The ferocious battle for customers of online accounting software is moving in a surprising direction. Trades businesses, especially those managing inventory and projects, appear to be prime targets for at least two major vendors.
One of the most unusual revelations in Reckon’s preview of itsonline accounting program, Reckon One, last month, was the inclusion of project management before critical components such as payroll.
This was a deliberate nod towards project-based businesses such as in the construction industry where invoices, costs and sales are attributed to a work site. Trades are heavily represented in Reckon’s business, comprising 20 percent of its customer base, Pete Sanders, general manager of Reckon’s business division, told BoxFreeIT at the Sydney launch.
Xero has had some success in trades due to “add-on” cloud programs such as GeoOP and Connect2Field which send invoices and other data directly to Xero. These two programs use real-time job sheets and 3G tracking so trades and services businesses can see where field workers and customers are located in a Google Maps-style interface.
GeoOP and its partners have generally tipped Xero as its preferred accounting system as did Connect2Field – until Reckon bought a stake in it in April last year.
Today Xero released two improvements for trades businesses. First, an annual report that tracks taxable payments, used by the building and construction industry to report payment contracts to the ATO. It can be used for payments made in the 2012-13 financial year.
And Xero now recognises inventory item codes on invoices imported from other accounting programs (such as MYOB) and use them to automatically create inventory items. From the heated comments in Xero’s community request forum the lack of this feature has been a major impediment to migrations.
Why the trades industry? Many trades businesses are still writing out invoices on paper and doing their accounts in Excel. The jump to automated, mobile software-based systems that run on iPads and smartphones have the potential to save many hours in a week and make a big impact on profitability. It should be easier to show the benefits of cloud software and therefore easier to make the sale.
In other words, the trades are low-hanging fruit for Xero, and a defensive market for Reckon.