So you want a new desktop accounting package?

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By David Carter

Choosing a mid- or upper-range accounts package is straight forward - work out the list of features you need, then find out which package has them. But with entry-level it's not just a matter of features, but also of the user - most entry-level systems are run by people who do not understand accounting.

Poor package design
The real problem is not that users don't understand debits and credits: it's that the standard design of a computerised accounting system - sales ledger, purchase ledger, nominal ledger - makes the payments side so difficult. Suppose, for example, that you pay three checks - the first to a supplier on credit, the second to the Inland Revenue, the third as refund to a customer who has paid his bill twice. With a manual cashbook you just list each cheque one after the other, but with a computerized system each one has to go into a different ledger. In my experience, non-accountant users have no problem entering sales or purchase invoices, but find payments very difficult to master.

First question: how skilled is the user?
So, keeping in mind the fact is that when it comes to payments a computerized accounts package isn't a patch on a manual cashbook, and that the accounting system for non-accountants hasn't been written yet, your first consideration is not the package at all, but the abilities of your user.

Who will be operating the package - the boss's wife, a part-time bookkeeper, a trained accountant? What are they using at the moment? Assess the skill-level of the operator and aim for a package that they can handle.

Features are important and some packages are better suited to certain types of business than others - I'll come to that later. But remember that lots of features, while superficially attractive, may actually make the package harder to use. There will be more options for the user to choose from, which means more complexity and a steeper learning curve.

What volumes will it handle?
Second, find out the number of sales invoices, purchase invoices, receipts and payments each week that will go through the system. If volumes are low - say in the case of a sole trader or consultant - an accounts package is probably unnecessary and the user would be better doing their invoices in Word and their accounts in Excel (as I do myself, for example).

Any interface with other, front-office systems?
Third, does the accounts package need to interface with any other package? I recently talked to a printer who had bought QuickBooks. He really liked it, but he already had a special package for the printing industry for handling customer quotations, orders and invoices. Because there was no link between the two packages he had to re-key all his sales invoices into QuickBooks by hand.

Before buying QuickBooks, he ought first to have rung up the supplier of his 'front office' printing package, and asked them if it could automatically post sales invoices into the sales ledger of any 'back office' accounts package. That would have been the accounts package to buy.

Basic functionality
On the whole, the standard of entry-level accounts packages these days is pretty good and they all cover the accounting basics. However, there are one or two areas where you should take care.

a) Sales invoices
Even after acquiring an accounts package, many small businesses continue to create their sales invoices in Word because they think the sales invoice printed by the accounts package is not presentable enough. They then re-key their invoices into the accounting system, which is a waste of effort.

So before buying, sort out the appearance of your sales invoice.

A suggestion here: don't use pre-printed stationery. Instead, get the accounts package to print the entire invoice, including your own logo and address. You can get excellent results on laser or inkjet, and remember that most packages allow you to send invoices and statements via email. If the computer prints the entire invoice, the invoice sent out by email will look exactly the same as your printed one. If you use pre-printed stationery, it won't.

The vendors don't talk about this much because pre-printed stationery is a good money-earner for them. But ask for the name of someone who can customize your invoice for you. Ring them up and ask for some sample invoices they've done, then base your own on one of these.

b) Batch payments to suppliers
If you only have make a small number of payments to suppliers, it will probably be quickest to write out checks by hand, or pay electronically.

But if you make quite a few payments and want to batch them up into a monthly run, your package will need a batch payments facility. The computer lists all supplier invoices due for payment; you can then untick on the screen the ones you don't want to pay, and the computer will automatically generate payments for all the invoices, together with a BACS payments file that you can send directly to your bank. Obviously this is a massive timesaver and all mid-range packages have it as standard, but I don't know the situation at entry-level.

c) Exporting data into Excel
Once you can get data into Excel you can do anything with it and this is really an essential requirement. Ensure that the package can export both nominal account balances (for example a Trial Balance) and nominal transactions (such as a list of all the transactions in the Entertainment account).

Specialist requirements
Certain types of business have specialist requirements beyond basic accounting and some packages are better at meeting their requirements than others.

a) The company needing Cost Centers or Job Costing
Some companies need to know not only what expenses they have incurred, but where they incurred them. They might be running a series of jobs and need to know the profit on each one, or they might have several budget holders in the company who need to have separate profitability reports.

The best way to determine whether a package is going to be any good at costing is to take a look at the purchase invoice entry screen (most costs are entered via purchase invoices). For example, if you compare the Batch Supplier Invoices screen of Sage with the Enter Bills screen of QuickBooks, the difference is quite remarkable. The Sage screen can accommodate 20 invoices at a time and records the bare minimum of data about each one on a single line. The QuickBooks screen handles only one invoice at a time and records far more information, even offering separate layouts for expenses and products.

The minimalist Sage approach meets the needs of accountants who want to bang in the maximum number of invoices in the minimum amount of time at year-end, but has the disadvantage that a lot of potentially useful management information cannot be recorded. Because it can capture so much more information, QuickBooks will be better at providing detailed costing analysis than Sage.

In the case of QuickBooks getting at this information is not easy. I had to spend half an hour on the phone with Intuit Technical Support in order to get out a fully detailed cost report.

b) The trading company that holds stock
The second type of user with special requirements is the company that stocks and sells products. For this type of company it is the sales order processing and stock system that really counts. But order processing and stock is simply a different ball game from the accounting ledgers and many of the accounting vendors don't really understand it.

As a result, while most accounts packages can handle stock and print sales invoices after a fashion, they tend to be poor at providing key management information such as which customer is buying which product, gross margins by product, excess stock reports and so on. Unless your requirements are very basic, avoid the standard accounting packages and go to a specialist.

IT Zone consultant editor David Carter has implemented more than 100 accounting systems, and conducted a series of Software Lab Tests on 11 mid-market accounting applications.


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