You can now integrate your cloud accounting software to applications that link to the data stored in the accounting software. This results in a consolidated and synchronised set of business data.
And possibly here in Australia, Xero was the catalyst for this for a couple of reasons. Firstly Xero was never as functionality-rich as the existing desktop incumbents, MYOB and Reckon Accounts. Xero needed to supplement its solution with add-ons to be a viable alternative.
Xero’s focus on user experience has also meant it has concentrated on delivering a program that is both easy to understand and use. It doesn’t require dedicated accounting professionals to manage day-to-day accounting processes.
So we are increasingly seeing business owners confidently interacting with their accounting software. As they expand their knowledge they require a single, synchronised view of all business data. Thus the cloud accounting software ecosystem was born and continues to evolve.
The upsides and downsides of add-ons
This ecosystem is a best of breed approach. Accounting software does not need to try to provide all the bells and whistles required by a myriad of different business models. Instead it enables a community of easy-to-use and easy-to-integrate additional and complementary solutions that target specific business requirements.
The accounting software can remain lean and uncomplicated but at the same time enable an integrated and holistic approach to the business system.
There are a couple of downsides though. Firstly these add-ons can add significantly to the monthly subscription charge.
If the business has done its homework and selected programs that meet requirements and deliver productivity and efficiency gains there can still be a positive return on investment. The combination can produce reduced time and effort, increased quality of data and prompt, complete and relevant reporting.
The other potential downside to using add-ons is that the user interface will differ between products. Extra training may be required for staff using multiple programs. However, I find there is a certain similarity across browser-based products which makes the learning process more intuitive.
One of the hallmarks of these add-ons is the ease with which they integrate to the accounting software. Occasionally they may require a couple of extra accounts in the chart of accounts but generally the integration is painless and hassle-free.
So what are the types of add-on programs for accounting software? The main categories include:
- Point of Sale
- Advanced Inventory
- Advanced Payroll & HR
- Bills/Expenses and Payments
- Project/Job Costing/management
- Debtor Tracking
- Point of Sale
The categories with the most solutions are CRM, E-Commerce and automation of data entry. E-Commerce is especially popular as so many small businesses have an online sales presence that needs synchronising to their accounting software.
Comparing add-ons by accounting vendor
And what do the various accounting software suppliers provide?
Xero: It is somewhat problematic to quote numbers of add-on programs for Xero as more are added almost each week. As of writing the website lists add-ons in some 15 categories and 14 industries. There are well over one hundred add-on software companies and probably in excess of 200 programs (some appear in multiple categories making counting difficult).
I would expect the majority of businesses using Xero should find a solution for their needs amongst this plethora of options.
MYOB: MYOB has always had a large number of add-on software companies. In the desktop world the integration was achieved using an interface called ODBC which has now been retired. Add-on software companies have had to modify their original solutions to work with MYOB’s hybrid program AccountRight Live which operates on the desktop and in the cloud.
Many but not all have made that switch and some solutions only work when AccountRight Live is used on the desktop and not in the cloud. MYOB’s add-ons probably cover the widest range on the spectrum with esoteric applications such as Loyalty Rewards and Membership Management. MYOB add-ons are also fairly strong on the pure accounting aspects including Fixed Asset Management and Budgets.
MYOB’s browser-based program Essentials has a much more limited number and range of add-on programs. This is indicative of both the smaller customer base and the reduced functionality. Interestingly there are solutions for Cashflow but not CRM or E-Commerce and just nine in total.
Intuit: In the US, QuickBooks Online has a large ecosystem but in Australia it is a lot more limited. This is partly a reflection on the smaller numbers of Australian users and partly because some US add-ons would need to be customised for the Australian market.
Increasingly, Australian software companies have recognised that it is worthwhile to integrate to QuickBooks Online and the number of solutions is increasing rapidly.
Intuit recently announced that both Big-Commerce and Shopify have joined the E-Commerce Add-on solutions bringing to a total of nine in that category and 45 overall.
Saasu: Saasu has around 60 add-on products, with E-Commerce solutions again being the most popular.
Reckon: Reckon is lagging behind its competitors. Reckon recently relaunched its cloud program Reckon One and has said the required interface (or API) for connecting to add-on programs will be released in the second half of this year.
Add-on solutions to augment cloud accounting software solutions are now commonplace. Most businesses should find one that supports their business model and requirements.
Synchronicity of business data gives a tremendous boost to business owners wanting to keep a finger firmly on the pulse of their operations.
To business owners wondering if there is an add-on program to solve a business problem I would say that program almost certainly exists. If it is not there today, it could well be there tomorrow.
As always it is important to recognise that these are tools that need to be used correctly to maximise results. Doing your homework to create a useful solution is always time well spent.
A version of this story appeared on Cloud Accounting Buzz.