I have just spent 10 minutes writing a comment to this posting over on Accounting Web, then thought that it would be better to set out my thoughts here.

There is a fundamental misunderstanding in the Accounting Web discussion, when contributors state (rightly to some extent) that transactions cannot be keyed into the online accounting services, like Xero, Kashflow and Free Agent as quickly as in desktop software, like Sage and QuickBooks.  The problem is speed, many say.

If your practice is providing what I would term “binge bookkeeping” services, meaning processing client records in batches, perhaps monthly or quarterly, then there is little benefit from using online accounting systems for 3 reasons:

1. the client is clearly not interested in maintaining accurate, up to date accounting records, so there is no need for real-time reporting
2. because the client does not need real-time information, there is less downside in sending backup files to the accountant and back – indeed perhaps the data file is permanently with the accountant, with the client only having financial information provided in the form of reports produced by the accountant, and
3. data in batches can be entered more quickly using the interface of desktop software compared with web-based software (with the exception of live bank feeds and bank statement upload files)

However, if you wish to provide a management accounting service, in collaboration with your clients, then online is the only way to go.  The client would typically enter most of the transactions themselves, in very small numbers but very frequently – i.e. daily.  No speed problems here then.

The accountant’s role is to monitor, review, correct and complete the records – then use the real-time numbers to help the client manage and grow their business.  Doing the “clever bits”, like calculating and posting depreciation or making the stock adjustments at the month end, is high value but low transaction volume work.  Again, speed is not therefore an issue.

So my argument is that web-based accounting systems are modern tools to enable delivery of modern services. Accountants can stick to traditional desktop tools if all they want to deliver is a traditional service.  I know which horse I would rather have my money on in that particular distance race.

Regular readers will be aware that I follow goings-on over at Xero very closely – although let me point out that I have no affiliation with them at all.

News is just coming through from the other side of the planet (New Zealand and the ONYAs to be precise) that Xero has won three out of the four awards it was nominated for, namely “Most Outstanding Website”, “Best User Experience” and “Best Web Application”.  They missed out on “Most Innovative” but, hey, this is accounting software we’re talking about.

Of course, being web-based software, this is the same stuff that we use here in the UK, so these awards are equally relevant this side of the world – although the other potential UK nominees would, in my opinion, put up a stronger challenge.

Well done Xero.  Hopefully they have laid down a marker for others to up their game.

Looks like users who have previously signed-up to play with Xero on a free trial will have received this email this morning.  Clearly, the marketing ploy is to prompt fence-sitters to make the switch before the start of their new financial year, which for most businesses begins 1st April.

The offer has 43 days to run, so represents a saving of about £26 for a business using Xero’s “Medium” plan.  Is this enough of an incentive?  Personally, I am not convinced but it is a clever way of getting into the inboxes of prospects without looking spammy.