Accounting software for small business and personal use is increasingly moving from the desktop to online. However, compared to other office software, this transition to online has been relatively slow. Partly that's due to user reticence: writing a document online and sharing it with others (via Google Docs, Office Live, Zoho, or whatever you use) is one thing. Entering sensitive financial information into your browser is harder to adjust to.
There are also technical complications when using online accounting software. Different countries have different tax laws, dealing with multiple currencies is tricky, your software should be compatible with your accountant's, and so on. We at RWW have had particular issues with multi-currency, as we'll explain below.
So what is the state of online accounting software? In this post we'll tell you about our awkward experiences trying out different packages. But we want to hear about your own experiences with online accounting software, because there is still much to learn about this market.
The existing market leaders in accounting software for SMB and personal use are desktop software vendors such as Intuit (with Quicken and QuickBooks) and MYOB. Relatively few of these have made solid moves towards web-based software.
One that has made moves to cover the threat of online software, is Intuit. It's had QuickBooks online for some time now, for small businesses. In January this year it released Quicken Online, its consumer offering. With Quicken Online Intuit is competing fiercely on price, with a 60-day free trial and then from as little as $2.99 per month. It differentiates itself from startup competitors by either offering lower subscription cost or being advertising-free.
It's hard to see Intuit not gaining majority market share of online accounting, given its resources and market leverage in traditional accounting software. Allen Stern of CenterNetworks had similar sentiments back in January.
A quick note about Google and Microsoft. We wrote a post end of last year called Online Accounting: The Next Killer App For Google Apps. 9 months later, still no sign of an online accounting app from Mountain View. As for Redmond, it too has seemingly little interest in this market.
Startups such as Freshbooks, Xero and Zoho are directly competing with the likes of Quicken, on purely accounting features - invoicing, payroll, expense tracking, etc. We have tested out several of these products and they all have impressive 'web 2.0' type designs, which make inputting data a pleasure (almost).
In this post we'll focus on Freshbooks. It offers online invoicing, time tracking and expense tracking. It has a subscription business model similar to Basecamp (from $14 p/mth onwards) and claims to have over 400,000 users. In our tests it was easy to use and had a lot of nifty features, such as getting a view of your outstanding invoices at a glance. It also has integration with Basecamp (our preferred project management service here at RWW) and offers an API. Freshbooks has an active forum and a browse through its forum showed a very helpful staff.
Another neat feature, which we pointed out in an earlier post today called Four Ad-Free Ways that Mined Data Can Make Money, is that Freshbooks offers benchmark data by industry to its users - e.g. compared to other graphic designers, maybe you're charging less and getting your invoices filled slower than most.
The only real downside we found was an inability to handle more than one currency per account. This is a major problem, but it's one that almost every online accounting service shares. Even the desktop accounting software we've been testing recently failed when it came to multiple currencies (and/or usability of that feature).
Still, Freshbooks is a breath of fresh air to online accounting, if you'll pardon the pun. We really want to be able to use it, so let's hope multi-currency support isn't too far away. Freshbooks has a number of supporters among friends of RWW, judging by the feedback we got via Twitter. Adam Metz proclaimed: "If you want to get paid on time, stay Fresh(books)". steaprok quoth: "Freshbooks is great, have used them for sometime, no complaints at all".
Other similar services
Another service worth mentioning here is Xero, a New Zealand based app that has actually done an IPO - on the local NZ sharemarket. In our tests a few months ago it had many useful features, similar to Freshbooks. However it is currently only available in New Zealand and it too can't handle multiple currencies. Like Freshbooks, Xero promises support for this feature by end of the year.
Kiwi friends of RWW liked Xero. Sigurd Magnusson of CMS SilverStripe told us that his company uses "Xero, except are forced to use MYOB to deal with U.S. Dollars (e.g.our involvement with demconvention.com)". Ben Young said that "I use Xero. Simply the best. Streamlines that part of the business for me whilst we are growing. Not location dependent...very handy".
Also check out Zoho Invoice (which claims to support multiple currencies) and Cashboard, two relatively recent entrants to this space.
Over the past couple of years we've seen a number of impressive new entrants to accounting software - products such as Mint, Wesabe, Expensr (acquired by Strands in April), Geezeo and Rudder. These products are focused on personal financing, such as budgeting and bank accounts.
Mint has received a lot of press (some would say hype). Currently Mint.com claims to serve nearly 400,000 users, manages over $12 billion in transactions, and has saved $100 million+ for its users. It recently released a new design, which we reviewed on ReadWriteWeb. The new design focused on the major new features added to Mint since their launch: enhanced budgeting tools, the addition of brokerage and investment accounts, mortgage accounts, student loans, and auto loans. In addition, we wrote, Mint has added six new "how to" guides that can help you with your major financial decisions. These include things like saving for retirement, paying off your student loans, buying a car, creating a personal budget, and more. The guides are the start of a new educational series for the site.
Mint seems like a great solution for US people who want to manage their money online. The downsides are that it's not international, there is no data import option (an important feature that many other online accounting packages have) and Mint doesn't cater to people who don't bank with large, national banking institutions.
This segment of the online accounting market - which is loosely termed 'money management' - is arguably the most exciting, because there are new software opportunities being explored. An example is moneyStrands, which we reviewed at the end of April. moneyStrands is employing recommendations technologies, such as enabling users to anonymously compare themselves to others with similar traits - e.g. demographics.
After all our testing, we're almost ashamed to say that we're still using custom spreadsheets to manage the accounts here at ReadWriteWeb. That's because multiple currency support is critical to our business, but sadly lacking in many of the products we tested. We'll check out Zoho Invoice though, as they claim to have implemented it.
Tell us in the comments if you're using online accounting software to manage your business or personal finances. What 'web 2.0' features have you come across in these products that have particularly impressed you?
top image credit: quickenonline
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Hi,
I'm based in Portugal, EU. The products you reviewed are all American restricted, aren't they? Do you now any for Europe? Thanks.
Posted by: daniel ribas | August 25, 2008 12:55 AM
Xero is awesome! They even won a Top 10 App of the year award from Usability Expert Jakob Nielsen.
Multiple currency support would be a lifesaver for me though.....
Posted by: Ben Young | August 25, 2008 1:08 AM
@RWW - couple of points
1) Freshbooks, Zoho and Xero do not do payroll at this stage
2) Zoho invoice does do multiple currencies
@Ben young - Xero is available in the UK and is a NZ company. Free Agent Central and CodaToGo are two European offerings
For an interesting panel discussion about online money applications check out the panel I'll be moderating at the Office 2.0 conference next week - http://office20.com/docs/DOC-1124
Posted by: Ben Kepes
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August 25, 2008 1:25 AM
Some of the web 2.0 features that are starting to pop into online accounting apps are things like links from the CRM to popular social sites. Saasu.com has had one click links from their contacts page to facebook, myspace, linkedin, bebo and the like for about 6 months for example.
Posted by: Peter J Cooper | August 25, 2008 1:31 AM
Just saw the other posts above from daniel et al. Saasu.com works in 50 countries and has European clients but I think their next version due soon has even better support planned. They also have payroll which is semi customizable but the language is fairly specific to some western countries. A lot also don't have inventory but saasu.com does have a neat standard module for that which also links to froogle for one click competitor research which is sweet.
Posted by: Peter J Cooper | August 25, 2008 1:35 AM
CODA is another alternative that works for US and European organisations.
Posted by: Enda Madden | August 25, 2008 2:32 AM
I thought Xero just announced that it's available worldwide and not just NZ ... [checks old feeds], ah, nope - aiming for "early 2009" - http://blog.xero.com/2008/08/hello-world-we-hear-you/
Posted by: Mike Riversdale
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August 25, 2008 2:49 AM
@Daniel, I work for a Danish company e-conomic. We offer a accounting service in the following European countries, Denmark, Sweden, Norway and Great Britain. Please feel free to visit our english homepage e-conomic.co.uk and sign up for a free demo. The functionality is adjusted for Great Britain, but the core functions might fit any countries.
Posted by: Christian Buch Iversen | August 25, 2008 3:16 AM
Does anyone know of a good online practice management accounting system for doctors?
Posted by: Neil | August 25, 2008 5:59 AM
Freshbooks Rocks! I have gotten to know a lot of the team there personally and they'll go out of their way to make sure that you have a good experience. They really care about every single one of their users.
Not saying that the others don't... i'm just saying that I can speak about personal experiences with the Freshbooks crew.
Posted by: Justin Thorp | August 25, 2008 6:31 AM
Hey, you guys forgot to mention Buxfer.com! It's a very neat personal finance manager!
Posted by: Bart | August 25, 2008 7:09 AM
I've been using LessAccounting.com a lot for freelance billing and I really enjoy their interface and functionality.
Posted by: Mark Schoneveld | August 25, 2008 7:12 AM
uh, guys, Intuit has had a fully hosted, browser-based version of QuickBooks (the small business accounting package) since at least 2001.
See http://oe.quickbooks.com/
Quicken is more of a consumer offering.
Posted by: dave | August 25, 2008 7:27 AM
Lots of applications already use the QBXML API and the QB web connect so it will be hard to kick Intuit out of this space.
Posted by: Techlusive | August 25, 2008 7:36 AM
You didn't mention QuickBooks online. See http://oe.quickbooks.com/index.cfm?sc=QBC-V51-HME-FAMTXT-TSTA-060213
This has been around since at least 2004. It's definitely for small business and not personal use, but is probably the best example of a complete accounting solution online
Posted by: Scott Hemmeter | August 25, 2008 7:40 AM
Our feelings are hurt for even getting a mention. What gives? Less Accounting is one of the few apps that is a full service accounting solution for small businesses, not just money management or single feature based. We also integrate with Basecamp, Highrise, Gmail and Wesabe. We have multiple currency options, but at this time, you can't invoice for different currency types in one business (working on it). If you guys haven't heard of us before, check it out here: http://lessaccounting.com. We'd be happy to work out a longer trial period if you need it, just email me or ping us on Twitter (http://twitter.com/lessaccounting). We have an active customer service forum as well at the rocking Get Satisfaction site: http://tinyurl.com/6n375x
The same goes for anyone else that reads this article and wants to test it out, just drop a line and we'll do our best to address your needs.
Posted by: Less Accounting | August 25, 2008 8:12 AM
Happy birthday, Richard!
Good writeup.
A very good and successful online accounting solution from the UK is http://www.freeagentcentral.com. They're mainly geared towards freelancers based in the UK but also have a universal version.
Posted by: Christoph Janz | August 25, 2008 9:04 AM
@Techlusive QBXML and QB Web Connect? I realize a lot of companies are using these, but have you actually used these services? They're horrendous!
Posted by: BJK | August 25, 2008 9:05 AM
Hey, thanks so much for the major kudos! It's incredibly ego inflating to see our names on RWW.
It's true, we support multiple currencies by creating multiple accounts. We do this to keep the reporting clean, so your USD tax reports are separated from your Euro tax reports.
One thing we don't communicate clearly is that we don't charge people for two accounts. If you call us (1-866-303-6061) or shoot us an email at support splat freshbooks.com then we split your client limits between the two accounts.
@daniel, you can use FreshBooks in Portugal. We're being used in around 100 countries.
@BenKepes, payroll is all about being on top of all the crazy remittance and employment law, and that means going to a specialist. I recommend using a payroll service, like the deservedly popular, PayCycle. (And see you at Office 2.0)
@Scott, @justin, heya!
Posted by: Fresh Sunir | August 25, 2008 9:10 AM
anyone know of a good online Shop accounting system ?
Posted by: jenifer | August 25, 2008 10:03 AM
Does anyone know if PayCycle supports Canadian payroll?
I'm looking at adding payroll support of some kind to our online accounting software and it would be nice to leverage their hard work in maintaining all the payroll tables and forumulas.
Posted by: Dobes Vandermeer | August 25, 2008 12:05 PM
very interesting post. certainly an interesting read. i am just becoming familiar with xero.
Posted by: antiques | August 25, 2008 12:30 PM
There has been a lot of discussion on muti-currency support and this was one of our pains when we first started our software business. We tried quickbooks first and found it to be a pain to use. We tried Freshbooks and found it to be an excellent invoicing system but not a sufficient "accounting" system. Therefore, we created our own online accounting software: www.clarityaccounting.com
It is fully equiped with multi-currency support and breaks down income and expenses in different accounts to produce up to date balance sheets and profit & loss reports.
Posted by: May Chu | August 25, 2008 12:33 PM
Cubit Accounting allows you the user to host the system for yourself with no per user costs.
Cubit Accounting started development in 2001 and is already a mature php web based accounting system.
Downside is that it is only suited to VAT countries, we are looking for development partners all over the world...
:)
andre
Posted by: Andre Coetzee | August 25, 2008 4:59 PM
I have to say, it kind of drives me crazy that you can write an article called a "review of the market" when you clearly haven't used or even heard of some of the biggest products on the market.
It makes me seriously doubt the validity of other articles on the site.
Posted by: tom | August 25, 2008 8:29 PM
dave #13 and Scott #15, good call, I've added QuickBooks to the article now and edited that part. mea culpa.
tom #25, while I usually ignore criticism from people who don't leave their name, I will say that you're wrong that we haven't used any of this software. It shows you didn't even read the article. I've tested out many online accounting packages, for use in our business. I said as much in the article, so your blanket criticism was pretty rude. However clearly I got the bit about Intuit wrong, for which I apologize (not to you, but to actual readers).
Posted by: Richard
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August 26, 2008 12:32 AM
I think that the next killer web-app accounting system that will emerge soon is an online accounting expert system. The system contains an inference engine and knowledge-base in addition to its SQL database. It has the capability to learn and adapt itself to how users interact with it. Some of these systems are already available (and the technology is still improving) but I've yet to see one being deployed as an online tool.
I have to say, that Xero (yes from NZ) is up there as one of the top online accounting system available today.
Posted by: Falafulu Fisi | August 26, 2008 12:47 AM
Great post!
This is my first comment on RWW.
FreshBooks seems very nice and clean but I don't see inventory support. Is there any similar online service but more close to ERP systems?
I would recommend another similar article about how data on such services is really secure, accessible and portable.
Milan
Posted by: Rukavina | August 26, 2008 5:50 AM
This is a great article! I take exception with something, though:
Although Intuit likely has the resources to do so, Quicken Online is not necessarily poised to take over the web-based personal finance market at this time. Quicken Online is currently targeted at those who have not used personal finance software before, it provides no way to import Quicken desktop data, and it does not have the personal finance tools many more experienced users want.
Posted by: Shelley Elmblad | August 26, 2008 5:52 AM
Richard,
Though I appreciate the response, I think you misinterpreted my comments. Nowhere in my comment did I say what you suggest (that you hadn't used *any* of the products in your review).
Clearly you've used some of them.
I also think you're mistaking criticism for rudeness.
I read this site very frequently, and enjoy many of the articles. But the fact that you all missed some important products that could be found by talking to any accountant or by googling "online accounting software" does raise doubts in my mind about the rigor of the articles posted here.
Posted by: tom | August 26, 2008 7:33 AM
I'm the PR Manager for QuickBooks Online. Thank you for including us in your article on online accounting. We've been in the market since December 2000. Since you're covering this space, I wanted to let you know that yesterday we announced that QuickBooks Online supports both the iPhone and BlackBerry so users can now view their key company data on their phone:
http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080825005280&newsLang=en
iPhone and BlackBerry users can try a demo by going to: //accounting.quickbooks.com/m on their phone and clicking on Try Demo.
Posted by: Sharna | August 26, 2008 11:51 AM
Richard,
thanks for the great article and hosting the great comments. I find it heartening that there is such an active discussion about new accounting/billing/invoicing systems (not just on RWW!). It's rapidly becoming a hot industry.
Its worth noting that with over 5.6 Million small businesses (in the US at least), small biz needs differ significantly, typically by size. At the mid level many of the great offerings have been mentioned; Xero, Freshbooks, FreeAgent etc. These guys are doing a great job of iterating to deliver ever more sophisticated offerings. However, we think there is still an underserved segment of Very Small Businesses that need super simple invoicing and billing tools. Our app, billFLO was designed with that demand in mind.
thanks,
Ian Sweeney
www.billflo.com
Posted by: Ian Sweeney | August 26, 2008 3:59 PM
We introduced a very simple online bookkeeping application last month: http://gobootstrap.com. It is designed for the more than 20 million very small businesses (single person, sole proprietors, etc.) that file a Schedule C at year's end. We keep it super simple with no jargon, focusing on sales and deduction tracking, with help for estimated taxes.
We're quite new but have very big plans. And you'll never see terms like "receivables", "payables" or "chart of accounts" anywhere in our software:-)
Posted by: Kevin | August 26, 2008 4:18 PM
I use the open source LedgerSMB, hosted by my friends at Egressive. Although it is not multi-currency, it is multi-user, it works fine for my business, is cost-effective, and feels good.
For all that, my recommendation is "do not take my recommendation". The cost of switching accounting systems is so high that it takes a long time to get better than "the devil you know".
To those choosing a new accounting system, research this carefully. To those providing SaaS accounting systems, good luck finding the ones choosing a new system.
Posted by: Dan Randow | August 26, 2008 5:06 PM
Xero has been available in the UK for a little while.
However the problem I have with all of these options is that there is no support for stock / inventory. They may be fine for service type companies, but what about all those who have inventory to deal with. With the large number of people who have set up online stores in recent years, it seems a great missed opportunity. And while the different tax rules in different countries do make complications, dealing in multiple currencies is a common situation for so many businesses now, it is something that needs to be offered.
There is also the aspect of value for money though - eg buy a copy of MYOB that you can use for several years at less cost than one year subscription to Xero.
Posted by: Robert | August 27, 2008 10:00 AM
http://www.turbocash.net
Hi Guys - Philip Copeman here from TurboCASH Accounting. We are the worlds leading Open Source Accounting Software for small business, 800000 downloads, 100000 Plus users, translation in 20 languages, communities in 50 countries . I include an Alexa Graph comparing TurboCASH to the leading online Accounting systems including Quickbooks Online, which gets rolled into quickbooks.com
http://www.turbocash.net/wiki/images/b/b2/OnlineAccounting.jpg
Now given that the Web site IS the business of the Online Accounts and our website picks up only peripheral activity, you have to conclude, as we do, that the users simply are not interested in Online Accounting. It is not the vendors, we even offer many web front end POS options to TurboCASH, but the users that decide this.
The answer to this is that Accounting is a sentient as opposed to a transient app. Sentient Apps are predisposed to Fat Clients. Imagine Google Earth, Open Office or Photoshop as an "Online App". This does not meant that a Fat Client will not deal with Online Data, just simply that as a platform from Rich client side experience this is not over until the Win 32 Fat Client has finished singing.
TurboCASH is a pure Open Source option, and we simply go where the users take us. If the community pulls us towards Online we would go there, that is the community driven nature of a pure Open Source project. Quite simply they are not taking us towards Online solutions. It is in fact in the markets with the strongest bandwidth that TurboCASH as a Fat Client is making the biggest inroads.
We run from an embedded memory stick to 50 user systems, Mixed Linux and Windows platforms. Quite simply what is it that you would to do in an Online system that you can't do with Terminal Services? The single central installation argument falls away in a high bandwidth environment, because software update is almost instant.
I do see a niche role for Online systems, but they would do far better off partnering with A Fat Client. I would venture that without a strong interface with Quickbooks even less people would be interested in the Quickbooks Online system. This foray seems more driven by the interests of vendors intoxicated by the stream of hosting fees than driven by fulfilling the interest of the users.
This is a very important market. I would be quite happy to address any partnership ideas with interested parties, who are prepared to walk the full GPL walk with us.
Posted by: Philip Copeman | August 27, 2008 2:10 PM
I just thought I'd mention that Invotrak supports multiple currencies for invoicing. You might want to check it out too.
Posted by: John Fredrickson | August 27, 2008 2:25 PM
I tried CurdBee (http://curdbee.com) few days ago and really likes it. It is totally free and do supports multiple currencies. Also, you could configure it to receive payments via PayPal and Google Checkout. Woot!
Posted by: Jeremy | September 9, 2008 4:54 PM
What are you referring to, accounting or invoicing? Many of the applications you mention only do invoicing. Also you forgot NetSuite which probably is the largest invoice/accounting SaaS vendor. I would also recommend 24SevenOffice which includes invoicing and accounting. It also supports multiple currencies.
Posted by: Espen Antonsen | September 18, 2008 4:49 AM
After reading through all the various comments and opinions it is clear that the online accounting market is quite competitive. I just
want to add to my previous comment that online is also MOBILE accounting and that Cubit Accounting and Payroll can also be accessed with mobile devices like cellular phones. The other thing that I wanted to say is that
almost all the decent online accounting systems offer Invoicing already and that online Invoicing by itself is not really relevant anymore. Regarding Cubit Accounting, it is multi currency and has very advanced Inventory management, unlike many of the other systems reveiwed or mentioned in the article.
Kind Regards
Andre
Posted by: Andre | September 20, 2008 9:13 PM
I'm amazed to see a discussion on online accounting where a lot of the major players are just over looked. There's been no mention of Kashflow yet (see www.kashflow.co.uk)
I've been a happy customer of theirs for a while. The sped of support is phenomenal and they are constantly ading new features based on user requests.
They seem to be streets ahead of the rest of the pack(Although the interface isn't as slick as Xero) and have some pretty tight integration with PayPal.
They don't do Payroll but they do integrate with other payroll products.
I wish they'd add multi currency though!
Posted by: N Ballard | September 21, 2008 8:32 AM
I'm also a big fan of Kashflow - it makes accounting for small business very easy, and it's a big plus that it's online because it means it works on Macs. I saved money on my subscription by using the discount code AFF2100647, as well.
Posted by: Emma | September 22, 2008 12:20 AM
You CAN have online accounting AND have advanced features such as multi-currency handling and stock management. And the cost is amazingly low compared to traditional software with equivalent functionality.
e-conomic provides both of these features and a lot more besides. You can keep your accounts in any base currency, invoice in any currency, have both stock and non-stock items, modify the accounts structure and a lot more besides.
It's already in use with over 15,000 subscribing companies (tens of thousands of users) in over 60 countries, so it's well proven.
Take a look!
Posted by: Mark Davies | September 23, 2008 5:31 AM