2010 Small Business Accounting Review of SaaS Products

From the June 2010 Issue

For those who still don’t quite understand the whole “cloud computing” movement, don’t worry. You don’t really need to know what it is to be a part of it. In fact, you already are a part of it.

Much of the things we do for our professional and personal lives are now done through web-based programs, and with the continued movement of small and mid-sized business accounting systems to online platforms, businesses and their accountants will continue to move increasingly toward the cloud model. As more and more of our business data is hosted through online programs, more and more of it is available to other programs you use for professional or personal purposes. This interconnectivity between web-based programs is part of the definition of this cloud. Imagine a world where your client’s accounting data would be seamlessly integrated with your write-up package, where reconciliations would be virtually instant, where financial data could be streamed directly into your planning or preparation systems. Zero data-entry accounting. That is what the cloud will soon mean for professional practices.

The core of the client-accountant-cloud relationship will be the client’s web-based accounting system. Through the Software-as-a-Service (SaaS) model, small businesses essentially rent their software under agreements that usually have per month and per user fees. This method makes it easier for small businesses to give users access to only the features and modules they need and, therefore, to only pay for those features the business needs. But SaaS, especially when it comes to small business accounting, has many more benefits than just the delivery platform. That is why, for this year’s review of small business accounting systems, we’ve separated the programs into two groups: web-based SaaS systems, and traditionally installed on-premise programs. The review of on-premise small business accounting products appeared in our April/May issue and is available at http://www.cpapracticeadvisor.com/article/10263164.

For starters, SaaS-based programs are, inherently, accessed via the web, even though they may have some small parts of the system installed on the user’s computer. This web-based nature means, of course, that the programs are pretty much accessible from anywhere. This also means that they easily support staff working in different locations, whether nearby or around the world. Other advantages of web-based accounting packages come through integration with other online systems, such as e-commerce functions and collaboration tools.

While I believe that, eventually, almost all of the programs we use will be web-based, at this point, a business needs to decide on whether these mobility, collaboration, remote office and integration features are essential or potentially advantageous for them. If so, now’s the time to go web-based.

There are other potential significant advantages to having clients who are using web-based accounting systems. First off, the accountant can log in instantly to help the client troubleshoot a bookkeeping or transactional error, instead of waiting until the end of the month. Second, there’s no need for an “end of the month” for write-up since the professional can access live client data in real time to reconcile accounts, make correcting entries, run financials or perform any other work.

The web-based SaaS accounting packages on the market vary widely in functionality and pricing, with some geared more toward the mid-sized enterprise level. For the purposes of our small business accounting reviews, we define small business accounting products as those that cost $5,500 or less for one to five users of the core package. The key is in finding the solutions that offer the feature sets that most benefit a particular small business. Then, the business will want to demo one or two of the programs. And since they are all web-based, each has online demos or trial versions.

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NetSuite Inc. - NetSuite
NetSuite was one of the original developers of SaaS for the small and mid-sized enterprise, but we do not include them along with the other systems in this review because they are priced just outside of the margins we set for products for the small business market.