Over the last few years, a wide range of new cloud accounting solutions have become available. The common thread between all of them is that they aim to make it easier for non-accountant business owners to maintain their accounting records and perform tasks such as issuing invoices, paying bills and reconciling bank transactions. All information is stored in the cloud so the user can log in from anywhere in the world where there is an internet connection.
With such a large choice, it can be difficult to know which product will be best suited to your business. Below we provide some considerations to help find the right one for you.
Broadly speaking, you get what you pay for. The more you spend, the more features and fewer restrictions you get. If you've just started out, the subscription cost may be a significant overhead and a cheaper option may provide a cost-effective solution without paying for features you aren't going to use. However, it's important to take a long term view of where your business will be in a year or two's time and check whether the solution you choose will be able to grow with you.
If you start on one of the cheaper, less feature rich accounting programs, it is possible to migrate to a new system later on when you need the extra features. However, this does take time, effort and cost. Therefore, it's worth considering how your requirements may evolve over time.
This is a big consideration for any company that deals in foreign currencies because the functionality of cloud accounting products range substantially. Some products include multi-currency functionality accross all plans whereas others require you to upgrade to receive this feature.
For example, Zoho Books processes multi-currency transactions on all editions including it's Basic subscription which costs £6/month. By comparison, Xero requires customers to fork out for the Premium subscription at £30/month for multi-currency functionality.
Integrations are essentially connections with 3rd party applications and systems that allow products to work together. For example, most cloud accounting software products have bank feeds that automatically import transactions from the bank without the need for manually processing bank statements. Other integrated products include invoicing, project management, customer relationship management (CRM), analytics software and so on. These integrations can significantly increase workflow efficiency and add additional functionality to the core product.
More and more accounting software packages now support direct submission of VAT, Corporation Tax, Self Assessment and more. It's worth checking which ones are included and whether any features are restricted to accountants only.
To attract customers at a range of price points, accounting software providers generally offer plans at varying cost and with associated feature limitations. The limitations vary from product to product, and so it is worth comparing the features of each product at each price point.
You will generally have a seperate login for each person who requires access to the accounting software. User restrictions can be applied to each account so that each user only gets access to what they need to do their job.
Basic plans may restrict the number of user accounts you can set up. A plan which allows only one user may be too restrictive even for small businesses and sole traders, for example, if you need to provide access to your accountant. Some plans allow you to pay an addition fee per month to allow extra users.
Basic subscription packages are often limited by number of customers and suppliers that can be set up. Depending on the type of business, this may or may not be a concern, but it's important to consider how much the fee will jump when your business grows beyond the plan limit.
Some software provides full functionality but limits the number of transactions that can be processed in any one year. Unless you are able to reliably forecast how many transactions you will have, this limitation should be treated with caution. Some providers hike the subscription price up significantly as soon as the transaction limit is reached, leaving you with an unforeseen cost.
Xero's 'Starter' plan is a good example of a high value, feature rich product thats main limitation is the number of invoices (20) and bills (5). Again, this will suit some businesses and not others, but for those businesses that it suits, the plan provides great value for money.
Each accounting software product has it's own 'feel', and people who have used more than one product often say they prefer the user interface of one over another, even if the features of each are pretty similar. Most products allow a free trial for up to 1 month which gives you an insight into the aesthetics of the product as well as the feature set.
Other things to consider include the customer support and training that is provided by the company. There are a lot of product specific online resources available to help guide new users.
The product features and subscription plans offered by accounting software providers vary significantly and it is beneficial to shop around to find the one that suits your business. If you are trying to decide which one to go for, please get in touch with us and we will be happy to help discuss the available options.