Adding up the pros and cons

Colin Exley and John Willcock test-drive the best accounting software

Less than a third of UK small to medium-sized enterprises (SMEs) use bookkeeping software. We tested four accounting packages specifically designed for SMEs. All four packages contained the following functions as standard: sales ledger, purchase ledger, cash book and nominal ledger.

What should it do?

Essentially the software that you will buy does the same thing as that used by much larger companies: it automates bookkeeping. Most accounting software is presented as modules, each performing a set of related accounting functions. As the complexity of the business increases, more modules are needed. The starting point for most packages are four basic elements:

1. Cash book – a record of all receipts and payments in cash and those going through your bank account.

2. Sales ledger – invoices issued to clients and amounts due from them.

3. Purchase ledger – invoices received from suppliers and amounts due to them.

4. Nominal ledger – brings everything together into the basic accounts from which the balance sheet and profit and loss are drawn up.

The whole point of the software is to produce clear, accurate reports of your business's performance. Ask to see examples of these reports and find out how easily the software handles their production.

Establish a clear idea of your needs. The first question is whether you really need any software at all. Write down your needs in the form of a checklist which can be used to compare features of different products. If you use an accountant already, see if they have any favourite software.

Do your transactions involve other currencies? How does the system handle this? The software reviewed is generic and should suit most types of business, but remember that specialist packages may have been developed for your industry, for instance hotels and guest houses, where accounting may be integrated with a reservation system.

Don't pick a system purely on the basis of price. If you can't get what you want from your software, it is money badly spent. Remember, once you have been using a particular system for a while it can be a complex exercise to switch to different software, so it is important to make the right choice at the beginning.

INTUIT: QUICKBOOKS

Overview
This package is designed for non-accountants and relies heavily on graphics to keep things simple. The cheapest version would suit a business with five to 10 people.

Price: £129.99 including VAT
There is a more advanced "Professional" version costing £249.99 that can be integrated with Microsoft Excel and lets you prepare sales orders and estimates. You can also buy a payroll service for £89 a year. A third, new package allows your accountant to access your accounts remotely without having to travel to your offices each time. This is called QuickBooks Premier Accountant and retails at £399.95.

Comments
The package includes a credit card facility. This allows you to take credit card payments from customers at a cost of four per cent plus 30p per transaction. There is no set-up fee or regular charge and no minimum amount, which makes it attractive for small users compared to the high street banks' services.

Conclusion
An easy-to-use package from this innovative company.

MICROSOFT MONEY 2002: PERSONAL AND BUSINESS

Overview
Product also includes extensive personal financial management features.

Price: approximately £70

Comments
This version of this software for controlling and recording personal finance and investments has been extended to enable the accounts of a small business to be maintained as well. As with most recent Microsoft products there is a strong integration with Web services such as business news and information. Inevitably, these features link to Microsoft-owned Web services – hardly the only places on the internet. It is possible to separate business and personal records and to password protect them, but otherwise this is not intended to be a multi-user package. Care needed when entering transactions to make sure you are in the right set of books. Good document templates that can be easily customised to include the logo for your business. A very well-presented and easy-to-follow handbook is included. The graphs and charts in the various reporting functions are easy to adjust and understand. As one would expect, it is possible to link into other Microsoft products. A payroll module has yet to be developed for use with Money, so separate software would be needed if your business employs staff and has to deal with PAYE, NI etc.

Conclusion
A good starter package for a simple one- man business, but you would probably want to switch to a more advanced (and expensive) Microsoft package as the business grows, not least the ubiquitous Microsoft Office. The low cost of Microsoft Money however is particularly good value for anyone using all of the personal finance features. There is more information on Microsoft software for small businesses to be found at www.bcentral.co.uk

MYBUSINESS: EASYBOOKS

Overview
Other versions also include contacts management, diary and stock-control features.

Price: £40 to £150
Depends on version. Payroll software which integrates with the accounting software costs £100. The higher-end versions can be networked.

Comments
MyBusiness is a recent venture founded by two developers who previously worked for Sage. It has been designed for Micro and SoHo businesses and is being used by all types of enterprise. MyBusiness is designed to be very easy to use, with a wide variety of prompts and help menus for users. Depending on the version used, MyBusiness integrates other key areas that need to be managed by a small business such as stock control and contact management. Also copes with businesses which are stock-based (eg retailer) and those which are service-based (eg plumber). The Bookkeeping section does not have a complicated accounting interface, using terms such as ledgers, journals and double entry. It does, however, have a very powerful accounting engine and can handle complex accounting tasks including all basic VAT transaction requirements. It does not produce the VAT return. A positive sign is that the handbook is very brief and easy to follow. The look and colouring is bright and cheerful if not very sophisticated. The demo business provided with the software is an excellent place to try out functions before using them on the live data for your own business. The program allows costs to be attributed to units of stock or chargeable time so that the profitability of each sale or project can be assessed. Although simplicity is the aim of this software, its limitations would probably be frustrating to somebody with some accounting knowledge. This seems to have been designed with the expectation that you will hand over to an accountant who will handle the final adjustments.

Conclusion
A genuine attempt to deal with many of the standard business tasks in a new and different way. Best suited to the user who does not know anything about accounts.

SAGE: INSTANT ACCOUNTING

Overview
Depending on the version used, the product also includes stock-control features.

Price: approximately £129 or £250
Depends on the specification you choose. Payroll software which integrates with the accounting software costs £100.

Comments
Suitable for businesses with turnover up to £250,000 and five or fewer employees. The Sage range is probably the most widely used in this country. This large user base means that more resources are available. It is also more likely that your accountant will use this software, or at least be familiar with it. There is a clear upgrade path so that more powerful software can be acquired as your business grows. In look and feel, this is closer to a "traditional" accounting package than the other products. This could be off-putting to the complete beginner. The variety and type of functions within the package will be of more interest to the established business that needs the ability to manipulate and analyse data. Current versions allow links to be created with websites and use with electronic banking. It also produces a VAT return.

Conclusion
A sophisticated package used by many SMEs. Ideal for an expanding business.

SOFTWARE PROVIDERS

INTUIT
Product: QuickBooks
Tel: 0845 606 2161
Web: www.intuit.co.uk or quickbooks.co.uk
Comments: Also produce Quicken personal finance software.

SAGE
Product: Sage Instant Accounting
Tel: 0845 3000 900
Web: www.sage.com
Comments: The most basic in the Sage range. Can be purchased from PC World etc. CD-Rom-based training material available.

MYBUSINESS
Product: Easy Books
Tel: 0845 120 3040
Web: www.mybiz.co.uk
Comments: Includes business management features. Interesting and imaginative presentation.

MICROSOFT
Product: Money Personal and Business 2002
Tel: 0870 6010 100
Web: www.microsoft.com/uk/homepc/money2002/products.asp or bcentral.co.uk
Comments: An extension of the personal finance product.