Accountancy software

Winning new business, increasing your profit, meeting customers. These are the things that give you a buzz and help to build your business.

But there’s no avoiding the fact that the software that manages your accounts is the backbone of the operation. When it comes to changing or improving your current system it’s not easy to pick the right package.

For a start there are more suppliers than ever to choose from as the likes of SAP, normally associated with bigger businesses, have decided to tap the entrepreneurial market. Then there is the evergrowing range of products available from boxed off-the-shelf packages to more tailored bespoke IT solutions which affect all parts of your business. Adding to the problem is that for most businesses, accountancy packages are a one-off purchase unlikely to be repeated so no CEO or FD could ever need to, or expect to become an expert.

THE NEED FOR CHANGE

The most important question for your business is whether you need to change your accountancy software.

In some cases the need for change will be obvious: it could be that you may be keeping your information on different databases; that a client demands you start delivering information in a different way; or that your system is simply too old and clapped out to meet your needs. In other cases the need for change will be less obvious. The tendency to milk software beyond its useful life is a common trait among smaller businesses. In this case your business may be missing out on functionality which could help your staff save time and work more efficiently. If, for instance, you spend a lot of time importing and reformating data in Excel then it is probably time for your business to look at upgrading or changing.

Rick Holroyd has been through the process of change recently with his contract catering business, Holroyd Howe. Having expanded his business using Sage Line 100 software for six years he decided the company needed something more sophisticated to meet a variety of needs which had emerged as the company got larger. “Being in the catering business we have a disproportionately large purchase ledger. It has to handle 9,000 invoices a month from suppliers for items like groceries that are ordered daily,” says Holroyd. “We also want something that can extract financial data in one way and present it in a greater variety of formats to suit clients’ differing requirements.”

And so the company swapped from its Sage package to a Microsoft solution. Holroyd saw the switch not just as a pure software purchase, but as an investment in the business, and advises other companies to do the same.

“Don’t go for something that will just do. It’s wise to invest in the infrastructure of the business. But always ask ‘what is the benefit for the organisation?’“ he says. Your accountancy software is there to make your business function more easily and allow you to see the figures which help you make the right decisions. If it isn’t, you end up wasting time and money on something which doesn’t work for your business, as Cathy Humphreys, finance director of recruitment company MaydayExec, found in the past. After a hiccup with one system, she switched to an Access Accounts package after it was suggested by an employee who had used the software before.

“Interestingly enough when our auditors saw it in action they decided to buy it too,” says Humphreys. “People should be really sure before they commit themselves to a package otherwise you waste money and time transferring data to a system that may not be right.”

WHERE TO START

The biggest mistake is to begin researching software before you take a good long look at your business. Veda Snyman, who is the product marketing manager, at Microsoft Business Solutions says before you think about researching out in the market you should look closely at your own business to decide what you need to do and what you want to do, to progress further.

“You should ask yourself what are the pain points, what information you need and what information you are lacking in your business,” says Snyman. “The pain points could be manual processes which could be automated or processes such as order taking which could be simplified.”

The trick here is to involve your staff at an early stage and ask them what they need and what problems they are currently facing rather than trying to impose a solution on them.

Whether you are a large or small business you should be looking for input from heads of department such as your finance director, sales director and purchasing manager. That way you will be able to answer honestly what your needs are and get a full view not just of the accounting process but other functions which may have a need for data. This will help you decide the scope of the project. That is: whether you simply want a system to supply useful financial information or whether you want something more sophisticated that can integrate with areas including invoicing, order processing and payroll; whether you can upgrade or whether you need a completely new system.

If you feel this process is daunting, it is possible to get help through an IT appraisal. Many accountancy firms now have specialists who will do this for you. If not you can go to an independent IT consultant or a reseller. Either way you get a valuable external view of your business and its processes from someone who is well-placed to identify the issues affecting your business and recommend areas of best practice which you may not be following.

Nick Hood, senior partner at insolvency specialists, Begbies Traynor, is one of many who advises businesses to err on the side of caution when you are drawing up your wish list. In his view, these days most accounts packages will extract information and give you the key figures you need. The thing to think about is, what level of sophistication do you think that your business demands.

“You can overdo it. Having too much financial information is worse than not having enough,” he says. Bear in mind the size and complexity of the reports you want from your software. Fifty pages of data may look impressive, but four or five pages may be sufficient for a regular overview of performance.

CHOOSING A PACKAGE

Once you know for certain what your business needs, it is time to look at the choice of products that are out there.

You will invariably have to buy your software through a reseller, but before you go to scope out prices and packages there is plenty of preparation that you should do to get an idea of what will suit your business.

First you should find out which is currently the most commonly used software in your industry and what, if any, packages are tailored for your type of business. Although most vendors will say their packages are suited to all businesses, many have strengths in supplying and servicing different sectors so it is worth identifying who the people are for your sector.

Microsofts’s Veda Snyman says there is also nothing to stop you calling up the vendor and asking for customer references and case studies from businesses like yours. There are also useful sites online such as specialist website www.accountingweb.co.uk and the site from the Institute of Chartered Accountants of England and Wales (ICAEW) lists accredited packages which have been evaluated using a series of common criteria.

Only then are you ready to go to a vendor. For most growing businesses this will mean going to a reseller or value added reseller who will sell, supply and install the package you decide to buy.

At this stage you should have an idea of a short list. For any software you are considering you should talk to users and, if the software’s still on your shortlist, get a demo. Make sure the demonstration includes the most common processes your business needs so you can see it in action. If your supplier has arranged for you to visit a site that uses the software don’t just listen to the sales spin, chat to the people at the keyboards. Ask how easy the system is to use and how often it crashes.

Find out what functions a product can offer that will simplify or improve your current processes.

And don’t limit yourself to this style of thinking. Avoid simply asking the salesperson what the software does. Think about what functions you’d like your system to offer and then find out whether there’s software to match.

MAKING THE DECISION

Although when it comes to making a decision it is important to buy a package that can do what your business wants. There are also important questions you need to bear in mind when it comes to your final choice of vendor.

For a growing business, perhaps the most vital question is whether your vendor provides a migration path and upgrades, which will match the needs of your business as it gets bigger. There are also other factors. For instance, how committed are they to the market and how long have they been servicing your market? How established is the product in the market and how long will they support the product for?

With regard to your business, the most important deciding factor is what you think your business will need the software to do, over the coming years.

If you’re planning to do any sort of ebusiness you must factor in your web trading activity when choosing an accountancy package. This could include reconciling online orders with your sales ledger or handling currency exchanges when trading with international customers. Or, if you want to invoice via the web, consider whether you would benefit from transaction email, known as ‘Tmail’ which is now offered by suppliers such as Sage.

Whether you are going online or not, take a close look at five main issues: software licenses, customisation, hardware, consultancy and training of staff. All of these are as much about logistics as they are about price. They force a business to get down to the nitty-gritty of what product will be the best fit. For example, who do you want to have access to the software? Is it just a tool for the accounts department or do you want some of your managers to have access too?

Again when it comes to making your final choice, the most common advice from suppliers and end-users alike is to take caution. Steve Fraser, a director of Monahans Chartered Accountants says: “Don’t run before you can walk. It is much better to have less and then build on that. Keep an eye on what updates are available.”

So take care to pick a package that you can upgrade over time rather than one offering all manner of bells and whistles that you may never need.

WORKING OUT THE COST

“How long is a piece of string?” was one supplier’s answer to this question. Not a helpful reply, but an understandable one.

The difficulty is that costs will vary depending on your business needs, the functionality you want and the level of support you require.

Whatever the reason for changing software don’t just go for the cheapest option, advises Rick Holroyd of Holroyd Howe. He suggests looking for something that will grow with the business over a period of years without, of course, busting the budget.

Smaller businesses with a turnover of up to £1m can buy an off-the-shelf package which they can install themselves with minimum help for a couple of hundred pounds or less. However, most growing businesses needs are much more complex. A service business that wants to monitor and charge out its employees’ time, for example, will require something with a greater degree of sophistication; a manufacturing or distribution company, on the other hand, might require a programme that not only supplies financial information and integrates this with stock control, but can also handle online orders from customers.

In short, the more complex your needs, the more expensive the package. When it comes to budgeting for the package you need to look at more than the box price. The fees you need to consider are data migration fees for transferring your current information across to the new system, maintenance fees, which will normally be 2% of the software licence and support fees, which are usually between 18-20% or the licence and upgrade fees which will depend on what you buy.

Added to that is the cost of training and the costs of calling helplines to help with day-to-day glitches or difficulties. In the case of contract caterer Holroyd Howe, a company with 550 full and part-time employees and a turnover of £12.5m, its new system cost £48,000.

Further up the price scale computer memory product distributor Simms International, which turns over £8m and has 15 employees, has invested £150,000 on installation of a Microsoft Navision accounting system. It expects to spend the same amount again on further development (see Doing Business Online).

As a guide, a smaller company requiring straightforward accounting and financial information might spend between £250 and £500 on an off-theshelf package for a handful of users, plus around £200 or £300 annually for support. Clearly the costs can mount up so it’s well worth devoting some management time during both the purchase and implementation to ensure you get the right system within budget.

PLANNING THE IMPLEMENTATION

Installation and implementation may add to costs but if you want to make the most out of your software then you simply have to pay to get it right.

Helen Maggs learnt this through bitter experience when she started a basic computerised system using an MYOB package four years ago. Maggs is a director of West Berkshire Brewery, a business with a £500,000 turnover and five full-time employees.

“I installed the CD and blithely started. But I had no accountancy or book-keeping experience. I should have spoken to an accountant to ensure I set up the various categories correctly and put figures in the right places. It would have saved problems later on,” she says.

If getting it right can be tricky for those using a relatively simple package, anyone who is thinking about something a bit larger should call in a vendor or consultant to help them through the process. Consultants should sort out all the technical issues, give advice and iron out any bugs.

Whatever you do on no account delegate the entire responsibility for setting up the system to your IT consultant. key member of staff – you or a colleague – must act as project manager. You might not have the technical knowledge but you are best placed to ensure you get what the business actually needs rather than what the IT technician thinks you need. Given your investment it is vital that you get the system working for you, and you shouldn’t wait until the installation is complete to find this out.

It might sound glib but think about what the product looks like when it’s actually in use. For example is the onscreen format user-friendly? Ask how the package presents some of your regular statements and reports.

If these don’t suit your presentation style you should ask for them to be adjusted and customised to match your requirements. Involve your main end users in the demonstrations and pilot stages and get their feedback. This will get their buy-in and you’ll get a system people are happy to use.

TRAINING

Once your system looks the part and can do what you want it to, the end-users need to find out how to make the system work properly.

It’s tempting to skimp on training in order to reduce costs. True, some of the off-the-shelf packages can be largely selftaught, perhaps with a little telephone support. For more complex systems, however, it’s worth training a number of users to ensure they get maximum value from the system. The training should feature the type of data they’re likely to be dealing with every day and cover all your common reports and processes.

Be prepared to commit staff for anything from a couple of hours to a few days in order to ensure they are fully trained. It’s an investment that will result in less wasted time and fewer calls to the helpline.

Remember, your principal users can also teach other staff, so don’t feel the vendor has to do all the training – while charging you accordingly. You’re also less at risk of losing useful knowledge if there are sufficient competent staff. This is particularly the case for smaller organisations according to Alison Marsh, director of Barracudas, a £1.7m turnover company that organises and runs summer activity camps for children. Barracudas uses TASbooks 2, to run the accounts for its 13 full-timers and 400 temporary staff who are employed during the summer. Purchase price was under £500 and the system costs around £300 per year to support.

“It’s important that more than one person knows how to use the system otherwise you could be storing up a problem for the future. If only one person is using it every day you’re leaving yourself exposed,” says Marsh.

Of course all of the time and effort devoted to implementation and training could be wasted if you haven’t given enough thought to the purchasing decision from the outset. You’ve got to know what you want before you find a solution.

Time is in short supply in any expanding business but a few days spent investigating the software is better than making a hasty decision you’ll regret within a year.