It's No Fairy Tale
Goldilocks' search for the perfect accounting software
Table of Contents
A New Chapter for Goldi
Once upon a time, there was a small business owner named Goldi. She opened a boutique furniture store that provided furniture designed to each customer's unique specifications. Goldi had plenty of customers, thanks in part to the excellent PR she received from starring in a book with a couple of bears from her childhood. But Goldi wasn't one to rest on her laurels. She wanted to put her childhood fame (and that nasty lawsuit filed by Baby Bear) behind her. She planned to make a name for herself by running a successful and profitable furniture business.
After creating a detailed business plan, Goldi knew it was important to find a good accounting solution. But, like many small business owners, she didn't know where to start or what to look for. However, Goldi was confident she would know the right solution when she saw it. She came up with a list of questions to help her assess her needs. Then she put on her best pair of walking shoes and headed out.
This is the story of Goldi's search for accounting software that was not too big, not too small, but just right for her business.
Goldi's first stop was a website called Mint.com. She was drawn to the simplicity of the site and liked having a connection to her bank account. While Mint.com let Goldi see how much money she spent by category, she had no way to tell if she was making money on individual furniture sales, she couldn't produce financial statements, and she couldn't enter unpaid bills.
Like many other cash-based tools, Mint.com does a great job of summarizing past activity, but it wouldn't help Goldi analyze her business results or plan for the future. The site is designed for individuals who want to build a budget for each month and then track their progress against that budget.
Mint.com falls short for business use in the following areas:
- Non-cash transaction tracking: It can't manage vendor bills or customer receivables.
- Inventory control: It can't handle product sales or purchases.
- Operational insights: There is no way to track product margins or separate the elements of her business between direct and operating costs.
- Reporting: It doesn't produce financial statements.
Mint.com does, however, have some great features that Goldi should look for in another accounting solution:
- Dashboards and displays: Information is displayed in a visual way, which helps a non-financial person understand the numbers.
- Online banking integration: An accounting system should make it easy for the user to reconcile bank accounts and import transactions.
Goldi's rating of Mint.com: Too little
Goldi understood the importance of tracking and monitoring her spending habits, but she knew her business would involve more than cash receipts and disbursements. She wanted to build customer lists, manage vendor and supplier relationships, and hire employees. She wanted a system that could create and monitor financial statements and produce information that she could share with her banker and accountant.
Goldi was ready to resume her search.
Next, Goldi went to another web-based solution called Wave Accounting. She found it to be similar to Mint.com, but it had more features for businesses—like tracking her vendor bills coming due. Goldi thought she might find a fit here, until she dug deeper into the application. Like Mint.com, Wave Accounting used online banking information and credit card transactions to create categories of spending. It was designed to be simple and straightforward. It produced good financial dashboards—but where was the inventory tracking? Where was the help with payroll processing?
Wave Accounting targets small business owners who want to escape from the disorganization of "shoe-box accounting" and get better control of their cash. It tracks categories of expenditures from bank and credit card accounts but it is not designed to manage product sales or inventory. It is the next logical extension of online banking, however it doesn't go far enough to meet Goldi's needs as a business owner.
Here are some of the missing features for a small business owner like Goldi:
- Inventory tools: It can't track units bought, sold, and returned. It can't handle inventory costing. It can't keep records of her supplier's part numbers.
- Retail tools: There is no tracking of price lists or ability to integrate with Point of Sale systems. There is no integration with a contact management system like ACT! by Sage to help Goldi nurture her customer relationships.
- Unit tracking: There are no tools for seeing which items are selling and knowing when to re-stock.
- GST/HST tracking: A sales tax rate can be applied to sales and purchases, and there is a report for seeing the sales tax paid and collected. But there is no way to automatically generate or track remittances or re-set the balance owed.
- Payroll: There is no ability to add payroll processing.
Here are some features that Goldi will look for in the solution she selects:
- Multi-currency: Invoices can be created in multiple currencies.
- Financial statements: Balance sheets, income statements can be produced as well as aged receivables, aged payables, and several other basic reports.
Goldi's rating of Wave Accounting: Too light
Goldi was starting to wonder if her search was impossible. Would she have to choose between ease of use and good information? Why couldn't someone build a solution that would help her take control of all areas of her business? Weren't all fairy tales supposed to have a happy ending?
Goldi was growing tired, but after a refreshing bowl of porridge, she resumed her trip down the information super-highway.
Goldi found her way to QuickBooks. She installed a trial version of QuickBooks on her computer and began entering transactions. She liked working from a virtual cheque register, but when it came time to run reports and track her inventory, Goldi got a little frustrated. She couldn't keep track of item builds, account for costs the way she wanted, or make adjustments easily. She thought the basic financial reports were pretty limited, so she would need to buy an additional report writer to create the reports she wanted.
QuickBooks is a widely used and respected application. Business owners are drawn to its simple interface and ease of use. Unfortunately, ease of use on the front end sometimes means extra work on the back end—when reports aren't right, inventory isn't costed properly, and employee controls aren't in place. A business solution shouldn't require Goldi to choose between ease of use and quality of information; she should be able to have both.
Here are some reasons QuickBooks might not be the perfect fit for Goldi:
- Bi-lingual: QuickBooks does not currently offer the ability to switch between French and English on-the-fly. Goldi needs to be able to work in French and English. She needs to be able to produce customer invoices in French, and then toggle right back to doing her bookkeeping in English.
- Accounting periods: Goldi has found that it is very easy to delete cheques and invoices that were entered months and even years ago. She is afraid that she won't be able to rely on information she sends to her accountants and bankers if the numbers keep changing.
- Canadian support: Goldi wants access to customer support experts who are based in Canada and understand Canadian business. She really would like a solution that was developed in Canada and is supported in Canada.
- Room to grow: Once Goldi expands her business in multiple locations, she is afraid she won't have room to grow in the software. She would like to have a solution that offers a long-term growth path for her business as it evolves.
Here are some features Goldi would want to find in her solution:
Goldi's rating of QuickBooks: Too soft
- Customer snapshot: All customer information is available from one screen.
- Ability to export information to Microsoft® Excel®: Goldi knows there are times when she will want to work with her information in Excel and likes the options for exporting from transaction screens.
This wasn't getting any easier. Goldi longed to turn over her search to a fairy godmother like that nice lady who always got Cinderella out of a bind. Alas, she was on her own, so the search continued.
Microsoft® Dynamics GPS
Goldi started to wonder if she had been heading down the wrong path. Maybe what she needed was an ERP (Enterprise Resource Planning) solution, like the one the Bear family was using to run their home security company. They seemed to be quite happy with all of the features that they needed to run their 500-employee multi-location business. But could she afford it?
Here's why this solution isn't right for Goldi's needs:
- High overhead: Goldi doesn't understand databases or technology and doesn't want to spend money hiring a big IT staff to keep her system running. She doesn't need a dedicated server and doesn't want to buy a bunch of different software, like Microsoft Frx, Microsoft Forecaster, Microsoft SQL, and Sharepoint, when all she needs is an accounting system that will help her run her business.
- Implementation time: Goldi can't devote months to a software implementation. She wants to set up the system herself and start running her business as soon as possible.
Here are some features Goldi would like to see in her accounting software:
- Integration with industry-specific tools and applications: Point-of-Sale tools, like bar code scanners and credit card terminals, will be essential to Goldi's business and she will want to make sure those tools integrate with her accounting system.
- Transactional integrity: Goldi likes the idea of an audit trail that helps ensure her numbers are accurate.
Goldi's rating of Microsoft Dynamics GP: Too big
It was starting to get late, and Goldi was just about to give up. She didn't know where else to turn. She thought she would have to use an Excel spreadsheet for the rest of her life . . . and that's when it happened.
She found Sage 50 Accounting.
Sage 50 Accounting
Goldi took a look at Sage 50 Accounting. It had a clear, easy-to-use interface. It walked her through the setup process and helped her understand the importance of any decisions she needed to make. It helped her get a handle on her inventory and keep an eye on the health of her business. Goldi dared to hope she had found the right solution. It felt like a perfect fit.
Here's what Goldi found:
- Setup: She won't need an IT staff and can easily install and configure the software herself.
- Training: She can go online and get training she needs on the software.
- Reporting: Sage 50 Accounting offers comprehensive operational and financial reporting that she can easily customize.
- Dashboards: Goldi uses her Daily Business Manager as a dashboard to help her stay on top of the issues that are important to her, like cash requirements and upcoming bills.
- Error checking: She can use the internal accounting control to check for any data entry errors. Goldi knows this feature will save her accountant time and make her financial reports more meaningful.
- Audit trail: She can review all transactions that have been changed by her employees.
- Vendor and customer management: Goldi can establish customer credit limits, monitor payments, and send emails and letters directly from the software. She can use ACT! by Sage as an integrated contact management system.
- Inventory: She can record inventory costing a number of different ways, convert units purchased to units sold, and see how much inventory is on hand at all times.
- Integration with Microsoft Excel: Goldi can export information directly into Excel for further analysis and planning which will help her make better decisions.
- Passwords and rights: She can add multiple users to her system and assign them different security access.
Goldi's rating of Sage 50 Accounting: Just right
Goldi let out a satisfied sigh as she reflected on all she had learned. She had not wasted her time as she searched for the perfect accounting solution. With every stop she made, Goldi had gotten a better idea of the features she should expect in a robust accounting package. Goldi felt secure in the knowledge that Sage 50 Accounting would meet her current needs and would grow with her business well into the future.
She was amazed to learn that Sage 50 Accounting brought so many features together in one easy-to-use, affordable solution.
Thanks to Sage 50 Accounting, Goldi and her furniture business would live . . . Happily (and Accurately) Ever After!
What to look for in small business accounting software
Use the guide below to help you find the perfect accounting software. Narrow your options down to two or three choices, then check off capabilities.
|I need to...
||So my software needs to...
||Show me my current and future cash flow
||Let me create quotes, orders, and invoices without rekeying information
||Help me track unpaid bills and pay them by cheque or electronic funds transfer
||Keep track of items I buy and sell, manage unit conversions, and give me options for identifying part numbers
|Assign costs to inventory
||Give me multiple options for inventory costing, not just average costing
||Show me how much I make by individual item, order, and department
||Give me multiple ways to view my results—income statements, quick dashboards, and spreadsheet-based customizable reporting
||Calculate payroll taxes for me
||Make it easy for customers to pay by credit card
|Manage customer accounts
||Create credit limits and monitor amounts due from customers—with information all in one place
|Have info at my fingertips
||Give everyone on my team easy access to the information they need
||Allow me to forecast income and cash flow
About the author.
Geni Whitehouse is a CPA and speaker and the author of "How to Make a Boring Subject Interesting: 52 ways even a nerd can be heard." Originally from Greenville, South Carolina, Geni now resides in Napa, California. Geni's favorite fairy tale is "The Princess and the Pea," because she really values a good night's sleep. She is an avid blogger and Twitter fan, and prefers grits to porridge.
Geni Whitehouse, CPA
@evenanerd on Twitter
Sage 50 Accounting
#120-13888 Wireless Way
Richmond, BC Canada V6V 0A3
back to Grow Your Business articles