An Overview of Software Accounting Packages
By Arnice Asquin, B.B.A., C.A., Edmondson Roper Chartered Accountants
Each business is slightly different from the next, even if they are in the same industry and in direct competition. What allows one business to be more effective or efficient than the next is often the information on which management decisions are based. Usually, the better the information - the better the business decision.
Historically, small businesses would collect all of their transaction information and record this periodically in a synoptic or have their accountant summarize the transactions at tax time. This scenario does not allow the business owner to react quickly to shifts in costs or markets. With today's proliferation of personal computers and easy-to-use, off-the-shelf software, more businesses are recording their transactions as they happen (or shortly thereafter). What this provides the business owner is more current results on which to base decisions. As with any method, accuracy produces the best results. The set-up of the software is often critical to the quality of the information produced. If you are not certain of the set-up and the method of recording the transactions, please consider training from a certified installer/trainer.
Another important consideration when selecting a software package is whether or not your accountant is equipped to deal with that software, version, and operating system. The majority of the business world has chosen the IBM compatible with a Windows based operating system, so if you choose to use M.Y.O.B. for MacIntosh, your accountant may not be able to use your data in electronic form and you will need to print all of the reports that the accountant requires. The easiest way to know what your accountant is able to use is to ask - most will have a preference. Your accountant's preference will not determine which software best meets your needs, however it can have an impact on your year end bill.
In selecting a specific software package, it is useful to identify what information is critical to your business success. The other items to identify are: what information, if readily available,would be useful in making decisions, what you are willing to spend your valuable time tracking and what information you foresee as useful in the future. For example, a small greenhouse operation that sells its seed stock to nurseries and landscapers may not wish to track each inventory item (seedling).
For most small businesses, an entry-level package will handle all of their accounting needs. The main characteristics of these packages are they are easy-to-use, inexpensive (generally less than $500) to buy and maintain, and have many built-in reports for accounting and management. For those businesses that have more stringent needs, you will need to consider a mid-range or high-end acccounting package.
The three most popular entry level accounting packages are ACCPAC Simply Accounting for Windows, Intuit's QuickBooks and Best!Ware's M.Y.O.B. These packages are frequently updated so if a feature that you like is in another package, your package will likely have it in the next release.
A recent Canadian survey of accounting software by PMA Publishing indicates that the small business accounting package market represents more than 900,000 small and home based businesses. Roughly 60 per cent of these businesses have fewer than five employees, while the remaining 40 per cent have less than 100 employees.
The feature set of each of these packages is very similar, so in the sections that follow, I will focus on the key strengths and differences.
This software has historically been the market share leader. However, over the past few years, other packages have picked up some of the market share with aggressive marketing. With announced feature additions such as multi-user and multi-currency functionality, Simply will likely hold onto the lead position.
Simply Accounting's set-up wizard is a useful tool for those who are just starting out, as is the new business guide that provides a checklist of what steps are required when starting a new business. The CD version of the software has a number of computer-based training videos, which can give a new user a head start.
For those businesses that require cash-based accounting, there is a set-up option to activate this accounting basis.
Simply Accounting comes with a wide variety of accounting and management information reports, many of which are customizable using Crystal Reports. The accounting reports allow for "drill down" into the detailed transactions. You can print the reports after the fact and still have them agree to the control accounts. There are a number of built-in graphs that show the results in a picture format.
The ability to link to Microsoft Word, Excel, Outlook, Internet Explorer and Access is very useful for doing more detailed analysis and reporting, e-mailing various reports, or obtaining banking information. The Pay Cheque Run function allows for printing a batch of pay cheques quickly and easily. The job costing functionality is only a job tracking system; there isn't a provision for project cost estimates within the software. You can use the links to Excel to replicate this.
The audit trail is strong (it cannot be turned off). Entries cannot be deleted, but they can be adjusted which causes the software to reverse the original entry and enter the revised entry. These entries must balance.
Quickbooks has two versions: Quickbooks and Quickbooks Pro. The Quickbooks Pro version has a number of features in addition to those in the regular version.
For those businesses that require cash-based accounting, there is a preference to display some or all of the reports in cash basis.
The latest version has a utility to allow the user to create a personal Web site and address with access for four months. Other internet benefits include accessing product patches and upgrades, and links to banking information for download.
The Pro version has links to Microsoft Word and Excel for additional reporting. Currently, there is not a link to Microsoft Access.
Both flavours of Quickbooks are multi-user capable, can batch payroll entries to print the cheques in a batch, allow for easy deletion and changing of previously posted entries, and allow the audit trail to be turned off or on. Both become unstable after the data files exceed 10MB. Since the software currently maintains history indefinitely, accumulating more than 10MB of data is not difficult.
The Pro version has a strong project tracking system that has a time tracking module. It also allows for project estimating and progress billings.
There is current talk in the industry about a US legal action against Intuit related to the payroll module. It is uncertain what effect this will have on the Canadian version.
The current version of M.Y.O.B. is multi-user and multi-currency capable. The reports can be confusing with the mixed currencies.
Another benefit of M.Y.O.B. is the time and billing module that is built-in. Links to Microsoft Word and Excel are available after some set-up procedures. There isn't a link to Access in the current version, although the software does allow e-mailing of invoices.
M.Y.O.B. payroll entries print the cheques individually. M.Y.O.B. allows for easy deletion and changing of previously posted entries, allows the audit trail to be turned off or on, allows posting of one sided journal entries and is slow over a network. Complaints have also arisen concerning quirky errors cropping up, such as a trial balance, that will not balance with zero balance accounts suppressed.
M.Y.O.B. comes with many built-in reports. However, they are not easily customized, nor are they always easy to read. The aged accounts receivable and accounts payable reports are useful only at month end prior to entering further transactions. Once you move on with subsequent entries, the historical report will no longer agree to the control account. "Drill down" is available from some reports but not from the Balance Sheet.
Regardless of which software package you purchase, having timely information will be a benefit to your business and your decision making process. Remember that garbage in means garbage out, so learn how to use the software correctly.
All three of these software packages can be used in a low volume, point-of-sale situation where your customer can wait for a couple of minutes for the invoice. For those businesses that have a high volume of transactions with speed a critical issue at the register, we would not recommend these products unless you added on a point-of-sale third party product. There are also DOS based low-end products and mid-range DOS and Windows products that may be better suited to your POS environment.
The mid-range products include ACCPAC Plus, ACCPAC for Windows Discovery Series, ACCPAC for Windows Small Business Series, Business Vision Delta, Business Vision 32, Business Vision 2000, Great Plains, Integrated Office Accounting, Vigilant Point of Sale and others. These products generally have more functionality, tighter audit controls, improved reporting and report customization. The number of third party add-on products also increases with this level of software.
These packages are significantly more money than the entry-level packages, so often a business will have a specific need that will cause them to select these products. Often the cost is based on the modules required, however, some of the packages are completely integrated. On average you would be looking at $3,000 to $10,000 for the software.
The high-end products include ACCPAC for Windows Corporate Series for Pervasive SQL or Microsoft SQL databases, Great Plains Dynamics, Navision Financials and others. Again, you will see improved functionality, expandability, tighter audit trails, improved reporting and customization, and many third party add-ons.
These packages are very expensive and complex so you will not see the average small business using them. Again, you will generally see these packages being modular with the costs based on each module. Your hardware requirements will generally be more stringent and therefore, more costly. The software, on average, would range from $10,000 - $100,000 depending on the number of modules, users and database engine.
Arnice Asquin B.B.A., C.A. is the manager of Computer Services at Edmondson Roper, Chartered Accountants. She is a certified installer and trainer for a number of different software companies and has extensive experience with stand-alone and network environments.
Edmondson Roper is a regional C.A. firm with three offices located in the Fraser Valley of British Columbia.