Cloud Accounting for SMB

As a true believer in Cloud Computing for small businesses, I have been progressively moving the applications I run my small business on away from on premise or on PC to applications to those that run in the Cloud.

I now use Evernote as by basic work horse note taking and project book software (at £27 per year), Microsoft Office 365 at £189 per year, Dropbox with extra storage at $99 per year, Skype for Business, Salesforce.com for my CRM package at £120 per year and a few free applications on my iPad 2. From time to time I also use Google Apps and GoDocs.

By and large I can run all the above applications on my new Apple Macbook Pro, iPad 2 and iPhone 4, and I store all my data in the Cloud as a permanent back up. The last bastion of the on premise and on PC world was my accounts package called TASBooks 2 from Sage. I must admit, I have always found that losing control of my accounting was the last great fear factor for me, particularly as I am not an Accountant and have had learn the package by the seat of my pants.

Last week, after trying various online solutions like NetSuite and InniAccounts, I discovered Xero Accounts (www.xero.com) through a contact at the company I consult for. Xero is a New Zealand company with over 45,000 paying customers, is quoted on the New Zealand stock exchange and is available only in the UK outside the Antipodes. Their annual revenues were over $9m (NZ) last year to July and they are tracking at $15m for this year. They are strong in the UK and they have set up a subsidiary to tackle the US market.

What I like about them is that they offer a really simple to set up 30 day free trial and the process is easy. But more interestingly, it's an Accounts package that is driven by the bank accounts. If you're anything like me, I relate everything back to my actual cash book - the one run from my HSBC bank accounts. I run a master spreadsheet which records every single cash transaction on every account and I run it in tandem with my TASBooks. This means that if ever I lose track in the software or enter anything wrongly, I can always unravel what I have done by checking every cash transaction on the spreadsheet. Yes, I know that's really silly but it works for me.

Xero means I no longer have to do this. The software actually takes automatic feeds from my bank accounts and first time it allows you to check by hand and allocate each transaction against an expense code. In doing so, Xero records which supplier account is coded as what and remembers this for the future. So in subsequent downloads from the bank, it automatically allocates against codes for you. I like that.

The accounts codes are limited and that will help me as currently I have several accounts codes but when I do my monthly management accounts, I group them logically as travel, entertaining etc so I have just a few reporting lines I compare regularly.

For a small business like mine, this is a godsend. The software also produces automatic invoices and sends them as pdfs (TASBooks doesn't do this). Also, it does expense claims as you go - currently, I do a spreadsheet per month and then reconcile them and scan the receipts. Xero allows you to do expenses as you go and attach the recipes as pdf files which also good for personal accounting.

It has really easy reporting and this is automatic and up to the current month - in TASBooks, I have to run these by hand and then copy them into spreadsheets to do anything with them. It also does an Executive Summary Management Report with all the consolidations on one easy to read sheet. naturally, all data is automatically backed up onto the Cloud and can be accessed by internet device.

At the moment, I pay £375 per year for my TASBooks 2 support, £1,600 for my annual accounts and £600 per year for payroll, VAT and some ancillary bookkeeping as well as some accounts insurances. Xero actually costs from £12 per month but mine would cost £19 month or £24 per month if I want multi-currency. You can pay by credit carted monthly and you can cancel the contract any time.

For a single charge of £120 per month, I can get the software with unlimited support plus all my accounts, VAT and payroll done with personal tax return too. Xero has quite a list of geographically spread advisers who are accountants who use Xero. I have started to work with Duncan Strike at Brightstar Accounting and he has been really helpful in managing a smooth handover form my old accountants. The old company are good people and have been of great help but realistically for a small company, I was paying too much.

I will start with Xero as of 1 October. We will just go for starting with end of year positions and catching up with my two months worth of transactions. For a person not actually turned on by accounts, I am quite excited.

As a person very turned on by Cloud applications, I think this is an absolute killer application for small businesses. I will keep everyone updated as I go.