General Ledger systems – which is for you?
For those who need more functionality than a cashbook system, the next step up in the off-the-shelf software market for business is the simple general ledger system. Typically these systems can keep track of accounts receivable (so you can use them for invoicing your customers), accounts payable (so that you can keep track of who you owe money to and when it is due) as well as all transactions that go through the bank. Providers of this kind of software in New Zealand include MYOB, Quickbooks and Xero.
As with cashbook software and many other types of non accounting software, there has been a trend towards the delivery of the software over the internet or “the cloud”. The cloud is just a trendy way to describe large data centres which store your information for you and deliver your content to you via a secure connection over the internet.
MYOB and Quickbooks have gained their name in the market over a number of years through their desktop software. Each of them have a product that is very refined after years of development. will discuss the pros and cons of online software in a future article.
Xero was formed in New Zealand in 2006 by kiwi entrepreneur Rod Drury and accountant Hamish Edwards. Since then Xero has developed into very slick, easy to use software that is delivered over the internet. One of the advantages of Xero is the way that it takes advantage of the internet to connect with other software. For example, bank transactions come in to Xero automatically from the bank, keeping the bank reconciliation process easy. Xero also has a set of protocols (an “API”) that allow other software vendors to make software that can interact with Xero.
While Xero is an excellent product that would suit most small to medium sized businesses in its standard form, in some areas the more traditional software has more features than the newer software. One example of this is the stock tracking function. While MYOB and Quickbooks are both able to keep track of inventory levels, this function is not yet available in Xero.
As usual, the right software for you will depend on your business and your preferences. Here at The Accounting Hub we believe that Xero is here to stay as it offers us more opportunities to connect with our clients and to work with them in a proactive way. Any functionality that is desired in Xero but that is not there yet can usually be achieved by using add on software that interfaces with Xero.