Will asks: > I ... have been thinking about alternatives to QuickBooks. I sent these links to my bookkeeper but she has not used any of these. Do you recommend any of them, or is a “custom open source” option viable for me at this point? > Are you familiar with any of these? http://www.techrepublic.com/blog/five-apps/five-alternatives-to-quickbooks-for-business-accounting/1160 Hi, Will, Interesting list... these are all completely different, and include some I've never heard of -- and missing the ones we're more familiar with. There's also a mix here of open source, SAAS, and proprietary options. I'd ask first of all why do you want to move away from Quickbooks? The one thing to consider there is you're probably going to have quite a bit of cost moving to anything else -- cost in terms of moving your books, setting up, learning how to use the new system, creating new invoice templates, etc. Next I would ask what your bookkeeper advises. I know a lot of them prefer the PeachTree software over Quickbooks, especially if they have more of an accounting background -- I've heard the complaint that Quickbooks "dumbs down" the accounting to make it more approachable for business owners, but that gets in the way for more experienced bookkeepers. On the other hand, you'll probably find that just about any small business accountant at least supports Quickbooks since it's so ubiquitous. But if you're not using something very common, your bookkeeper will likely charge you more, if only because it takes them longer to do their job in unfamiliar software. Web-based solutions have the huge benefit of allowing everybody to be in the books at the same time, and you never have different copies that might get out of sync. You do need to consider the security implications of making something available on the web, and it's likely to cost substantially more if you're going to run it safely yourself (as opposed to using a software as a service offering that handles all of that for you).
Types of accounting software
That said, we're talking about 4 basic kinds of packages here:
- Software as a Service (SAAS)
- Client-only applications
- Client/Server applications
- Web-based applications For SAAS programs, a company offers bookkeeping software as a service. They run the service, handle the security, do most everything for you. You pay a monthly fee, upload your books, and use it. This is perhaps the simplest/least expensive way to go. The basic downside is that it's out of your control -- the service could close down with little notice, you're entirely reliant on them for backups, data security, and data integrity -- basically you're putting your entire business financials at the mercy of another company. These include Xero, inDinero, Quickbooks Online, and more. One we've heard good things about is Freshbooks. Client-only (desktop) applications include regular Quickbooks, some Peachtree software, and GnuCash. The biggest drawback of these is that the data is in a single file, and you end up sending copies of that file back and forth to your accountant, bookkeeper, etc. so it's really easy to get out of sync and cause a big data mess. Advantages are it's relatively lightweight, easy to get started, inexpensive, and generally you'll only have to pay when it's time to upgrade. Client-Server applications include Quickbooks Server, other Peachtree systems, Microsoft Dynamics, various Sage/Navision products, Postbooks, and many others. These are generally considered more "enterprise" accounting systems, and can be quite expensive to get up and running for your business, generally with a fair amount of setup/installation cost. They do solve the multi-user issues that are common with client-only applications, and are generally more customizable but often carry per-user licensing charges. Web-based accounting systems are kind of a special-case of client-server applications, in that you don't actually have separate client software to install -- you simply access it through a web browser. These include FrontAccounting (which I actually haven't run across before) and LedgerSMB, which is what we use. Most of these I would consider "Enterprise Open Source" accounting software -- while they don't carry any licensing fees, you have a lot of setup/configuration to do to get running, and you also need to consider the security aspects of running a server, potentially one that anybody with a web browser can access. These systems are great for being able to totally control your books, allow particular people access to particular parts of your books, allow practically limitless customization/automation, and more. But you're also going to spend potentially hundreds of dollars a month in keeping a secure environment, and probably well into the 4 figures to get set up for your business (or dozens of hours of your time trying to figure it out...) So, in short:
- SAAS offerings are probably going to cost you the least, but may have the most limitations, and puts your business at the mercy of the vendor
- Client (Desktop) applications are probably the next least costly, and the most limiting, not appropriate unless your bookkeeper is in house and only one person ever needs to be in your books at a time
- Client/Server applications are very powerful, and generally what larger businesses move to, when Quickbooks is no longer sufficient. But you're generally going to spend tens of thousands of dollars to get into these, and quite likely thousands per year (or more). You'll find wide adoption by bookkeepers/accountants for mid-sized businesses of these applications.
- Web-based accounting systems are fast becoming a really solid alternative, and will probably cost slightly less than most client/server applications, though they can easily get into the 5 figure range as well. From our perspective, these are slightly less usable, slightly less expensive, but quite a bit easier to customize than client/server applications.
How would you decide?
Freelock has invested in a long-term approach, with an eye to minimizing risks posed by external vendors. By running our own web-based accounting package, we can control access to our books, automate invoicing, not be forced into upgrades or price changes. However, this has come at a considerable cost in terms of additional bookkeeping time getting our bookkeepers up to speed on unfamiliar software, and we've found numerous bugs along the way that have caused reporting challenges and having to refile tax returns. Even so, this far in, we think we've made a sound decision for building a sustainable business going forward, since most of our implementation cost has long been paid. For companies with a growth plan, revenue that supports the cost of using an enterprise accounting system, and complex billing or other needs that demand more automation, a web-based system is a great way to go. If this doesn't describe your business, I would minimize costs and go with a SAAS offering, and pay a bit more to get a solid contingency plan to make sure you have up-to-date backups of all of your data and can move elsewhere if the SAAS company disappears. Or stick with Quickbooks.