Is Online Accounting Software Still Lagging Behind?

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Charlie Russell
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We often see people compare what they now have in desktop accounting software with what is available in online accounting software, and in many cases they find that the online software is lacking. The problem is that we are looking at the situation in a “traditional” view. We count features, and – by themselves – online products tend to have fewer features.

For example, did you know that neither Xero nor QuickBooks Online support finance charges on statements (at the time I’m writing this)? That is a problem for some businesses. If your business depends on those features, then that certainly can be an issue.

In the online environment the lack of features is often made up by add-on products. Don’t see what you want? Get an add-on. Integration between products tends to be easier in online products these days.

However, from the traditional view, that isn’t what people want to see. They want a vertically integrated product that has a lot of bells and whistles, rather than a basic product where you have to pay more to get an add-on product to obtain features you want.

But counting features isn’t the right approach when you are evaluating online accounting products. Rather than using the traditional approaches you may find that with an online product there is a different solution that may be more efficient.

Your software doesn’t support finance charges? You need those because people aren’t paying you on time. Rather than complain about not having this feature, you should look at features (and add-on services, perhaps) that will improve client payment processing, making it easier for clients to pay you on time.

There are new features available to us with online accounting products, we just need to learn how to use them:

  • A single global platform: You don’t want to have a different core product for each of the global communities you serve, you want to have one core product that fits all markets. You can “localize” the product for each market by adding features, translating how some features are presented, but there should be one core database product for all markets. 
  • Utilizing a major PAAS provider: PAAS (Platform as a Service) is a cloud computing service that allows customers to develop, run, and manage applications “in the cloud,” without having to develop their own infrastructure. In an article in the August 28 edition of Technology This Week (a paid subscription newsletter that I highly recommend), Rick Richardson talks about how there is a “growing sense that things may be more secure in the public cloud,” referring to services such as AWS. Moving to AWS provides you with a global platform that is easily scalable, provides superior uptime, reduces cost, and is highly secure.

Waiting for the Big Leap

Regarding the online accounting marketplace in general, what I’m looking for is “the big leap” in online accounting software, something that will be a quantum leap beyond what we can see in the desktop. Yes, there are advantages with online accounting software when compared to the desktop. For example, product integration tends to be easier in the cloud than the desktop, and bank integration usually works better. But those are incremental improvements, not big leaps.

We’ve been told that moving to online accounting is going to revolutionize our lives and I’m still waiting for that “big leap,” as I mentioned. My pessimistic view (as a longtime desktop user) is that after several years of promises, at this point we still have essentially the same kind of software processes online that we’ve been working with on the desktop for years.

The original post appeared on the Accountex Report. Charlie Russell will be speaking at Accountex USA 2016 in November. AccountingWEB and Accountex have partnered to bring you this content as we share a belief in the furtherment of the profession through greater insights.​

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Oct 7th 2016 18:58

When in search of features, one of the concepts lost with the move to an "add-on" environment is a certain ownership. There is the potential for more flexibility but when one company owns all of the features there's more accountability for the software as a whole.

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to Christopher Wagner
Oct 7th 2016 19:31

I agree, when something goes wrong you now have multiple companies that you have to deal with when you depend heavily on add-ons. However, you now have the flexibility to choose from several providers for the same function (at least in some cases), which gives you more control. And often (but not always) you find that an add-on product provides better service than the original company's product.

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Oct 16th 2016 01:54

Hi Charlie- You are a terrific writer and I've read lots of your articles over the years, this is another great one. Regarding "the big leap," I get what you're saying but the thoughts that immediately jumped to my mind were: bank feeds, multi-user system (with no server or network required), and anywhere access. Personally I think we hit the tipping point a couple years ago and the big leaps are already there. Thanks for the great article!

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to WillKeller
Oct 17th 2016 17:06

Thank you, Will. I still contend that these aren't "big leaps" that I'm looking for, just incremental improvements. We have bank feeds in desktop software - some online products improve the process but it isn't a big leap. We have multiple location multi user systems in several ways - hosted QuickBooks, remote access and more, so again I don't see the difference with online products being that big of a leap. Incremental improvements

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