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Review of Collsoft Payroll 2018

Your Payroll needs to be well managed

Most business owners I know are a little bit frightened of payroll.

If you don’t manage it properly, you can end up with a big bill at the year end.  If you agree to pay an employee’s wages on an after-tax amount – agreeing to pay, say, € 500 into the hand –  you could find yourself having to pay a very large gross pay to leave the employee with the agreed after tax amount.

You need to get it right and the best way to do that is either to have access to a good payroll package or else to outsource your payroll to somebody.

Collsoft (www.collsoft.ie) is one of the most popular payroll packages for Ireland.

In this video, I am going to provide a quick review of the software focusing on:

How easy is Collsoft to Navigate and use?

Are the Collsoft Payroll calculations reliable?

Are the Collsoft Payslips user friendly?

Does Collsoft Payroll provide the essential Revenue Reports?

Does Collsoft Payroll provide good management reports?

Is Collsoft Payroll Cost Effective

What are the alternatives to Collsoft?

What payroll package do I recommend??

The video takes about 22 minutes.  If you are short on time, go straight to 17:30 mins and you can pick up a summary of the review from there.

After viewing, if you have any questions please feel free to leave a comment or else contact me.

Review of Sage 50 Accounts

Choosing new accounts software can be a challenge.  You want something that you can use yourself so that you won’t always be dependent on someone else.  You want it to be reliable so that when your review your Profit and Loss you can believe it and you can be confident when you are submitting your VAT and any other returns. Finally, if you are hiring you want to know that there are plenty of people out there with experience in your software.

On top of that, you may have well-intentioned people giving you advice.  Your accountant may prefer to use a particular package.  Your office staff may be familiar with another package and want you to choose that so that they don’t have to learn something new.  You will hear and see advertisements from companies telling you how good and popular their particular product is.

It can all become very intimidating.  You are running a business after all – an expert in your own area.  You don’t want to have to become a software expert as well.

The bottom line is that you want software that will be a good fit for you and your business.  You want something that will give you the information that you need as efficiently as possible.  I have a separate blog post call “How to choose accounting software” that will help you decide on selection criteria.

For now, I want to look at one particular accounting software package called Sage 50.  I have been working with accounting systems now for more years than I want to remember. I have worked on large sophisticated systems and worked on the smallest systems.  In this article I will draw on that experience to help you understand the features of Sage 50 and make a good decision.

History of Sage 50

Sage 50 is a long established product dating back to the 80s.  For a long time, it was market leader and it is widely used throughout Ireland.  Sage also produce software that helps accountants produce annual accounts in the annual accounts format (Sage Accounts Production).   This software can import data directly from Sage 50 which simplifies the annual accountants task.  For that reason, many accountants will be members of the Sage Reseller plan and will recommend Sage to their clients without always being fully transparent about any possible conflict of interest.

In recent years, there have been a large number of challengers to Sage 50 including Quickbooks and Xero.  Sage have been adapting and updating their product in recent years to meet these challenges.

What’s good about Sage 50

  • The product itself is long established and proven. It does what it is supposed to do – when it is used well it works.
  • The product has a large user base so there is lot of information available to help you use it. There are a lot of articles available on its different features and on how to deal with common problems that might arise
  • There are a lot of people around with experience using Sage 50 so that if you need to hire or replace one of your accounts staff if should be fairly easy to find someone with Sage 50 experience.
  • Most accounting firms will have clients who use Sage 50 so they will be familiar with the software and will be able to help you if you need help.
  • Sage 50 is pretty good at VAT. Because it started out as a UK system and we share similar VAT systems to the UK, Sage probably does VAT better than most other accounting packages.
  • Sage 50 handles Bank Reconciliations well.
    On the reconciliations screen you match transactions against what have appeared on the bank statements.  There are good reconciliation reports available.
  • Sage 50 and Foreign Currency
    Some versions of Sage 50 offer the ability to handle foreign currency.  Basically, you set up currencies and input exchanges rates whenever you want – usually month end.
    The software will allow you maintain bank accounts and suppliers or customers in foreign currencies and revalue at month end.  The only issue seems to be that once you set up a customer or supplier for foreign currency you can only transact in that currency – you cannot handle a once of local transaction for that supplier.

What’s not so good about Sage 50

The underlying technology of Sage 50 – multiusers

Sage 50 was originally developed in the 1980s and the database technology that it uses is not as good as what the newer software is using.  In particular, if you have a multiuser environment you will find that you cannot do certain things while other users are active on the system.  I have often been in office where someone is calling out “Who’s in Sage? Can you log out?”  I have only  experienced that with Sage and its very frustrating for all involved.

Interface for Sage 50

The user interface looks like something from the 80s or 90s.  I know that you will get used to it but its not as neat or as intuitive as modern software.

Year End in Sage 50

One thing that really frustrates me is how Sage 50 handles year end.   At Year End you run a close off procedure which transfers all of the profit and loss accounts to the balance Sheet.  You can only do this once and you should wait until your accounts have been finalised so that you transfer correct figures.

However, many small businesses don’t finalise their annual accounts for several months after year end.  Those several months can run to 9 in many cases.   While you are waiting to finalise last year’s accounts, all of this years transactions are classified as future.  You cannot get a monthly profit and loss for the current year until last year is closed out.

As an accountant who strongly recommends that my clients should produce regular management accounts, I find this to be a major weakness.

Drill down in Sage 50

Drill down is a feature that is now very common is modern accounting software.  What is means is that if you run a report and display it on screen you can drill down ie click on a number in a report to see what that number is made up of.

Drill down is really useful for when you are reviewing accounts and trying to better understand why you are getting the results that you are getting.

For many years, Sage 50 did not have drill down.  In recent years they have added it to some reports but not to all.  It’s kind of there – but not fully there.

Correcting Errors in Sage 50

There will always be errors to correct in any accounts package.  People do make mistakes.  At year end, I often find items misclassified and I want to correct them.

For many years, Sage 50 did not allow corrections as they took the view that this weakened the audit trail.  Rather, you had to post a journal to transfer the original figure. What you were left with in your accounts was an incorrect transaction and a correcting transaction.  This makes it harder to follow what had happened.

They have amended that in recent versions but its not perfect.  Some, but not all, transactions can be corrected but often to correct those all other users have to be out of the system – the multiuser issue.  Additionally, finding and editing the transaction is cumbersome.  Overall, I don’t like how they do handle corrections.

Collaboration in Sage 50

If you want to collaborate with your accountant using Sage 50, you have to share a backup. The accountant can make changes, if they also have the software, and then they send you back a backup.  You can’t work on your data while the accountant is working on it as restoring his backup will overwrite the work that you have done.

This is very cumbersome compared to what’s possible with any of cloud packages where the data lives in the cloud and anyone with a browser can work on it, more or less, at the same time.

To overcome this issue Sage have introduced Sage Drive.  I have read about this feature but have not yet met anyone who is using it.   I have been looking at the Sage Guides for Drive and its seem complicated enough.

Reporting in Sage 50

Reporting in Sage 50 is mixed.   They have lots of reports and often many variants of the same reports.  Almost everything that you need is covered within the reports.

Reporting can be slow – you can monitor the status of the report as it is being built and it does seem slow.  The bigger your data base the slower it will be.

Some reports have little settings that can catch you out.  For example, if you are running an aged customer balance report for your year end, the report automatically defaults to including any payments after the year end.  This means that it won’t be showing you the actual customer balances as at the year end.  For me, that’s a strange default.

The Profit and Loss and Balance Sheet Reports all come from an element called Chart of Accounts.  With this the user can edit/configure the Profit and Loss or Balance Sheet to suit themselves.

Once you have set it up, you can add or edit accounts. If you don’t update your Chart of Accounts to allow for the changes that you made, this may put your chart of accounts off.

I regularly see balance sheets that do not balance because of adding new accounts.  Its not difficult to fix but it can take a bit of time and not everyone notices the reports are out of balance so could be working with incorrect information.

If you want to create a new report, Sage provide a Report Builder.  I have yet to come across any one who uses this.  For most businesses, writing a report is a rare requirement and most businesses don’t have the time to learn how to use the report writer to do one report.

One alternative is to outsource the writing of the report.  Another alternative is to export the report to Excel and play around with the data to get the report that you want.   Again, not everyone wants or can do that.

Overall, while there’s a lot that is good about Sage 50 Reporting there remain  a number of problems.

Integrating Sage 50 with other Applications

I am not aware of any applications that integrate with Sage 50.

Sage is a large company with many other products. Sage want you to buy their products so they don’t make it easy for you to buy another module, say an inventory management module, from someone else and integrate it with theirs.  They prefer you to buy their inventory module.

Overall Cost of Sage 50

Sage 50 was always expensive compared to other products.  They seem to have reduced the pricing so that they are more competitive now.

If you are buying it today, you have three options.  Sage 50c Essentials cost € 25 per month.  This is a basic package for 2 users and one company. The next package is the standard package.  This allows for 2 core users and up to 10 companies and allows you to track stock and have multiple departments.

The Sage 50c Standard Package costs € 80 per month.  This allows 2 users work with up to 10 companies and it handles stock and projects/departments.  It doesn’t have multicurrency.

Finally they offer the Professional Version which adds departments, projects, sales orders and purchase orders and foreign currencies.  This costs € 155 euro per month.

The essentials compares reasonably well with competitive products. The Standard seems more expensive than the competition and the Professional is very expensive compared to alternatives.

Is Sage 50 right for you?

If you use accounting software mainly for compliance purposes then Sage will do that for you.  On the other hand, if you want to be more hands on and to use your accounting software to get good information about what exactly is happening in your business then Sage is not as good for that.

In my experience, the way things are developing, business owners are much more comfortable with software and they want software that they can use themselves.  The want to be able to access their business information on a phone or a tablet and Sage 50 is not a good fit for that.

Sage 50 is not a product that I recommend to my clients.  If you have read some of my other blogs, you  will realise that I encourage my clients to “own their own accounts”.  In my opinion, Sage 50 doesn’t support that approach as well as the competition.  For the money they are asking, you will usually get a better solution elsewhere.

Over to you

What do you  think?   Have you experience of Sage 50?  Am I missing something?  Let me know if you agree or disagree.

Review of Xero – the cloud accounting software

Review of Xero – the cloud accounting software

If you run a business, the likelihood is that you will have heard of Xero, the online accounting system.  It seems to be everywhere these days.

Are you wondering if this is something that you should be using?  Maybe you are frustrated by your current accounting system and you think that Xero might be better.  In this blog post, I review Xero so that you will be better able to decide if it is suitable for your business.

I have been working with accounting systems for over 30 years now and I have been exposed to a wide range of solutions – from complex systems integrated into ERP packages down to the most basic solutions used by microbusinesses.   This experience includes leading the selection and implementation of solutions in large manufacturing industry and also being the accounting specialist on teams to help clients select large ERP (Enterprises Resource Planning) Solutions.

I approach this review  of Xero in the same way as I approached a review of any accounting software – looking at approach, functionality, costs and ease of use

Before evaluating – begin with the end in mind

Before getting into the evaluation, you need to be clear on what exactly you want your accounts software to do.

Do you want to use it simply for bookkeeping – keeping track of customer balances, supplier balances, bank balances and vat owing.  Or will you be using it to get analysis and useful insights into your business.  For more on this see our blog post http://www.accountsplus.ie/financial-transactions-insightful-information/.

What type of transactions do you have?  How many sales invoices per month? How many purchase invoices per month? Do you give and/or take credit? Can you download your bank statements from your online banking – if yes, what format?

Who will be using it – just you, staff members?  What levels of computing skills do you have?

How much support will you be getting from your accountant?  Will they be supportive of this or will they leave it to you?

What reports will you  want to run?

Xero’s Philosophy

Xero is cloud based and they take advantage of the fact that it is easier to share information between cloud applications than it is with desktop applications.

With Xero, you enter your sales invoices and purchases invoices as you do with most other software. Then you import your bank statements and you assign the various transactions to your income and expense classifications.

Pretty quickly, Xero “learns” from the way you have assigned, or coded, the transactions and soon starts to make suggestions as to what they are.  You can accept or edit, those transactions.

Once the transactions are entered and coded, you can run any of the usual reports.

That is the core approach.  However, Irish banks don’t facilitate the sending of statement information to Xero (bank feeds) so, for Irish users, a major advantage is lost.

Ease of Use

Setting up Xero

When you first go into Xero, you will see a dashboard which is customisable.  This should show all of the elements of Xero that you want to access regularly.

Setup is straightforward.  You enter your company name and your VAT number etc.  You may need to get opening information from your accountant so that your opening position is correct and you should tailor the list of income and expense accounts to get the information the way you want it.

Once you have it set up, you can start to enter sales invoices and purchases.  For each customer and supplier, you will need to enter their details.  You can do that up front, but most people do this as they are first creating the transactions for that customer or supplier.

You can tailor your invoices to suit the way you want them to look.

Day to Day transactions in Xero

Entering invoices and purchases in Xero is easy.  You have the option of having comment lines on your sales invoices.  Once the invoice is entered you can email it to customers and the system records that the invoice has been sent and when.

You can set up recurring invoices or bills.  You can also copy an existing invoice or bill to create a new one.

Training for Xero

Xero provides online training which you can use to get familiar with the product.  They also have a test company that you can use to practice on and get familiar with the product.

There are also independent online training options available on online training providers such as Udemy.  Just search for Xero in these training providers.

Correcting Errors in Xero

One area where I find Xero a little bit awkward is correcting transactions.  As you enter transactions, you may make mistakes in coding or maybe in the VAT rates.  Some accounting packages allow you edit these quite simply, much as you would in Word or Excel.

With Xero, you have to drill down to the basic transaction and then you have to put it into edit mode before you can edit.  It’s an extra step which can be a bit slower than I like.

Reports in Xero

Xero has all of the standard reports that you would need – Profit and Loss, Balance Sheet, Aged Customer Balances, Aged Supplier Balances, Bank Reconciliation Reports and Trial Balance.

Report Dates in Xero

When you go to the Profit and Loss in Xero, they present current month plus last three months plus YTD.  You also have other options – year to date, month to date, current financial year – which is monthly report.

What I find I need most frequently are last month or last month YTD. I can get those but I have to do a little bit more work to get them.

I would prefer if those reports were options to just click on.  It’s a small thing but it just adds to the time needed.

How Xero handles VAT?

VAT is an important element of any accounting software.  On paper it looks like Xero can handle VAT the way we, in Ireland, need it to.   However, its not that simple.

Irish users are given the global Version of Xero and users are reporting difficulties with that.  The more sophisticated users can work around it.  Other users seem to struggle.

For Ireland’s cash basis of VAT, sales are invoice based and purchases are cash based.  Xero can only do either “all invoice” (i.e sales and purchases) or “all cash” but not the Irish Hybrid.  You can get around this by running the reports both ways but that’s messy.

VAT in Xero needs to be well setup at the beginning so that the data is set up for easy analysis.  You need a good understanding of VAT and the software to do that.  When you do set it up well, the EU reverse charge and the RTD reports can all be run with some workarounds.

Another issue to be careful with is the closing off of filed periods so that a late transaction for a VAT closed period does not get missed.

Drill down in Xero

Drill down is a feature that I find invaluable.  If you are looking at a Profit and Loss and see a figure that looks wrong, you can click on the figure to open a new screen showing the make-up of that item.

From there, you can drill all the way down to the lowest level transactions making up the queried figure.

Xero has drilldown and it works well.

Using Xero to Collaborate with your accountant

One of the big advantages for me as an accountant is the easy ability to access clients accounting information.

If the client is having a problem entering transactions, they can ring me and I can check it out quickly by just logging on.  I no longer have to travel to their premises.

If the client is concerned about results and wants me to look review his/her accounts, that’s easy to do as well.

Xero allows the accountant to help with the setup, possibly even to complete the setup, and to help with VAT returns or reconciliations.  Overall, it makes it much easier for the client to have timely  and reliable accounting information to support them in managing the business

Exporting from Xero

You can export most reports from Xero to Excel.  The export works well, you get an excel sheet that is formatted well.

With some other accounting software, I find the exported sheets have merged cells which make working with large blocks of data awkward.  And let’s face it, you are usually exporting the data because you want to analyse or edit it in some way.  You don’t want to be hindered by merged cells.  With exports from Xero, I don’t find that problem.

Bank Reconciliations in Xero

The big breakthrough with Xero was the automation of the bank reconciliations using bank feeds directly from your bank.

Unfortunately, as mentioned above, Irish Banks are not yet providing those feeds.

We do have a work around however.  You can download transactions and import them to Xero.

Most, but not all, banks allow you to download bank transactions to a csv file.  Once you have the csv file you can open that file and edit it so that the data is presented as Xero needs it.

Once you import the file, it’s as if the automatic bank feed had worked.  You will be presented with a reconciliation screen where Xero shows you all the transactions imported and offers you its suggestion for what each transaction is.  If it doesn’t know what the transaction is, typically the first time it comes across that transaction,  it waits for you to tell it how to analyse it.

Working with csv files is a bit fiddly and I often get files rejected for reasons I don’t fully understand.  I then waste time playing around with file, deleting rows or columns to make it importable.  If you are not comfortable with csv files then you are not likely to be able to use this.

You can always leave the reconciliation to your accountant.  However, that’s losing out on probably the best feature of Xero.

Departments or Projects in Xero

Xero has always had the facility to organise your transactions around departments or categories.  This could be useful for larger businesses that want to track profits or costs by departments.

It only added the facility to track by projects recently.  This would be useful for any business that works on projects such as building contractors or event management companies.

Foreign Currency

Xero offers three different user plans – Starter, Standard and Premium.  Only the Premium plan handles multi-currency.

If your business needs to be able to handle foreign currencies then you will have to choose the most expensive plan.

The foreign currency feature is neat in that they pull the exchange rates from online rate providers so your exchange calculations are always reliable.

If the exchange rates change between the time the transaction (sales or purchase) was first recorded and it was paid, the system can handle the foreign exchange gain or loss and record them correctly.

Cost of Xero

The cost of the plans are as follows – Basic $20 per month, Standard $30 per month, Premium $40 per month.  (I am surprised to see dollar pricing.  I thought they priced in € but dollars are what they are showing for Ireland as I write this.)

They regularly have discounts for three to six months so you may be able to avail of that.

Remember that this is an ongoing monthly cost so if you are on the standard plan then that is going to cost you $360 per annum.  This seems expensive when you consider that you can still buy Quickbooks desktop for about €180 and you will usually get 3-4 years out of that.

On the other hand, Xero is constantly being updated and, it being a cloud product, you are always working with the latest update.  Also, unlimited support is included in the monthly fee and you also have access to an online user community.  With desktop products,  you typically have to pay extra for support.

Also, you won’t’ have to run a server if you are a multiuser site and you won’t have to worry about backups as Xero look after that.

What platforms can you use Xero on

Xero is a cloud product.  You can access it through a browser  (on Windows, Apple or Linux) or through apps for Android or IOS.

In my experience, the apps are best kept for creating and entering transactions.   For working with reports or for importing bank transactions, you are better working in a browser on a desktop or maybe a large screen tablet.

Xero Add-ons

A really attractive feature of Xero is the number of add-ons that are available for it.

Xero can communicate with other applications using APIs (Application Programming Interface).  In practice, what this means is that lots of other cloud products have been developed that provide additional functionality to what is in the standard Xero.

A small industry has emerged of developers who create products to fill the perceived gaps in Xero.  For example there are inventory apps, receipt management apps, crm apps, time tracking apps, job costing apps, integration with paypal etc.

A full list of apps can be found here – https://www.xero.com/ie/marketplace/s/app-functions.

Not every company seems to manage stock, or inventory, in exactly the  same way.  The standard Xero stock may not give you all the flexibility you want. In that case, there are likely to be add-ons that will help you.

Its good to have that option to expand functionality.

Xero is constantly being updated

One of the things that I am very conscious of with this article, is that, like most cloud apps, Xero is constantly being updated and those updates are automatically rolled out to all users.

I plan on updating it as often as I can and definitely for all major changes.   But when you are reading this, keep an eye on the date and realise that there may have been new features added or problems since it was written

What other products compete with Xero

Right now, the main competitors are Quick Books Online and Sage Online.  In Ireland we also have The Big Red Book Online , Sortmybooks and Surf Accounts.

I think Quickbooks is likely to be the biggest challenger to Xero.  Xero was first to market but Quickbooks had an excellent desktop product which they have been migrating to the cloud.  A few years back, QB started to move to the cloud.  At first, I thought their cloud product was a long way behind the desktop offering but it has improved.  Quickbooks pricing is slightly cheaper – € 14, € 21 and € 29 – and there is currently a 70% for the first year.

If you want cloud accounts and haven’t already switched to Xero, I think you should also keep an eye on Quickbooks Online.  In recent months, I have been looking again at their cloud solution and I think it’s now probably as good as and may be getting better than Xero.

They seem to be bring a lot of the features of the desktop product into the online product which can only be a good thing.  They also have the bank feeds functionality which, I hope we will one day be supported by the Irish Banks for all cloud solutions.

Their desktop product also has a weakness with VAT and I assume the online is similar.  Like Xero, there are workarounds but it’s not ideal.

Unlike Xero, they have a companion desktop app that addresses slow internet speeds.  You enter transactions into the app which buffers the transactions and uploads them as fast as your connection allows.  I think that will address the complaint many bookkeepers have about cloud accounting performance.

Conclusion

I have been using Xero for my own accounts for a couple of years now. Before that I used Kasfhlow, another cloud accounting solution, for many years.

I think that for Xero to be a good fit for you, you will likely have

  • A good broadband connection. Even with fast broadband, experienced bookkeepers entering large numbers of transactions, report that online accounting software is slower than desktop.
  • You will be creating your sales invoices on a computer already so entering them in Xero will replace what you are currently doing and not creating more work.
  • You have little or no purchases on credit. You won’t be entering many bills and your expenses will be made paid by bank or credit card transactions.
  • You will have either no inventory transactions or a small number of inventory transactions.

That mix of transactions will not be affecting as much by performance issues.

I have been happily using Xero for almost three years now and its a good fit for me.  If you have high volumes of transactions or you have inventory items, it could still work but you would want to make sure that you can process those transactions fast and efficiently.  That may require the use of add-ons.

 

Your Turn

Have I missed anything?  Do you disagree with anything?  Let me know.  Every user and every business has their own way of doing things.  I would love to hear other views on Xero.