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MYOB – the Essentials

One of the disadvantages of moving to the country is that unless I travel to Sydney, I have to wait patiently for accounting software roadshows to visit regional NSW. MYOB Incite visited Port Macquarie in early March so I was able to hear their plans for 2016 and experience how ‘Tomorrow begins Today and Today defines Tomorrow.’

MYOB sees accounting as having three strands:

  • transaction processing,
  • compliance,
  • advisory,

and provides tools to assist partners and businesses to facilitate management of each of these. Transaction processing is all about automating manual processes and making use of real-time access to data and MYOB is already well down the track in providing quality solutions to address this. Compliance is about reducing data cleansing, increasing collaboration and streamlining statutory reporting and it is here we should be seeing some significant gains in 2016. Advisory is largely a change in mindset to client servicing that the accountant needs to embrace to stay in the race.

The automation tools provided recently include enhancements to bank feeds and here MYOB claims to provide almost 100% accuracy due to directly contracting with over 130 financial institutions in Australia rather than using Yodlee feeds (Xero uses Yodlee for the majority of the financial institutions it supports). Other tools include Smart Bills – a product still in its infancy but that will stream line the Accounts Payable function, automatic tracking  of invoice status across a range of devices, and Pay Direct – a mobile solution for customer invoicing. This is a solid set of tools but still expect to see ongoing improvements including direct Amex feeds which are scheduled from 31st March 2016.

On the compliance front – MYOB is set to deliver some serious enhancements in 2016. From 1st July a new dashboard will be available to partners to centralise client activities and provide greater visibility on client activities. The previous accountants’ software of MAS and  Accountants Office will be replaced with a New Ledger which will be agnostic to the client software providing accountants with more flexibility to work with clients who use non-MYOB software. Xero for example uses an industry standard format in its export files making it straightforward to map and bring into the MYOB ledger.

MYOB has for decades been the accountants favourite accounting product simply because it is has strong underlying accounting principles, uses accounting terminology, has features that accountants love such as year end close (everyone else hates this) and has been suitably conservative for a hitherto conservative  profession. Xero came along some eight years ago and commenced disrupting this happy existence, transformed accounting software into a tool that could be used by non-accounting professionals, ‘turns number crunching into beautiful business’, provided a previously unparalleled user experience and listened to business owners and accountants. It took MYOB a while to realise the disruption had become the building blocks of a brave new world but now MYOB is fully committed to providing an equally positive experience for accountants as well as business owners.

The Accountants dashboard and new ledger that MYOB will be delivering this year should result a couple of gains to accountants: – it will demonstrate that MYOB can deliver an accountant experience to rival Xero and will be a great opportunity to entice those accountants that to date have not whole heartedly embraced the cloud, into the 2nd half of the second decade of the third millennium.

So accountants are taken care of and there has been only positive feedback to the enhancements but what about businesses? Interestingly, MYOB stressed that MYOB Essentials not the fully featured AccountRight is their platform of choice for the future. Although MYOB did deliver enhancements to Essentials in 2015; apart from ABA files for Payroll and SuperStream compliance, the enhancements were all features that enabled businesses to take advantage of an online accounting environment rather than enhancements to the core accounting functions. There remain a number of fairly sizeable gaps in the functionality of Essentials that need to be addressed before the product can be considered in the same league as Xero or QBO.

In terms of core accounting functions, there has been little change to MYOB Essentials since I first started reviewing it more than three years ago (although Budgets are now in Beta phase). Specific functionality gaps include:

  • Multi currency – you cannot invoice customers or receive invoices from suppliers in a foreign currency, or have a foreign currency bank account.
  • No ABA files for supplier payments – the feature was delivered in 2015 for paying employees but not extended to suppliers.
  • There is no Job Costing functionality other than via a third party app which is unexpected because the Taxable Payments Annual Report required by ATO for the construction industry is available.
  • Payroll remains very simplistic for example payroll schedules are not available, you cannot specify the posting accounts for payroll transactions, and items such as bonus and commission automatically include Superannuation (not always needed).
  • There is no Inventory module.
  • There is no Fixed Assets module.

So whilst MYOB is using cloud technologies to deliver transaction processing automation and real time data access for businesses as well as providing quality compliance tools for accounting professionals, the product that is to be its flagship for business owners remains far from comprehensive in its functionality. MYOB is budgeting for $50 million R&D expenditure this year so hopefully some of that will be channelled into expanding the functionality of MYOB Essentials so that it does take on more of the capabilities of AccountRight or even Xero and QBO.

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Zoho Books – a so-so cloud accounting solution

I was contacted recently by the folk at Zoho Books and asked if I would take a look at their cloud-based accounting software which I hadn’t previously reviewed. In January this year, Zoho released its Australian version of Zoho Books to include the GST worksheet for preparation of Australian BAS so although there is not yet an Australian Payroll module, I decided to have a quick look at the product.

Background – Worldwide and across all products, (includes Zoho Books, Zoho Inventory, Zoho Subscriptions, Zoho Expense and Zoho Invoice as well as apps for sales and marketing and other business processes) Zoho has over 15 million users with the majority based in the US.

Zoho Books was launched initially in 2011 and was given a major revamp in January 2014. In September last year the influential US-based Sleeter Report nominated Zoho Books as the best micro and small business online accounting software for customer payments in terms of flexibility, so it has some solid credentials.

Functionality – I was pleasantly surprised to find in addition to the standard accounting functions, the product (Professional version) came with:

  • Purchase Orders
  • Sales Orders
  • Estimates
  • Retainer Invoices

making it a reasonably mature and comprehensive solution.

Missing however (as well as Payroll) were:

  • Fixed Assets
  • Budgets

making the product better suited to the micro end of the small business market.

Listed below are some of the features I found to be of particular benefit and some of the features that were either missing or compared less positively with similar products.

Pros:

  • Zoho Books supports Two Factor Authentication to reduce risks of unauthorised access – this was introduced last year in Xero and should be coming this year in QBO.
  • I can do part delivery of a purchase order (not yet available in Xero).
  • It does have multi currency and I can run reports on Realised and Unrealised Gains/Losses.
  • Reports can be scheduled and emailed to intended recipients.
  • Customised workflows based on business requirements can be set up based on Events and Dates.

Cons:

  • Bank Feeds are all via Yodlee, there are no direct/partner bank feeds.
  • Once a GST report has been generated, it is not possible to change any of the GST settings, including changing the basis between cash and accruals which could be a limitation where a business is required by the ATO to change.
  • There is no support for any other taxes that an organisation may need to report to ATO including W1 and W2 and WET, LTC, FBT, FTC etc. However as there is no automatic link to lodge the BAS, this is probably not likely to cause much pain.
  • Periods can be locked but unless this is done, there is no way to identify transactions that may have been posted to a period for which the BAS has been lodged.
  • It is not possible to generate ABA files for bulk payment of suppliers, this feature is on the roadmap although no delivery date is available.
  • It is not possible to assign a default GST code to an account in the chart of accounts. This can be done for a customer but not a supplier and so opens the system up for user errors.
  • Sales Invoices can only be entered using items, not coded direct to an account in the chart of accounts.
  • Only a few reports can be run on a Cash or Accruals basis.

Several of these negatives relate to GST and given this functionality is a relatively new addition to the product, we are likely to see enhancements in subsequent releases.

Add-Ons and Integrations – The plethora of third party apps we see with Xero and QBO for example are not available with Zoho, mainly because Zoho has its own native applications including Inventory, Projects and CRM. However there are links with a number of payment gateways including PayPal and Stripe although not eWay.

Expenses can be uploaded into Zoho Books via Dropbox, Evernote and OneDrive amongst others.

Mobile – I didn’t try this out but mobile apps are available to track time, create invoices and run reports.

Pricing – the product compares fairly well with QBO on pricing. The Professional Plan which includes Purchase Orders, Sales Orders and Inventory, compares best to the Essentials version of QBO and costs around $29 a  month, although if you pay for a year in advance you do get two months free and this does include unlimited users. There is a Basic Plan at $9 a month and Standard at $19 a month for an organisation requiring reduced functionality. But given there is no Payroll in these prices, this would need to be factored in if required.

Support – pleasingly there is a telephone number for Support in Australia which is available ’24 x 5’ as well as Live Chat, access to an online guide, email support, videos and a User Forum. Hopefully meeting everyone’s needs.

If you need an advisor to assist, there is a link to a page listing accountants and bookkeepers but once there, all advisors were in alphabetical order by business name, regardless of country making it somewhat challenging to use. (I only found one in Australia and one in New Zealand).

Summary – There are a lot of positives to the product however it doesn’t provide any significant functions or features not currently available in similar products such as Xero and QBO. These two are already fully customised for the Australian market with full support for GST, ABA files and Payroll. So I couldn’t find a compelling reason to recommend Zoho Books over these  products especially as there isn’t a wealth of accounting professionals to support a business using the product. However businesses already using Zoho CRM or other Zoho products may consider Books to be suitable for their accounting requirements and take advantage of the integration.

The largest base of subscribers to Zoho Books is in the US where the market is much larger and it may present as the best alternative to QBO, but in Australia there is already intense competition  between cloud accounting software products relative to market size making entry of a product without any significant points of difference and without a base of accounting professionals promoting it; a significant challenge.

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SageOne is open for business

SageOne launched fairly quietly in Australia last year, whilst functionality and infrastructure for our mature cloud accounting software market in Australia was completed. Now with just multi currency still in the final stages of pre-general release, 2016 is the year when Sage will ramp up the profile of SageOne and more aggressively seek customer acquisitions.

Currently around 30% of accounting practices in Australia use Sage Handisoft for their tax and compliance work so the potential to leverage SageOne from this base is huge, prompting Sage to set some fairly aggressive targets for customer acquisition of 15,000 customers by the end of this year which will probably put them ahead of Saasu and by the end of next year possibly even catch up with QBO. These targets could become reality if the Handisoft accountants see enough benefit in promoting  this cloud accounting product to their clients but otherwise, the highly competitive Australian marketplace will be difficult to crack.

Both Xero and Intuit have already gone down the path of attracting accountants as partners and Xero announced at its February road shows, the rollout of Xero HQ, a highly proactive accountants’ tool which along with Xero Tax would be a competitor to Handisoft. There are some major differences between the two; firstly Handisoft requires the product to be loaded on the desktop, whereas all Xero accountant products are 100% cloud and secondly being a desktop product, features such as sending messages to/from clients and alerts must be done through the Accountant’s version  of SageOne not Handisoft reducing the flexibility of the feature.

Apart from leveraging the Handisoft base, Sage is looking to build product awareness and customer numbers by:

  • Developing partnerships with bookkeeper organisations including AAT, Institute of Chartered Bookkeepers and Australian Bookkeepers Network.
  • Running Bookkeepers Boot camps.
  • Providing free training and certification for accountants and bookkeepers.

This should greatly increase the exposure of the product amongst accounting professionals and ensure that there is a base of trained bookkeepers to support accountants.

Ecosystem – Sage will not be delivering an extensive ecosystem to its platform unlike Xero and QBO, preferring to build the functionality into the base product. There will be a few exceptions for specialised applications including integration to:

  • GovReports – in the final stages of testing, this will enable direct lodgement of the BASs but it will only support reporting on GST and W1/W2 fields not any additional taxes or refunds such as WET, Fuel Tax Credits etc.
  • Shoeboxed – still in testing with release date not yet announced enables extraction of accounting data from scanned receipts, invoices and documents securely online
  • eWay – again in the final stages of testing but no release date yet, allowing Sage One customers to accept secure credit card payments online 24/7 from customers around the world via an online customer.
  • OneSaas Due to launch in March 2016, this platform will connect Sage One to a range of other applications including Shopify, Bigcommerce, MailChimp, Salesforce, Harvest and more.
  • Receipt bank.
  • Direct Bank feeds will probably be out either before or at the same time as this post to supplement existing Yodlee feeds.

Right now there is built in integration to Sky Payroll which comes free of charge; however Sage is using their in house expertise from MicroPay to develop its own payroll module which is expected to be released by the end of this year.

Business Functionality

Overall SageOne covers all the major business requirements and is fairly similar to both QBO and Xero although an in-depth review would likely throw up a number of differences that could drive choice. Because the product is still relatively new, I have included some observations on some of the differences – good and bad:

Pros

  • My Workspace: an area tailored specifically for each user, it can group together icons for all functions used  – a delightful experience that is not in competing  products
  • There is a free app to customise invoices which does look a lot more friendly than the options in QBO and Xero although QBO is just coming out with a new forms designer.
  • There is also a fully customisable dashboard which is more similar to the experience of Reckon One than Xero or QBO.
  • Favourites – on top of My Workspace, you can nominate functions as Favourites for fast access although not all reports can be favourited.

Cons

  • Analysis codes – this feature is similar to Class and Location in QBO and Tracking Categories in Xero but usage is effectively curtailed because the field cannot be made mandatory and no reports are available to show where an analysis code has not been used. QBO probably provides the best solution here because you can set whether a class is mandatory or optional. Xero has not been able to deliver this level of functionality but has reports to identify transactions that do not have a tracking category followed by the Find and Recode function to quickly correct. None of this is available in Sage One so a customer needing job costing is likely to experience some challenges here.
  • Fixed Assets – currently it is not possible to run depreciation, this can only be done via a manual journal or the accountant can run it in Handisoft and then import the journal to Sage One.
  • Time tracking – this feature is very basic and there is no concept of billable expenses that we have in both Xero and QBO. Additional functionality will be available through Harvest and WHMCS via OneSaas.
  • It is easy to import customers and suppliers along with their opening balances when starting a new company, however it is not possible to start with a blank chart of accounts and import a standard list. You can import your list, but then you have to delete all the ones Sage One has set up can be annoying
  • Reports – can’t run reports such as P&L or Balance Sheet on a cash basis.
  • ABA files for supplier payments are not available – lack of this functionality was a stumbling block initially for QBO as it is a common requirement for small businesses – again a limitation on the product.
  • Although additional job costing functionality will be available with Harvest there are still limitations for customers in the Building & Construction Industry as SageOne does not provide the Taxable Payments Annual report.

Pricing  There is a Cashbook version at $5 month which includes Bank Feeds and BAS but no Inventory or Payroll – this looks like beating even Reckon One on price for a basic platform  although similar to Xero this is only available via an accountant. The standard package is $15 a month for 2 users with additional users priced at $3 per month each which compares favourably with QBO; although it includes just 5 free employees rather than the 10 with QBO.

Support. This is comprehensive with  context sensitive help available on every screen and both telephone and email support. There is also a reasonable on line Help Manual and several online videos on the SageOne TV Channel.

In summary – from a functionality perspective there are a lot of good things about SageOne but some functionality holes that need to be addressed to put the product on an equal footing with Xero and QBO. The secret to its success lies with the accountants using Handisoft, but will they be as sympathetic towards a cloud accounting software solution for their customers as accountants using QBO or Xero? 2016 will be an interesting year for SageOne as we wait for missing functionality and review market penetration.

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The exciting year for QuickBooks Online (QBO)

‘What I am really excited about is….’, said Nicolette Maury, MD of Intuit in Australia who demonstrably was excited when I spoke to her recently about developments and positioning of QuickBooks Online in Australia. Being excited about accounting software is now fairly widespread but I still enjoy meeting with like minded souls and knowing I am not alone!

After more than three years in Australia, adoption of QuickBooks Online by small businesses is gathering momentum with customer numbers increasing 375% year on year as the product has become fully featured for the Australian marketplace.

Planned deliverables for 2016 indicate that as with 2015, QBO is staying very much on the trend line in terms of new features. Last year saw the now standard ‘Pay Now’ button on customer invoices enabling seamless payment via PayPal from the customer invoice, increased functionality in inventory and further development of the mobile solution. In 2016 from a functionality perspective we can expect:

  • Mobile – both QBO and QBOA are now fully mobile including Payroll on all devices, with a new version of the app to come.
  • Multi factor authentication – similar in principle to Xero’s two factor authentication introduced last year, this will add an extra layer of security for user access.
  • Banking including bank reconciliation to be a ‘delightful experience’ with additional functionality to improve productivity.
  • Electronic lodgement of BAS – right now the process of recording lodgement and payment is quite complicated so this will be a welcome feature.
  • Continued expansion of relationships with banks to bring innovation to the solution.
  • A number of ‘tweaks’ to existing functionality to improve the user experience and to ensure ‘seriously easy’ is a reality.

Third party apps is another area where we can expect some development this year. Xero is well known for its massive ecosystem but finding your way around all the offerings can be a bit of a minefield. Intuit has identified six main business types and grouped apps by type in the QuickBooks App store to assist in identifying relevant apps.

Accountants play a vital role as partners with accounting software suppliers. Research has indicated that each accounting partner will bring around 13 customers to the cloud software they embrace, a valuable source of new business. Xero announced at its February road shows, the rollout of Xero HQ, a highly proactive accountants’ tool, setting new industry benchmarks. Intuit is also working to build relationships with accountants but using a more holistic approach by reaching out to accounting firms with its concept of  the ‘Firm of the Future’  a three pillared organisation that embraces the Cloud, is a trusted advisor and stays connected. During 2016 Intuit will be providing accountants with the opportunity to enhance their skills and relevance by become more digitally savvy, better able to use social media and understand what value pricing really means. These practical skills becoming paramount for accounting firms and this should see a strengthening of the accountant partner relationship.

Intuit will also continue to offer support to small business owners with their Financial Fitness boot camps designed to provide business owners with the necessary financial knowledge to run the business, a further likely source of customer acquisitions.

So where does this leave the small business? How much will QBO meet their business needs when their accountant suggests a migration or how much would the move be of more benefit to the accountant?

Functionality Unlike Xero, QBO was a reasonably mature product when it came to Australia back in 2012/13 so we have not seen the wow factor associated with Xero which launched in 2008 with incredibly lean functionality simply because it was by and large already in QBO from day 1. We had Customer Quotes, Supplier Purchase Orders, Inventory and Billable Expenses; we had a comprehensive reporting engine with Cash or Accrual basis selection and a robust Payroll module. Subsequent enhancements have centred around improving the user experience, providing better integration with banking data, ensuring a complete mobile experience and providing tools to improve customer payments. So all in all QBO continues to be a robust product that embraces new technology as it becomes available and thus a reliable solution for any small business.

An in-depth comparison feature by feature with Xero is likely to throw up some valid comparisons at a more detailed level but at a high level there probably isn’t a whole lot of difference between the two. The Intuit design methodology of Design for Delight builds on customer empathy to integrate new functionality into the product which helps to ensure development is both responsive to customer needs and in the case of new technologies; providing a solution before the customer is aware of the need.

Pricing – QBO is competitively priced and certainly a lot less expensive than Xero for an organisation with 10 or fewer employees. However after 10 employees there is an additional $4 per month charge per employee which could quickly hike up the price tag. (Agreed that the QBO payroll solution from KeyPay is an industrial strength product and worth the money for businesses with complex payrolls and structures, but for most small businesses the additional functionality is not needed.)

Support – unlike Xero, telephone support is available for accountants and a Chat facility is available to businesses as well as email, but the comprehensive on line documentation available with Xero is not here which does limit the opportunity for self help and education. Some tutorial videos are also available.

So definitely, the needs of small businesses are being met and going into 2016 QBO is poised to deliver on two fronts – ongoing state of the art cloud accounting software and ongoing support for healthy accounting practices, another win-win solution. Participation in the Firm of the Future training will enable accountants to provide a more pro active service to their clients who will benefit not only from this interaction but also from proactive cloud accounting software that is user friendly, responsive to business needs and continually evolving to take advantage of new technologies. Intuit is ready to welcome small businesses and accountants who take up the challenge in 2016.

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The Xero Lifestyle in 2016

With more people attending the Sydney 2016 Xero Roadshow than attended national Xerocon last year, there was a definite buzz in the audience when incoming MD Trent Innes recapped what Xero had delivered in 2015 and more importantly what it would deliver in 2016.

Whilst the 2015 deliverables had concentrated on completing missing functionality such as the long awaited Inventory module, enhanced business automation tools and cash collection for small business owners, 2016 is set to be the Year of the Partner. Slated for completion is Xero Tax to cover all tax lodgements including the BAS, and the roll out of Xero HQ, a redesign of the existing Practice Manager. For full details on these , check out the indepth review from Digital First.

Accountants reacted positively to both the announcements on Xero Tax and Xero HQ (especially since for the majority of partners they will be free); but this announcement was very significant for a number of reasons:

  • Firstly it signalled a fresh, well rounded initiative to capturing the hearts of those accountants and bookkeepers not yet part of the 19,000 worldwide community of Xero partners with the provision of work flow tools with world class efficiency.
  • The almost organic result of this is likely to be another nail in the coffin of desktop software as accountants look to reap the efficiencies of this compliance workflow by moving more of their client on to Xero.
  • This could also be a catalyst for the demise of other cloud accounting software that does not link directly to the accountant’s tax and practice management software. Despite warning bells sounding over the reduction in compliance hours due to increased automation that is available with cloud accounting software, research has shown that more than 66% of practice income is still generated from compliance work. So efficiencies in compliance are significant.

From these announcements at the Roadshow, it seems as though this is a marriage made in heaven between Xero and its partners, a win-win solution for both and provision of a one-stop shop for compliance and business software. The horizons of the word ‘collaboration’ just got a whole lot broader .

So where does this leave the small business? How much will they be included in the win-win solution when their accountant suggests a migration to Xero?

Xero accounting software in 2016 is light years apart from the Xero we experienced just five years ago. It has morphed into having all the major functionality required of mainstream accounting software although there are still a few gaps that need fleshing out – just to mention a few:

  • Purchase Order and Sales Quote status reports.
  • Increased depth of functionality in purchase orders including partial deliveries, tracking of On Order quantities, supplier part codes etc.
  • More powerful reporting engine with greater customisation flexibility.

The ever increasing size of the ecosystem – now more than 450 ecosystem partners worldwide – means that if Xero cannot meet a specific requirements there is an app that will. The most popular apps continue to meet additional requirements in the more specialist areas of:

  • CRM
  • E-commerce
  • Advanced Inventory
  • Data entry automation

so if a business has specific business requirements not met by Xero, there is sure to be an add-on that will.

Xero’s impressive innovation delivery record means that 2016 should continue to delight users witha focus in four main areas:

  1. Automation – eliminating repetitive data entry.
  2. Real time data analysis to empower decision making with revised Dashboard.
  3. On Demand functionality.
  4. Security – to date the take up of Two Factor authentication remains disappointing despite security scares last year.

Xero constantly monitors the takeup of new features to ensure they are of value to its customers. So for example,  Invoice Reminders delivered last year has resulted in more than 1 million reminders having been sent thus validating the investment in this functionality. Xero is thus in a position to maintain continuous improvement in its software

Xero also monitors the pain point of small businesses and once identified provide tools to minimise or even take away that pain. Late payments (or non-payment) by customers continues to be a major cause of pain and this year Xero is linking with Veda an Australian credit reporting agency to provide new customer credit rating – hopefully to stave off some of the non-payment.

Xero is still the most expensive of all comparable products in the market place; the $60 a month premium plan is effectively the entry level for a business with even just one employee – making it three or four times more expensive than similar options from Sage and QuickBooks Online. However this has not acted as a deterrent to growth – Xero is still way ahead (almost to a factor of 10) of these two products in terms of subscribers.

Xero has been criticised and compared unfavourably with other products because it does not provide telephone support – all support is via email. However in practice this does seem a workable solution and users have access to virtually unparalleled online documentation both in the form a User Guides and Video tutorials.

In summary I consider that Xero will be delivering a win-win solution into 2016. Accountants and bookkeepers will enjoy the experience of Xero HQ and the completion of Xero Tax. This will enable them to provide a more proactive service to their clients who will benefit not only from this interaction but also from using world class cloud accounting software that is ultra user friendly, responsive to business needs and continually evolving to take advantage of new technologies. Roll on the 2017 Roadshow for even more!

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Great Expectations – Cloud Accounting Software in 2016

2015 was a bumper year in terms of delivery from cloud accounting software suppliers and there is no reason to suppose that 2016 will not be at least as festive or even surpass it. We now have very robust software platforms on which to build, a very competitive market which keeps the suppliers on their toes and a well educated user base that appreciates what we have but continues to demand more in terms of innovation and design.

Globalisation of accounting software

2015 has confirmed that whereas there are geographical specifics, cloud accounting software players are increasingly operating on a global level. During 2015 UK and South African based Sage launched Sage One in Australia, US-based Intuit arrived a few years ago and we have seen Xero continuing to build presence both in the US and UK. Globalisation results in a larger subscriber base with increased subscription dollars translating into bigger R&D budgets and the delivery of world best practice – an all round winner for subscribers.

It is still early days but Reckon has made an effort to tap into the UK market, opening an office in London and launching both Reckon One and SyncDirect (a tool enabling accountants to automate the collection of client data from any accounting software.) Whilst Reckon may be takeover target in 2016, the company has realised the only way to survive is through global expansion since the Australia/New Zealand market is so small.

Missing from the list of global software providers (I’m not counting New Zealand) is Saasu. Initially Saasu had greater  depth of functionality than Xero and attracted users based on this but the company has avoided the path that Xero has taken of raising capital to invest in software development and the limited R&D budgets have taken their toll on subscribers and Saasu is certainly not in a position to go global.

Also missing is MYOB which to date, I don’t believe has given any indication of moving into international markets. Possibly this is the one vendor that doesn’t need to; MYOB already has a substantial market share in Australia which with the stabilisation of its cloud offerings, it is now in a strong position to retain. It invests around 13% of a reasonable revenue base into R&D enabling it to focus innovation in a single geographical market and thus buck the trend and survive in a global market.

The players in 2015

During 2015 we saw a new player – Sage One – emerge, we saw the technical rebirth of Reckon One, we saw the filling of functionality holes in MYOB Essentials and Xero and we saw big improvements to the user experience with QBO.

There were also some common delivery themes across vendors especially in the areas of mobile applications and opportunities to facilitate customer payment of invoices indicating that suppliers are operating on a similar wave length and listening to customers all of which augurs well for 2016.

The players in 2016

I think it is unlikely that we will see any new players of note in 2016. The Australian marketplace is already very competitive and increasing homogenisation of existing products creates a barrier to entry for new products. We are likely to lose rather than gain in 2016. Reckon is threatened with a potential takeover, so much so that it’s more a question of when and who by. Depending on the who– we may see Reckon One disappear which is somewhat unfortunate as the product does have currently unparalleled functionality for job/project costing businesses.

Also at risk of disappearing is Saasu, 2016 could be the year where the lack of revenue to fund R&D  becomes crucial to its survival although I think its hold on the market is more tenacious.

The users in  2016

Cloud based accounting software is now mainstream. Any small business coming new to accounting software – either from a manual/spreadsheet system or a startup – would need to have a good reason to go desktop rather than cloud. The ease of use and automation tools means that start up businesses that may previously baulked at the cost of using a bookkeeper can adopt more of a DIY approach. (Professional assistance is always recommended for implementation and ongoing review.)

The drift from desktop to cloud also continues so these two factors should ensure user adoption will continue to increase substantially.

Should the ATO’s Single Touch Payroll become mandatory in 2016  we could expect to see more subscribers to cloud accounting software but although many small businesses would benefit from using a payroll system, it does not appear likely that this initiative will come to fruition in 2016.

The functionality in 2016

Functionality variances between the various products are gradually being eliminated and development of the add-on ecosystem means that new functionality releases are likely to be more limited in 2016 although there is hope that the payroll module for Reckon One will come out before 1st July.

These are the key areas where I think we will see some key deliverables during the year:

  • Dashboard – this is the screen that is displayed at login so it needs to be crisp and clear, showing both relevant and pertinent information and clearly indicating how to access functions. As part of the focus on user experience I would expect to see more tailoring or tinkering with the dashboard to ensure the first impression is positive and would expect it to become truly dynamic.
  • Mobile – 2016 will see a continuing focus on mobile apps so they cover the majority of features in the software, leaving out possibly just the pure accounting functions such as journals, chart of accounts etc.
  • Automation – this has the biggest potential for development. Business owners have long resented time spent on data entry; it is not seen as a value-add activity and can be prone to errors and/or omissions. There already has been a sizeable delivery in automation tools from Bank Feeds to automated third party Accounts Payable services and this is likely to be expanded in 2016.
  • Banking the close association between banking and accounting means that we can expect to see continued development here.
  • Paperless Workflow This is becoming more of a reality with payables invoices sent to software such as Receipt Bank, attachments held against transactions, publishing of reports online. Again this streamlining is ripe for expansion in 2016.
  • Security – following security scares in 2015, Xero released an optional Two Step authentication process. We are likely to see enhanced security options across all products in 2016 to match customer expectations.
  • User Experience – another area where there is strong emphasis. Xero was developed with this at the forefront of developers designs, QBO has invested heavily in 2015 and all other suppliers can ignore at their peril. Intuitive, easy to understand and a tool for non-accounting business owners is a must.
  • Add-on Ecosystem – this is already mature with QBO and Xero (almost to the point of oversupply for some functions such as e-commerce and CRM) but in its infancy with Sage One and Reckon One. Possibly 2016 will see some of these products being bought out and more solidly integrated with the core product. Add-ons that address niche business models especially will continue to benefit.
  • Accountant Tools – accountant recommendations have always been an important referral source when selecting accounting software but now that accountants can access client data any time, it has become even more important for software suppliers to provide tools to support accountants. Sage is relying quite heavily on its Handisoft accountant base to increase the exposure of Sage One and both Xero and QBO have concentrated on their Practice Management offerings – this is likely to further expand in 2016 to ensure accountants can work fully with the client.

As I said in my review of 2015 – it is becoming a little like the fireworks over Sydney Harbour on New Year’s Eve – each year has to glitter more than the previous. The QBO design methodology is called ‘Design for Delight’ and this is really what is all about – delighting the customer with the product depth and breadth. We have a well educated, technically savvy, demanding and discerning user base in Australia and I think that developments in 2016 will satisfy all but the most rapacious of appetites – it is going to be a great year.

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2015 – The year that was for Cloud Accounting Software

Throughout 2015 cloud accounting software suppliers continued to dazzle us with the delivery a plethora of new features and functions. We saw both new modules being delivered and the enhancement and extension of existing functionality. Some releases helped close the gap between one product and its competitors and others gave a product a competitive advantage over its rivals.

Interestingly a review of what was delivered by the different vendors identified several common features highlighting the importance of mobile apps and providing continuous improvement especially with regards to automation of non-value add and business-sensitive  activities. Features that I found across several products included:

  • Refinement of the functionality associated with bank feed data.
  • Delivery of mobile apps.
  • Options to facilitate customer payment of invoices.
  • Capturing of on-billable time and/or expenses.

In a world of continuous updates it can sometimes be difficult to focus on the bigger picture, to understand both how individual products continue to innovate and how each compares to competitors. In this review I have identified by software product (in alphabetical order), the major new features and functions released in 2015. Subsequently I will both do a comparison and give an indication of what we may expect in 2016.

MYOB Essentials 

Hot on the heels of its successful ASX listing, MYOB has seriously delivered with MYOB Essentials in 2015. The product has always been lightweight in functionality when compared with Xero and QBO so this year has seen some solid investment in missing functionality including:

  • ABA files for employee payroll payments
  • SuperStream compliance in time for the July 1st deadline
  • Customer online invoice tracking – send an online version and track when the customer opens it.
  • Updated bank feed matching enabling faster allocation and better matching including matching partial payments – this was delivered over several months.
  • Pay Direct, the mobile solution for customer invoicing

QuickBooks Online (QBO)

Intuit has positively bombarded us during the year with a plethora of updates or in the words of CEO Brad Smith ‘delivering awesome customer experience’. Much of what was delivered in 2015 has been tweaking or redesigning to improve the user experience rather than new functionality.

The Intuit business model especially in the US, is to market through accounting professionals, so Intuit always has one eye on its ‘ProAdvisors’ and one eye on the end customer. 2015 saw the release of QuickBooks Online Accountant (QBOA) which provides accountants with tools to facilitate working with multiple clients – somewhat akin to what Xero provides with My Xero.  As well as delivering QBOA, Intuit announced at QuickBooks Connect 2015 – to much applause – the Adjusted Trial balance – a feature that can only ever excite accountants!

There were way too many features delivered during the year to list them all so I have cherry picked what I consider to be the most important in terms of their impact:

  • Inventory items can now record a stock keeping unit (SKU) which is searchable in forms and can be Categorised (similar to header items).
  • Additional customisation of customer invoices by exporting a template to a Word document and then importing back into QBO.
  • Provision of the statutory Taxable Payments Annual Report (in time for FY 2015 year end) – a feature already in MYOB Essentials and Xero.
  • Including a ‘Pay Now’ link on customer invoices enabling them to make online payments using PayPal, Visa, MasterCard or American Express.
  • Ability to indicate if an expense is billable directly from bank feeds.
  •  Improvements to bank feeds including the ability  to add an attachment while in bank feeds.
  • More features available on the mobile app including multi currency, chart of accounts and products and services lists.
  • New reports.
  • Attachment folder (similar to Files in Xero).

Reckon One

In May this year Reckon One was re-released on the HTML platform. From a user perspective it was much the same as the previous version which had been built using the outdated Silverlight technology, which as well as becoming unsupported was not capable of delivering the flexibility required in today’s world necessitating a total rewrite of the product.  Now that has been bedded down – we can start to see some new features being delivered.

The major deliverable since May has been the mobile and browser-based Time & Expense module which is probably the most comprehensive of all competitor products and very useful in businesses that charge customers on hourly rates and recharge expenses.

Disappointingly Payroll has still not made it into the product – it slipped off the calendar for 1st July 2015 so the big question is – will it make 1st July 2016? Although possibly the even bigger question is will Reckon One still be around in July 2016? Reckon has been plagued by rumours of an impending takeover for several months and it really looks as though the rumours have some strong foundations with MYOB or possibly Sage being tipped as the front runners. Neither Reckon One nor Reckon Accounts are the products that these vendors are chasing so it remains to be seen if they will quietly slip away in the takeover.

Saasu

Always the odd one out in any list of cloud accounting software, it was the first product developed from scratch for the cloud and has a small niche market geared towards e-commerce businesses having a more robust Inventory module and integration with PayPal. It has had a customer base of around 20,000 in Australia for a few years without any sizeable increase. Saasu has shown no intention of embarking on a capital raising exercise to ramp up its R&D efforts and continues to meander peacefully along. A notable feature of Saasu is that unlike that of some of its competitors does make a profit – 8 years on Xero has yet to show signs that a profit is even imminent.

Whilst I admire Marc Lehmann’s quiet approach to positioning the product and his hands-on approach and whilst I am accredited with Saasu, I have never been a big fan of the product mainly because I find the user interface to be more challenging than that of similar products. However as Saasu continues to beaver away year on year – it is worthy of review although there isn’t a whole lot in the way of new features probably a reflection on the lower level of capitalisation.

The major deliverable this year was that finally Bank Rules and Fast Coding in Bank feeds came out of beta,

In December the new mobile app for Customer functions was released and hopefully we can expect other functions including bank feeds to be delivered on that platform fairly quickly now the model is in place.

Also delivered this year was the enabling of online payment of customer invoices direct from within Saasu using Braintree, eWay, Stripe and Westpac’s PayWay. The customer receives a receipt and the payment is instantly reconciled in Saasu.

And the scratching the bottom of the barrel a little – header accounts were delivered as well as improved Search functionality.

Sage One

Whilst Australia already had arguably the most competitive cloud accounting software market in the world – nonetheless Sage – which has a strong UK presence, released Sage One in Australia in April this year – possibly following Intuit’s goal to be a truly global company.  They haven’t had a whole lot of time to release new features but development is on a global basis so we have seen:

  •  Multi currency that was missing in the initial release is now available.
  • A default GST code can now be added to a Supplier and Customer although not to a General Ledger account and only if you add the supplier and customer through the full Add option, not via the Quick Add from within a transaction.
  • Sky Payroll is also now fully integrated with the product – this came out in between my review in April and the official release the following month.
  • Time Tracking has been released in Beta so I won’t comment on that here as hopefully by the time it is in general release it will have been fleshed out a little more but it is a promising start on functionality that so far is only fully available in Reckon One.
  • Customer invoices contain a link enabling customers to view and make payments on line using the Pay Now button that links to eWay and also view their account history.

Xero

Xero claimed that it was innovating faster than any other player in the industry and whilst that is a subjective claim, they did finally release their Inventory module in April – a major milestone.

There was a multitude of additional features released during the year and again I have picked out what I consider to be the main ones.

  • Another long awaited feature – Quotes was delivered at the beginning of the year eliminating the work around of a Draft Invoice
  • Invoice Reminders – this feature lets you automatically send clients a fully customizable email reminder about an unpaid invoice either before or after it is due and this can be set for repeated emailing whilst the invoice remains unpaid
  • Find & Recode – a feature available only to advisers allows you to update up to 2000 line items in one go – this functionality has long been in QBO except it can’t always be used in Australia as unlike Xero it doesn’t allow for change of tax code
  • Shortly before the end of the year, Xero released the powerful Xero Search functionality which searches both contacts and transactions from anywhere in Xero. Search also enables the addition of a new contact, invoice, bill, quote, or purchase order using shortcuts from inside the search bar.
  •  Business Performance dashboard was enhanced but it is still fairly limited – Reckon One has long excelled here
  • Following security scares earlier in the year, Xero released an optional Two Step authentication process
  •  Billable Expenses is now available from bank feed transactions as well as from Supplier Bills

All in all, quite an amazing line up of new features across the board during the year – something that could never have happened in the desktop world and for sure will continue in 2016. It is becoming a little like the fireworks over Sydney Harbour on New Year’s Eve – the wow factor has to be even greater than that of previous years. So hopefully once the Christmas break is over – we will see some more excitement.