Cloud Accounting Overview 2015: MYOB Essentials vs Xero vs Intuit QuickBooks Online vs Reckon One
The world of online accounting software has already seen much activity in 2015. MYOB Essentials, Xero, Intuit QuickBooks Online, Reckon One, Saasu – the choice for small businesses is the best it’s ever been.
So how do the various cloud accounting software measure up at the start of 2015?
I like the rebadged MYOB Essentials, it is a neat, concise and easy to use piece of software. Now that it has the BankLink service integrated into the program it makes it very easy to automate bank data. It is priced reasonably at A$29 per month without payroll and $40 per month with. However it lacks a number of key features that we see in Xero and QBO including:
- No ABA files for either payroll or suppliers.
- No user roles to specify function access.
- No classes (QBO) or tracking categories (Xero).
- Limited user control over posting payroll into the accounts.
- No inventory (Xero’s inventory module is due in a few weeks).
So it is still positioned very much at the micro end of the market but is easy and intuitive for a first time user with no accounting experience.
Xero continues to delight. The company walks the talk of customer engagement and user experience. It has a great employee portal, and the auto-superannuation payments removes the greatest admin hassle of every small business employer.
(I recommend the premium option of Xero even to employers with just one employee – the extra $10 per month payment is worth its weight in gold).
It is packed with many added extras such as Xero Files, the online B2B customer/supplier invoicing and many other features that support business operations. The product is possibly less intuitive to the first-time user and reporting still has a way to go but I still admire the company’s visionary focus – it really does create the answer before the problem is articulated.
Intuit QuickBooks Online
QBO is about to lose its competitive edge over Xero when Xero releases its inventory module. QBO came fairly late to the Australian marketplace, Xero had already achieved incumbency and Intuit had to search out the second wave of accountants and customers that hadn’t climbed on the Xero bandwagon.
The exact figures for Australian customers is not known but in their latest press release Intuit announced out of 841,000 global paying customers for its cloud accounting software, 127,000 were outside the US. (In December Intuit revealed it had sold 7,000 subscriptions in total for New Zealand and Australia.)
Xero has said it is close to 200,000 paying customers in Australia alone so Intuit certainly some challenges to close this gap in here. During 2014 however, a lot of effort went into the Australian version of the product so that many annoying small glitches were ironed out, especially in the areas of bank feeds and GST.
The final icing on the cake came with the release of ABA files in December. With increased numbers of staff and improved functionality, Intuit is looking good for 2015 – we just need to see it notch up some runs.
Reckon One is somewhat mystifying. It lacks the key payroll module yet at the same time has a time and expense module which tracks billable and unbillable time and expenses against clients and projects, and it also has a full-blown budgets module. So it is a mix of in-depth features and omissions.
It does however have the most illuminating dashboard which is visually appealing, uncluttered and with widgets that are user definable and relevant. (This feature has been announced for Xero in 2015.)
From a pricing perspective it is competitive but a little difficult to compare as payments vary depending on specific functionality selected. It remains to be seen whether Reckon One will become a valid option in 2015.
The end game is of course to retain existing customers while also gaining new ones. There are three main sources of new customers:
- Customers new to accounting software – either start-ups or moving off manual systems.
- Customers migrating from desktop to cloud within the same supplier, largely MYOB and Reckon.
- Customers converting from one supplier product to another.
Customer retention is something MYOB has grappled with over the past few years. Historically software suppliers such as Xero and Saasu have said that the source of new customers has been about 50 percent customers new to cloud accounting and 50 percent converting from another supplier’s product. More recently Xero has said about 60 percent of its new paying customers are conversions from another product (35 percent from MYOB).
So the marketplace for customers changing their accounting software is a lucrative source of business for the cloud-only players such as Xero and Intuit, both of which provide free data conversions from MYOB and Intuit also provides free data conversions from Reckon Accounts.
Converting and new customers come from a variety of sources and select the new software for a variety of reasons. The main sources are recommendations from accountants or other businesses, or from individual research. And the main reasons for converting to another software product are disenchantment with existing supplier or software, finding the current software too difficult or not responsive enough to the needs of the business.
All these factors mean that now more than ever software suppliers must be fully engaged with their customers, they must understand and meet (or even anticipate) their requirements. So 2015 is shaping up to be an interesting year. Expect a lot of moving and shaking.