Posted by Commie B on May 20, 2009 at 11:09 am
As most businesses start to make the transition from a one man show to becoming a growing enterprise, owners are faced with the difficult but crucial task of identifying information systems and processes, a major part of which today is procuring the right software and hardware. Even all large corporations are consistently faced with this task of improving the systems, redefining processes and procuring the correct hardware and software to either support the growth of the business or deliver efficiency in times of downsizing.
So what really should you consider when investing in systems? There’s a plethora of factors you will need to consider, and most of them will be driven by your organization, its structure, your employees, the culture and above all, your budget. With the technology world making leaps of progress every year and business and corporate strategy evolving with time (especially given the economic crisis of today), it can be difficult for executives and business owners to choose between what is available to them in the current marketplace. Business technology is evolving to bring more flexibility, better functionality and higher return on investment to most businesses, but getting this right means more than just going with a big name brand.
First and foremost is the illusion that businesses have about technology: it will solve their problems. It won’t. What technology will do is make available to you tools which when used properly will solve your business problems. However, the idea that spending money will result in problems going away is simply false. Getting the right technology that supports your business will certainly do this, and such technology does not necessarily need to be expensive or backed by a big-name brand.
When businesses starting thinking about procuring ERP or enterprise class solutions they often turn to the likes of Oracle, JD Edwards (now Oracle), SAP or Microsoft for answers. Whilst this is not a bad thing (given the experience these companies have with developing such software), it’s not the most efficient or effective way of going about getting a comprehensive information system. Since these companies develop solutions that are generic in nature and applicable to all businesses, they need customization that will tailor the solution to your business. What happens when business invest thousands of pounds in such software is that they expect it to start producing results from day one, an error that many major corporations today are guilty of. What you must essentially realize is that buying an off the shelf solution in this category with a powerful brand behind it will cost you an arm and a leg and will require further customization, time and money before it will start doing what it is supposed to do.
Add to this the cost of remote functionality and licensing, and you may very well be paying a lot more than your vendor originally told you it will cost. It’s all part of the game of selling technology solutions: everyone is trying to sell you their product and will undermine any other cost you may incur in getting the entire solution. You can avoid this by planning ahead. So whether you’re a business owner, an IT manager or a CIO, here are some helpful tips.
Do you really need the ‘best’ solution in the market?
Most businesses make technology and information systems decisions based on the intel they get about their competitors. Especially in times like these, many think that if a competitor is doing well it’s most likely because of their technology. That’s not always true. You should never simply invest in or buy a product or service because your competitor uses it. Neither should you make a technology investment because it is the ‘latest and greatest’ in the market.
Each business operates in a unique way with its own culture and model, and each business decision requires thinking along those lines. It is this business model that, along with what the requirements of your particular project are, should drive your technology decision.
Getting the Numbers Right
When calculating costs for a particular technology or information solution, you need to split it up between the 6 phases of the Systems Development Lifecycle. So, in essence, you need to budget the cost of:
- Planning – Must use external help for this to get a better view of the situation and your business.
- Analysis – External help over here is a must. It will help a third party clearly interpret what you need, thereby making the requirements of the entire project or solution clear.
- Design – Contrary to the popular belief that you won’t need this if you buy an off the shelf solution, you will always need this. Software does not design a system or vice versa.
- Development – For most complex pieces of software that you procure, the will need some customized development. So don’t forget to budget for this whether you’re costing.
- Implementation – You always need a contingency plan. What if implementation does not go right? What can go wrong and how will you tackle the situation. Not planning for this can be very expensive.
- Maintenance – You’ve heard that prevention is better than the cure. Well, it’s true of systems and software. Reactive maintenance is very expensive. If you’re proactive and stay on top of this, you’ll save millions in the years to come.
I’m not going to get into the details of each one of these phases, but it is absolutely imperative that businesses seek some external help or consultancy whilst involved in the first 2 phases. The reason for external involvement is necessitated by the fact that an external view to your problem can greatly aid in creating a better solution or coming up with a better proposition for business or particular situation. Planning and Analysis is imperative and this is essentially what will drive the other four phases and, in essence, the cost of the entire product or solution.
I’ll discuss a brief example of the typical defect a service-based company will make in its cost planning for procuring and implementing a new software system. For the sake of simplicity, let’s assume that this business needs a comprehensive financial management system along with project management and CRM functions to get a complete solution which can help manage projects from start to finish.
The options available to such a business are Microsoft Dynamics, Oracle, Quickbooks Enterprise or SAP. None of these solutions are cheap. Quickbooks is probably the most low-cost solution here, with annual licensing fees for 10 employees topping US $ 12,000. For each additional user you will end up paying an extra annual. Unfortunately, the same goes for Microsoft Dynamics, Oracle to SAP. Then, you’ll need to customize the interface and processes within each system to suit your business model, hire staff to manage the servers and user licensing and for maintenance. Add to the $12k additional cost for CRM and Project management modules (which may or may not work to your requirements and may or may not be available depending on which solution you choose) and you’re fast looking at an annual bill of US $50,000 a year plus initial costs and fees for deployment and any other updates and upgrades as they become available. Basically, at every point in time, you will need to spend money: whether it’s adding an extra user, adding an update for a bug fix or getting an update.
So, in this example, even though the numbers may not be fully accurate, you’re looking at a cost of around US $50,000 a year with a growing business, not US $12,000. Plus, if you are company that requires its employees to work remotely, you’ll need to pay licensing fees for Citrix or GoToMyPC, which can add up in thousands pretty quickly for multiple users.
Think Web 2.0
The world of systems and software is changing. Leading businesses and technology professionals need to think in innovative ways to bring new solutions into their business that cut cost, increase productivity and make their businesses more competitive.
With the advent of web 2.0, businesses that do smart, intelligent thinking can avoid the cost of paying for a brand name, user licensing, or extensive server management costs. From a business standpoint, it would be great to not be penalized for growing your business by having to pay extra for each license every time you hire a new employee, or drop $10,000 every time you need an additional module or add-on to your software.
If you’ve run through your planning and analysis properly, you could spend your annual licensing and maintenance fee just once (that’s right, ONLY once) and get exactly what you need, with remote access from anywhere at any time, anywhere. You won’t have to customize this. It will be built to specification. It’s also documented and you own it, so you can add as many users you want, make whatever changes you want and get internal staff to help improve or add functions at their regular salary as opposed to paying an Oracle or Microsoft certified consultant over $1,000 per day.
That’s right. When you move into the realm of complex systems and business management enterprise class software, customized web 2.0 solutions can be a cheaper and more effective option for many businesses. They’re better suited to the business model and can save businesses hundreds of thousands of dollars in the years to come. Best of all, open-source web 2.0 technology is scalable and can grow with your business. Server and hosting costs will be minimal in most cases compared to other solutions, simply because, if built right, web 2.0 software should require nothing more than what your browser needs.
That’s right, you could run your entire business from a web browser. It is the way all software is headed, so you need to consider this.
Think Open Source
I work for a firm that’s been a Microsoft Partner for years. Microsoft products are generally very dependable and they offer great support and unparalleled documentation, but they have their place. Open source software is becoming effective and powerful, and with the pool of technological talent out there and investment in open-source technologies by some of the world’s largest private equity firms, it comes as no surprise that open source software can very well support enterprise-class functions today. Whether you are a small or large business and depending on your business model, you can save thousands in licensing fees by simply using OpenOffice and Mozilla Thunderbird. Microsoft Office has its place, its user base and its functionality, but this is a cost many businesses can save with the right consulting and implementation.
Make your Own Decision
With the economy taking a plummet, sales teams across the globe have become far more aggressive than before. Businesses are fudging statistics and some are outright lying to get your business, so there’s all the more reason for you to do your homework, consult a business technology consultant and make your own carefully considered decision as opposed to believing what sales consultants tell you.
However, technology is useful if its timely and effective; so you do need to move fast.
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Posted by Commie B on March 25, 2008 at 1:31 am
The first part of this article discussed the things that needed to be a part of a small business accounting package, and what help the existing software in the market typically needs, and whether or not a small business can actually do without the help of an accountant or book-keeper. Let’s put all of that aside, and now simply talk about the accounting software available in the market as is. The packages I have used, and most of my clients use, and ones that are available almost globally will be the subject of discussion here.
Of the four packages mentioned here, QuickBooks and SAGE are scalable from small business to medium business. So before I dwell into which is superior and which is not, if you think you have a business that will grow or develop at a rapid pace, and will outgrow the circa definition of a Small Business, maybe you’ll have to stick to one of these. That’s not to say that Peachtree or Microsoft Office accounting cannot support medium size business. It can, with intelligent, creative (but legal) accounting.
QuickBooks – The Good
In my opinion, QuickBooks is probably the most comprehensive of out of the four packages (QuickBooks, Peachtree, Sage & Microsoft Office Accounting). It provides relatively efficient functionality, with a standard interface, customizable reporting, and it won’t cost you an arm and a leg. Feature-wise, it probably contains more than any of the other three pieces of software; it will do the basic accounting, invoicing, payroll subscriptions, credit card transactions, GL, PL & SL, prepaid (well, sort of), customer statements, financial reporting, etc. etc. etc. Quickbooks ALSO has some concept of drill down functionality, which can be relatively insightful at the click of a button.
Another area that QuickBooks has a big plus in its wide market area and availability of support. It is relatively easy to find QuickBooks consultants (certified or not). The support network is out there, and their own web site can guide you on where and how to find support. Plus, if you’re in the US, QuickBooks is the software of choice for many US Universities, making most accounting graduates QuickBooks literate, if not experts.
In addition to the friendly interface, QuickBooks is relatively self explanatory. The titles in the menus, the screens, the interface, the ease of use, all makes it a very efficient piece of software, especially if you’re a computer literate accountant. Even if you’re not, the learning curve is not too high.
QuickBooks – The Bad
From my position, I really don’t have much bad to say about QuickBooks. I’ve been using it for several years, and functionality wise, there’s really not much wrong with it (in comparison with other accounting / bookkeeping software in the market). The only possible drawback is that it’s ultra feature richness may make it confusing for the not so computer literate accountant/bookkeeper.
Technically, QuickBooks has one pitfall. From year to year, newer versions come out, and compatibility has been an issue in the past. If you upgrade, you have to convert data, and although it’s not that tedious with the new version, it would be much simpler if Intuit simply made Quickbooks backward compatible, which it probably doesn’t for reasons of profitability.
Sage – The Good
Really, I don’t have much to say here. In the near future, you will see me as both a QuickBooks Pro Advisor and a member of the Sage Accountancy Club, and that’s because it is good for business, and the UK is infested with Sage Line 50. It’s an okay piece of software. The interface is relatively standard, and it can pass off as a bookkeeping / accounting software, although all the others will give it a run for the money, and probably beat it.
Sage – The Bad
There’s a lot to say here, but I won’t bad mouth them too much. No drill down functionality, unfriendly interface, unfriendly usability, restrictive, poor layout, etc. etc. Clearly, you can tell that this is my least favourite software, so I’m going to stop talking about it now.
Peachtree – The Good
Peachtree is a fantastic piece of software. Although I trained on QuickBooks Pro in university, the first piece of accounting software I used on the job was Peachtree Accounting 2006. I was pretty reluctant about it first, but as it turns out, Peachtree is a wonderful piece of software.
It’s a less dull, less serious looking version of Quickbooks, and offers virtually all the functionality of QuickBooks. There’s less gray (unlike Quickbooks & Sage); the interface and layout are very clean, the different templates are customizable (as they are in QuickBooks), and it offers all the supplementary functionality (credit cards, good journal layouts, invoicing, POs, SOs, etc. etc.). All in all, this is a great piece of software, and is a wonderful place to start for any small business. It’s not to heavy on the pocket, and you don’t have to be a rocket scientist to figure out how it works. Oh, and Peachtree offers some drill down functionality like QuickBooks (unlike Sage).
Peachtree – The Bad
Peachtree is only US compliant. The software is not available for purchase or use outside the United States, and it doesn’t support multi-currency. What’s worse is that Sage has bought Peachtree from Best Software, and it has become Sage’s way into the US market. As long as they don’t make drastic changes to Peachtree, it is a fantastic piece of small business accounting software.
Microsoft Office Accounting – The Good
Okay, this is Microsoft’s first step into the Accounting domain. Originally termed Microsoft Small Business Accounting 2006, the software was renamed to Microsoft Office Accounting, and rightly so. It’s a sharp mixture of QuickBooks and Peachtree functionality the Microsoft Way. What’s good here is that this is one of the very few small business Accounting Packages on the market that will support multi currency without any issues, and it can probably pass off as a software that doesn’t necessarily require you to be very accounting literate. Why, you ask? It shares a striking resemblance to Microsoft Office, hence the name Microsoft Accounting. The idea here is that if anyone can use Microsoft Office Products, they should be able to use Microsoft Accounting.
Frankly, I have been impressed with Microsoft’s first try at Accounting Software. It may need some bug weeding, but all in all, this is a good starting point for Microsoft, and after months and years of using QuickBooks, Peachtree & Sage, it didn’t make much for me to get comfortable with Microsoft Office Accounting; just a couple of hours. This is a very affordable software for most small businesses, and provides the BASIC functionality of Quickbooks & Peachtree, without passing off as a complex, confusing or difficult to use accounting/bookkeeping package.
Microsoft office Accounting – The Bad
At this point, since this is something that is actively being developed my Microsoft, credit card processing, payroll etc., though existent, are slightly limited. Although most small businesses don’t use these features from within the software, they are useful considerations, as a small business truly sees the use and efficiency of the software if functions like payroll are managed from within the software. This software is certainly scalable, but at this point it’s a very good basic package for small business, and scalability is yet to be seen.
I’m sorry I’ve had to cut this article short. I had intended to write very detailed reviews, but I just haven’t been able to find the time to do it.
If you’re in the UK and looking for help with any of the above products, feel free to contact me or VAFTA Solutions Limited. Ultimately, what’s best for you depends on your business habits, practice, requirements, and your accountant/bookkeeper.
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Posted by Commie B on February 8, 2008 at 6:22 pm
Small Business has seen a dilemma when it comes to choosing and using an accounting package. The UK is primarily dominated by SAGE. The US sees plenty of QuickBooks and Peachtree, but there are others in the market too. The problem, however, is that although these three pieces of software along with the others provide a basis for double entry accounting, they don’t have what it takes to get true accounting automation, and I have to sadly say (now that I am in the UK) that SAGE is probably the worst out of the three.
All small business accounting packages suffer from similar diseases; not enough drill down user functionality, weak, if any, accountability for prepayments, deployment over multiple locations (without actually paying out of your nose) etc. etc. Despite all of that, I think it would be beneficial to review and discuss:
1. What is it that will make for a good Accounting Package, and
2. Which should you choose: SAGE, Peachtree or Quickbooks?
I’ve tried to look for reviews on the internet comparing the three accounting software packages, but I’ve had no luck. I have found some interesting articles that point to the shortcomings of SAGE or Quickbooks, but I’ve yet to see something that ideally tells you what’s good from a small business owner, accountant or book keeper’s point of view. There’s a good article http://nothing.tmtm.com/archives/2582 that discusses some of the fallacies of SAGE, and I totally agree with the writer, although I’m not sure small businessmen will ever be able to handle their accounting without the help of an accountant or bookkeeper. The double entry system is to blame for part of that; and people’s unwillingness to sit, think, and learn, given the lack of availability of time to the small business owner will make it impossible for business owners to use any accounting software independent of a professional virtually impossible.
As a professional accountant with a degree in Information Systems, I have a slightly different point of view about what accounting software should do and how it should work. I’ve also been a small business owner, and I’ll tell right off the bat that when I ran my own business, I could not take the time every day to sit down and update my books; hell, I couldn’t take out the time once a month, and I fell behind on my books drastically; but I can fix them come year end, because I know exactly what it takes. What about someone who doesn’t?
If software or accounting automation were to function ideally, whenever you made a sale or provided a service, the appropriate entry would be made automatically and it would update your books. Well, you can get part of that in a retail business, even with small business software like the QuickBooks POS terminal, but it still won’t do your depreciation, purchase of fixed assets, bill payments, etc. etc. automatically, even if you paid for and used every damn service you can subscribe for through Intuit over the internet. On the other hand, if you have a service business, well, you’re totally screwed! You’ve got to do everything yourself. The point is, for those of you who are thinking that “Ah! There will be accounting software that will do everything on its own one day,” the answer is no. That cannot be.
That’s basically because firstly the wonderful governments of the first world want extreme compliance with some rather unnecessary laws and regulations, and software will never be allowed to automate everything simply because a human being needs to be held responsible if something goes wrong. Second, we accountants love being in control. Corporate Accounting, for instance, can be the most dull job you have on earth, but the ability to tell someone “do your work and do it right, or no pay for you, buddy!” is excellent. Well, I like having my control over the money anyway. Third, and most important, the whole purpose of a double entry book keeping system is reconciliation. Everyone’s work is reconciled by another until an auditor signs off on it, and even then, sometimes the government comes in to reconcile that. As long as the basis and purpose of accounting is reconciliation and accountability thereof, accounting software will not become fully automated or “accountant-less.” Besides, the way I fathom fully automated accounting software, no small business could possibly afford it today.
Enough dreaming! Now, let’s get down to business. In the real world, what is it that a small business, say, any business ranging from GBP 200,000.00 in revenue to GBP 10,000,000.00 in revenue per year should look for? First and foremost, as discussed earlier, something that cuts down on accountant or book-keeper time. Now, what exactly does that mean? Things that a small business will primarily need a book-keeper or accountant for are:
1. Accounting for prepayments
2. Payroll accounting and returns
3. Depreciation for GAAP and Tax purposes
4. Minimizing tax legally
5. Useful, sensible reporting
1. Prepayments, if you think of them mathematically or simply, are nothing complicated. Even in simple double entry accounting, prepayments aren’t too complex. The concept is rather linear; if you pay for something before it was due, it becomes a current asset for the time being, automatically being written off against a liability that will arise in the future. So, what exactly is the simple accounting behind this? Say you pay your office rent 3 months in advance. The rent for the whole quarter becomes due on the first day of the beginning of the quarter. In such a scenario, in double entry accounting, you will:
a. You will cut a check for three months rent on the 1st day of the quarter, say, the 1st of January, for 3 months (from January 1st to March 31st, 20xx). Assume here that your monthly rent is 1,000, and the 3 months’ rent is, therefore, 3,000.
b. In your books for January, you will make an entry for rent payment of three months on January 1st, crediting your cash account with 3,000, debiting your Rent Expense account for 1,000 (for the month of January) and Prepaid Rent/Prepaid Expenses Account for 2,000 (for the prepaid rent for February and March).
c. When you prepare your financial statements at month end, you will show 1,000 in Rent expense on your Profit & Loss Account (if you’re in the UK, Asia or most of the Middle East) or Income Statement (if you’re in the US) and 2,000 in the current assets section on the balance sheet.
d. In the month of February, you would credit the prepaid expense account and debit the rent expense account with 1,000 each, respectively. Your balance sheet in February month will show only 1,000 in prepaid assets. Repeat for March.
e. You’re done!
As you can see, this isn’t really too complicated. The accounting is simple, but you have to be familiar with basic double entry debits and credits to do it right. I can’t tell you how many professional accountants screw up prepaid accounting, so let’s not blame small business owners for pulling their hair out with unusual and possibly unnecessary debits and credits for something as simple as a rent prepayment. You’d think that paying it for 3 months in advance you wouldn’t have to worry about for 3 more months. Unfortunately, that’s not the case in financial accounting.
2. The usual second hang-up in small business accounting is payroll. Now payroll is not rocket science; it is systematic and the method is well documented. But, undoubtedly, payroll is a very tedious and boring part of corporate accounting. Keeping track of different and changing income levels with different tax brackets and doing quarterly returns can, quite frankly, be a bitch. It’s not difficult; it’s just bogus. However, a small business can simply choose to outsource this function altogether. Depending on where you are and how many employees you have, you can outsource payroll accounting and disbursement for as little as $100 per month per employee or $ 300 per month in total. Please don’t start emailing me about where to find companies that can do this for you. Look around in your city. Ask a local accountant or check with someone like TriNet if you’re in the US. If you’re in the UK, well, you can contact me.
3. Here’s another subject I’ve seen small business owners get heart burn over. I have worked with clients and bosses who were shattered because straight line depreciation as per GAAP put a serious dent in their profits. It took a lot to explain to them that this was good for tax purposes (although that may not be true since you have to use government compliant depreciation methods depending on which country you’re in) and it didn’t really matter for scoring points in front of your bank, friends, or date. But managing statements that reflect and don’t reflect different types of depreciation, depending on who the financial statements are being made for can once again, be a boring and tedious task; one most small business owners would want to rid themselves off. Welcome to the real world; different institutions want your fixed assets accounted for differently. How would you calculate the life of each asset? How many years to break it down over? What percentage do you have to depreciate it according to the IRS? Treat it as real property or not? How about land and buildings? Who the hell is going to keep track of all the assets in your business? Computers, desks, chairs, fittings, etc. etc. Sounds like a full time job, doesn’t it? It is painful!
4. Corporate Income Tax, Sales Tax and/or VAT. Such wonderful terms. I assure you, even those of us who love taking your money for doing your taxes hate doing them just as much as you do. Again, although taxes can get really complex, they’re typically, for a small business owner, not too bad. That doesn’t mean they can be. When small business owners start making personal payments from the company account and start charging gifts, kids tuition, cars, rent, alimony etc. etc. for their extended family to the company account, the tax business can get rather nasty, especially if you don’t stay on top of it at month end, and tackle it while you can with your quarterly payroll return. However, I will say that even the tax return system is relatively developed. There is TOO MUCH documentation available on how to complete and file your return, and some software will typically be pretty helpful. But to maximize your tax benefit, you do need some tax craftsmanship, and that only comes with experience and knowledge of accounting and taxation. And who in the world will spend his time studying tax law and procedure unless he’s getting paid money to do it? No one. You’re better off getting professional help for this from the get go. Plus, by doing so, you don’t have to worry as much about the tax department coming down your ass for making simple mistakes. However, do keep in mind that if there is a mistake, and even if you have a chartered accountant sign off on it, it’s going to be the small business owner’s ass if there’s a problem. You need an accountant for this; I can’t stress how bad it is when you’ll get penalized $ 1,200 for trying to save $ 750 you could have paid an accountant initially, because second time around, you’ll be paying the 1200 and the 750. Do the Math!
5. It’s great to get professional looking P&Ls, Income Statements, Balance Sheets, Cash Flow Statements, etc. etc. etc. It’s very good for the small busiess owner’s ego to see a professional set of financial statements and reports with the business logo on it, but to most small business owners, the typical financial reports can be pretty damn useless. They’re a good measure to see how you’re competing with the big business on numbers, but useful reports that explain cash flow or budgets, that compare pro formas with actuals, present value and future value statements and calculations, and other such reports require some planning and thinking, and definitely need some kind of a financial background, if not an accounting one. It takes quite an accountant to explain a cash flow statement. A typical cash flow statement made under US GAAP is very user unfriendly, and I’m not sure a small business owner would want to spend his time on figuring out what exactly it means. That’s why you will need an accountant to explain or simplify any typical, standard reports that your accounting software may generate. Of course, if you’re happy without knowing what’s really going on, you probably don’t need to understand any of it. But for a growing and developing small business, accurate, useful financial reporting that provides valuable information, not data, is vital. It the job of a financial or management accountant to convert this data into information, and then present it to the man in charge of the business.
Now that we have established that a small business needs a professional accountant, or professional help, let’s discuss what it is that the accounting software in the market should about the above to minimize or reduce the use or functions of an accountant to reduce the overhead associated with having an accountant.
The Accounting Software Wishlist not available in existing software – by today’s standard
1. Let us first start of with drill down functionality. Let’s say, you have your balance sheet on the screen, and the figure for current liabilities looks a little out of whack (doesn’t it always?), and you want to see what makes up the massive number of US $ 2,,467,589.45. Well, if you were using SAGE, or any other third class third party accounting software, you would hear your PC make a buzzing error noise, that annoying sound that it makes on different occasions for different problems that sounds something like “tun`!” That’s because there is a lot of commercial software out there which will not allow for any drill down functionality, and that makes for very user unfriendly software, even for us accountants. I don’t know why it’s so difficult for us to be able to double click on our statements and reports, and have either the relevant ledger accounts pop up or a simple list of the items that are making up that number. Sometimes a typical, or what we may think of as typical, entry in a software does NOT come up with the desired result on the balance sheet or P & L. That simply means that the user doesn’t think the exact same way as the person who designed the software, and that’s a problem, because most johnnys who design the software have little or nothing to do with accounting. By the way, QuickBooks, Peachtree and Microsoft Office Accounting all provide for this. I’m not sure about MYOB, but I assure, SAGE should get fined for something as stupid as this. They’ve even bought Peachtree, but they refuse to learn from it.
2. Here’s what these software providers need to decipher: are you making the software for small business owners or are you making it for accountants? This question is key before we can tackle the ever famous ‘accounting for prepayments’ issue. Up to this day, all major small business accounting software does half and half. Take SAGE for instance, they have an option to account for prepayments, but it’s so horrid and hard to figure out that any normal person will be pulling his/her hair out to figure out how it works. Most irritating is the fact that you can’t see the effect of your prepayment entry until you decide to go in and CLOSE the month. So, if you were to look at your statements before actually closing the month to make sure there weren’t any mistakes, you’re screwed. Worst yet, if this is a tactic for security and internal controls in a business, it fails miserably. You won’t know what you’ve until you close the month, and then you’ll have to make a bunch of adjusting entries to fix up anything you may have screwed up. That will only cause more confusion for someone trying to pick up on erroneous accounting behavior.
It would, in fact, be simpler to add a prepayment section to the payment area, and simply ask the user how much of the amount being paid is prepayment, and then the appropriate entries could be made into the GL or PL accordingly automatically. Of course, that’s if you’re designing the software for the small business owner.
On the other hand, if you’re making it for accountants, and you’re dumb enough to not be able to figure out how to account for it automatically, why don’t you simply state that in the How-tos instead of giving a long lecture full of bullshit in Help Menu, and simply let us accountants make journal entries to account for prepayments. Well, it’s not like the software is stopping you. But that’s how I account for prepayments anyway. The prepayment options are buggy and sketchy at best, and quite frankly, even if you figure them out, they won’t work properly in Peachtree, QuickBooks, or SAGE. Microsoft has made a bit of an effort to incorporate prepayments into their new software, and it’s a decent attempt. However, it could require some further cleaning up.
3. Multiple Locations. I’ve deployed both Peachtree and QuickBooks over multiple locations. I haven’t even tried with SAGE, and given my low opinion of it thus far, I fear the day a client or an employer will ask me to do this. Of course, deploying over a network or over the internet is not as useful as one would assume. If you actually wanted to keep track of two locations from the two different locations, and have the software update everything automatically, wouldn’t that just be great.
The problems with deploying software like Peachtree and QuickBooks over a network or VPN are simple. The number of simultaneous user is limited (for many functions to one user only), and if you’re keeping track of say, multiple warehouses with equipment, your inventory management will get really screwed up. You’ll have to keep track of the same inventory different locations with different codes, and if you really want a clear report, you’ll have to export the report into excel, bunch and merge some cells, and then you’ll finally come up with the report you want. So, basically, support for multiple locations means:
a. The ability to deploy the same software with the SAME data set relevant to the specific location;
b. The ability to have multiple users logged on simultaneously; and
c. The ability to manage the books of multiple locations separately and the business as a whole.
Now we’re asking for something as complex as SAP over here, but the concept is similar. And mind you, it’s not very complex. WebERP provides an example of a software that already does this, and even though some old school executives might still believe there are possible security breaches to storing information online, that’s a rather weak argument in today’s day and age.
I took apart WebERP with another colleague of mine to customize a multiple location accounting system for a client. It was about 70% complete, but as you know with clients in Dubai, they didn’t want to pay up as per the agreement, so we had to abandon the project. A web based solution is the SIMPLEST way to manage a multiple location accounting software. A web based solution that uses AJAX will totally eliminate the need for accounting software like SAGE or Peachtree. Writing such a software is on my list of things to do. But I wouldn’t hold me to that.
4. Viewing Vendor/Customer Statements. This wish is simply more of a musing, although I think it will be a useful musing. How is that we can (or could until the 2006 versions) only print these statements. I mean, how hard is it for QuickBooks or Peachtree to actually come up with another screen to display a customer or vendor statement before printing it out. It’s either the product of very lazy project management or careless programming. Either way, VIEWING before PRINTING is not only more convenient; it is also more environment-friendly.
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Enough debunking of accounting software. Please feel free to add features to this wishlist as you deem fit. Mind you, I think most other things are already available in these accounting packages. It would be nice to be able to manage your bank account directly from the accounting software too, but let’s fact it, that’s not going to happen. Part TWO of this article will discuss which small business software is superior for small businesses, both from the accountants the business owner’s point of view.
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