Can I Extend The Lifespan Of Xero Or Quickbooks Online Or Should I Move To A Mid-Market Solution?

During last week’s Digital Accountancy Week, I saw a great session about what to do when your client outgrows its current bookkeeping system. I found it quite interesting that this would be selected as a specific topic for a session, as I wondered if indeed this was becoming an increasingly common issue amongst finance professionals, so much so that it now is a specific focus for software providers.

Now the title does not specifically name competitors, but it has been said that bookkeeping/accounting systems such as Freeagent, Kashflow, Xero and Quickbooks do have certain limitations, either from a transaction or functionality perspective. They do however often have a suite of integrated apps that will provide certain functionality that may also be found in a mid-market accounting product. Let’s also not forget that these products are popular for a reason and that is because all are very good at what they do and will have their own list of positives and negatives. Thus the purpose of this article is not to degrade these apps in any way but merely discuss the issues around whether a company should move to a mid-market solution if they feel their current system has reached its full potential and is still limiting them in any way.

There will be certain advantages to moving to a mid-market solution in that if you are a medium to large-sized company your provider is likely to be experienced in helping you with this transition, understanding the areas of complexity around your business, also as the product is designed for this specific area of the market it is likely to have all the necessary functionality within its own mini ERP solution without having to rely on external applications. As the various modules are all owned by the same provider this should also at least guarantee that they will work together harmoniously. A mid-market solution should also introduce more technical functionality such as accounting periods, consolidations, and analytical reporting which you would otherwise have sourced in via an integrated app if using Xero.

Many accountants will be aware there could be advantages to this approach, however, it still seems to be the case that they wish to continue using the SME solutions above rather than invest in a larger mid-tier product. This could be for a variety of reasons. Maybe they do not wish to service this kind of company and would be happy to move them on should they get to this size. It is fine to know what you are good at and service within your niche.

Investing in learning these systems can be a big task which they will not get paid for, plus, could end up being a waste of time if it works out the product is not as good as they wished it to be. It is also a risk the first time you undergo this process, potentially with a good client you would want to keep, so there is a leap of faith taking on something you don’t know much about whilst maintaining the good relationship you have with your clients.

As such what some accountants will do is batch transactions together by type and post in bulk to circumvent some of the transactional limits in these systems. Some integrations with the SME’s products will post transactions 1 by 1 which causes reports to be slower to run as transaction limits are potentially reached. The solution to this tends to be to unlink systems and then extract a report into excel, add everything up and then post a single transaction for the totals per day or month. This takes time, is less automated and therefore open to human error. But it does solve the issue (at least in the short term) and avoids the problem of tackling a bigger solution and potentially becoming a lord of many and master of none in the accounting software world.

If only there was a system that could handle this task of extracting and aggregating the transactions for you and posting in bulk… well actually… there is. There are tools that will integrate into systems and extract all the data so you can get detailed reports, whilst still carrying on with only posting a daily/weekly/monthly total into the accounts. This has the impact of automating the posting and avoiding extracting the data manually, whilst extending the life of these applications so potentially you do not need to move to a mid-tier product.

The question of whether you should move comes down to functionality and if you are missing something that simply cannot be supplied by those providers or integrated apps. I would say nothing is without cost and the system that does this would need to be paid for but it would save a potentially large migration cost to a piece of software which isn’t really wanted.