How Online Accounting Can Change Your Life. Really!

By Candace Nancke, Managing Partner

Welcome! For our very first blog post, we decided to get right into the topic of cloud accounting software (also called online accounting). We’ve spent a great deal of time trying out the various options and we want to share our findings with you.

cloudIf you’re still working with spreadsheets, cramming receipts into a shoebox or even if you’re using old CD versions of traditional desktop accounting software, there’s good news on making your life easier and saving a good deal of time and money. And our team can help you get started, if you choose.

Quick Outlook on Cloud

Cloud software goes by a few names. Sometimes called SaaS (software-as-a-service) and more commonly called “online software”, essentially it means accessing software programs through an internet connection instead of purchasing and installing a CD onto your desktop computer.

The major benefits to cloud software are lower costs, more mobility, automatic real-time updates and maintenance, and the ability to collaborate online.

When you sign up for an online software solution, you rent the service, usually month-to-month, with little or no obligation. This is far less expensive than buying expensive desktop software up front and maintaining it yourself. You can also access the software and your information anywhere you have an internet connection – including your smartphone or tablet. With online solutions, your software is continually updated without you having to do anything. In today’s rapidly changing technology environment, that’s important.

The most important distinguishing feature between cloud and desktop is that not only the software but also your information (as you use the program) is stored on the company’s servers instead of your own hard drive. This sometimes raises concerns with users about security, privacy and reliability. Let’s talk about that for a minute.

Common Concerns

Security, privacy and reliability are the most common concerns about cloud software, particularly when it comes to financial matters. Storing financial information elsewhere sometimes seems a bit scary. What about cyber threats? What if the company’s servers are down? Am I going to be able to get my information when I need it?

The reality is that reputable online accounting companies often have better security than your desktop, with security encryptions equal to the levels used by banks. The good ones also have up-times of 99.9%, better than many home or office internet connections. Their business depends on maintaining tight levels of security, enforcing privacy rules and providing reliable access – and using their considerable resources to monitor and manage those critical issues.

What We Tried

Over the last twelve months we’ve been trying out a variety of online accounting programs. We wanted to find some options that were less expensive and easier to use than Simply Accounting (now Sage 50) and QuickBooks.

We narrowed it down to these four programs, and gave each of them a trial run:

How It Worked Out

Kashoo was the first one we tried. It was well designed and easy to use but it had some fundamental issues. For example, when we did a reconciliation and went back to it later, it wasn’t the same. Another time we wanted an AR report for year end, but weren’t able to access it except on that exact date – not very practical. Overall, we thought it might be a good option for sole proprietors but not suitable for many of our corporate clients.

Then we tried FreshBooks. This is a popular online accounting system that’s open source (meaning free, which sounded good). We found it worked well for invoicing and expense tracking, but it wasn’t very accountant-friendly, so to speak. Since one of the main benefits of online accounting is being able to share information and collaborate seamlessly with your accountant, any limitations there can really impact the benefit.

Next on our list was Wave. Again, a free service that’s easy to understand and use. They had some new smartphone and tablet apps for accepting online payments and taking photos of receipts, but we found the service too basic to keep up with our clients’ needs as their business grows. As a side issue, some of our staff found the advertising – there to keep the service free – quite distracting.

Xero was hands-down our favourite. We love this software for the value it offers in terms of flexible options, ease of use and smart design. It ties into bank accounts, looks after purchase orders, inventory, cash receipts and links up to PayPal. It has some great add-ons like WorkflowMax for quotes, timesheets and invoices, and Shoeboxed or Receipt Bank for receipts and expenses.

There was only one drawback to Xero, It’s so easy to use that some people here thought it couldn’t handle the tough stuff. Wrong. We did our best to put it through its paces. It’s just designed really well.

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With any online accounting system, the mobility factor is a huge benefit. One of our first clients to go onto Xero wanted a way to bill right from the job site instead of going back to the office at the end of the day to prepare and send out invoices.

Now he does his invoices right from his smartphone before he even leaves the job site, which also speeds up his collection process.

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How it Can Work for You

Using online accounting software to automate your day-to-day tasks makes a lot of sense. It means being faster, more efficient, making less mistakes and being able to share information online with your accountant from wherever you are. The end result? You save time on financial chores and you save money on your accounting fees because it takes us less time. That’s a win!

The biggest issue for most clients is doing the initial setup. Although most online accounting providers make it as easy as possible and often provide support, it’s still a transition where some of our clients want one-on-one help. For people who want to get set up on Xero, we’re now offering setup and training with two of our staff members who have become Xero Certified Experts.

What’s the cost for assisted setup? It depends on the amount of data you have to transfer over, but setup and transfer can usually be done in a matter of hours or days with costs ranging from about $250 to $1,000*. Every client we’ve helped with this has felt it was a great investment that’s started to pay off almost immediately.

(*Note: Every situation is unique. Call us for more info or to talk about how we can help you get set up.)

Candace Nancke is the managing partner at Loren Nancke & Company. She has served as Chair of the Board of Governors for CGA-BC and has been designated as a Fellow of the Certified General Accountants of Canada (FCGA), one of the highest honours awarded to certified general accountants in Canada.