The very fact that you’re reading this marks a milestone. Would you have been interested in a “cloud-based” accounting application only a few years ago? Probably not. You were probably, like myself and most small business owners, still trying to get your arms around the cloud and doubting that you would ever entrust your most critical financial data to some outside company. But things have changed. Online, or cloud financial applications, are slowly but surely becoming the norm. Many small business owners are taking notice, particularly because of their benefits.
And the benefits are many: access from anywhere, integration with other popular third party cloud applications and banking software, better backup, quicker bug fixes, immediate access to upgrades. And, let’s face it: better security. No cloud provider, not even the Department of Defense, can provide 100% security against hackers. But with so many threats today many business owners are reluctantly agreeing that their financial data is probably better secured by a cloud provider whose business model is reliant on security than on their own server that’s looked after maybe once a month by their local IT guy.
And now we hit the next milestone: the first comprehensive book on the market that reviews the leading small business cloud accounting applications. It was released just last week in the form of an ebook, is called Online Accounting Software: Finding the Right Match and can be downloaded for $79.95 here. The book is produced by the Sleeter Group, an independent consulting firm that boasts 700 accounting experts who provide software and process consulting services to more than 300,000 small businesses. The company also produces reference books, webinars, seminars, and a very popular annual Accounting Solutions Conference and Tradeshow, among other services.
The ebook reviews these cloud accounting applications for micro and small businesses: QuickBooks Online, Xero, Cheqbook, Kashoo, Wave, Zoho Books, and FreshBooks. Here’s what I learned from reading it:
1. Online applications are not for everyone. Although the benefits are many, the book stresses that there are tradeoffs, including their dependence on a good internet connection and a culture that accepts less control over your data. As I’ll further describe below these applications mostly lack certain advanced features, have potential data and user limitations and contain less functionality for certain vertical industries.
2. The applications reviewed are still immature. Most do a good job handling the accounting basics, from invoicing to payables management to general ledger postings. But companies looking for more complex processing such as advanced inventory management, purchase order control, human resources, CRM and detailed fixed asset management are not good candidates for these products. End users looking for the ability to significantly customize the applications or implement advanced workflow processes will likely also find themselves disappointed.
3. The applications are mostly horizontal. Right now, they’re designed to handle the bookkeeping needs of most small businesses, regardless of their industry. But most small businesses I know have more industry specific requirements and will not have their needs addressed with these services. I’m keeping my eye on some of the up and coming online products not reviewed, like Plex for manufacturers and ServiceMax for people in the service industry, as well as bigger players like Intacct and NetSuite. The author’s approach for this book was to focus only on applications for micro-business, small business and invoicing. I’m not so sure they had much of a choice otherwise. There are few players on the market yet who do much else.
4. Online applications are positioned for an online world. They are all geared towards the mobile user, with access from iPhones, iPads and Android devices. They like to integrate with banks and online payment services. They are fighting with each other to partner with other online leaders like PayPal, Square, Bill.com and DropBox.
5. There are data and user limitations. As previously mentioned, the applications reviewed in this ebook are all geared towards micro and small businesses. To this end, the reviewers warn that even though some of the service providers say they can handle as many as a thousand transactions a month or even unlimited users you should still do your due diligence.
The book does a good job at breaking down and comparing the most popular deliverables offered by these applications and covers 18 categories of functionality including reporting, sales tax, inventory, job costing, payroll and fixed asset tracking in addition to the basic accounting and banking features. My only suggestion is to consider offering the book as a paid for monthly or annual service that’s continuously updated, just like the products it reviews. That way I can be assured of the most current information while I go through my research.
The Sleeter Group also steps up and names which online accounting products are the best for both the micro and small business categories. And who are the winners? Oh, wouldn’t you like to know.