Best Cloud Accounting Software for Small Business – Collaboration

By July 24, 2015 July 14th, 2017 Accounting Software, Cloud Accounting Software

Welcome to part 7 of our comparison series between Freshbooks, Xero and Quickbooks. Feel free to view Part 6: Invoicing & Payments. Now on to Collaboration.

One of the greatest obstacles in traditional accountant/entrepreneur relationships was the way they collaborated.

Here is what it used to look like:

  1. Entrepreneur maintains accounting on desktop
  2. Entrepreneur sends file to accountant
  3. Accountant looks at file and make changes
  4. Entrepreneur can’t do accounting while accountant reviews information
  5. Lots of emails fly back and forth
  6. File is sent back to entrepreneur
  7. Both must keep track of the latest version of the file
  8. Nearly impossible to review a history of changes to the books

If there were additional people that needed to touch the books, then it was even more complicated.

Now that accounting systems are in the cloud, collaboration between the small business owner and the accounting team can improve in dramatic ways, depending on the software that is chosen.

In this review, we’ll evaluate how our competitors answer two simple questions. The answer to these two questions should give you a good idea which platform allows for the best collaboration with teams and accountants. The two questions are:

  • How do accountants and business owners communicate about accounting reports?
  • How do bookkeepers communicate about bookkeeping tasks and transactions to small business owners?

I chose these two questions because it addresses the type of collaboration needed by most small business today, because transactional communication can eat up a lot of time. On the flip side, accounting reports and comments are what upper management look at and communicate about. So this review should address both types of small business owners, the single member and the growing small business with several employees.

FYI – If your time is short and you need a quick summary, skip down to the bottom!

Freshbooks

Accounting Report Communication

Freshbooks allows for multiple users to access your account at no extra charge. This means you can add in your staff, accountants, and business owners to the platform to review information for free. The information is readily available to all at any place and time. This is helpful because you can all see the same data at the same time on a call without being in the same room or having to worry about what file version you are looking at.

FB_Add_Team_Members

In my experience, most entrepreneurs want to either see a nice PDF report to review during the call, or have the ability to be in the software themselves and look through the live version of the report. Though Freshbooks does have the online version, the PDF report is rudimentary in its design and looks like an old 2005 QB income statement. Freshbooks also doesn’t have the ability to store a saved report in their system, so it has to be exported. This can cause issues if someone has accidentally changed some of the older accounting data.

Here is a sample of the type of design you’ll have in a PDF report from Freshbooks.

Communication of Bookkeeping Tasks

Freshbooks includes a variety of fields that can be filled with information that helps in the communication process for reconciling transactions. For example, on their sales invoices, you can leave notes for your customers to view that also might be helpful for a bookkeeper to see.

Freshbooks_-_Notes

You can also pre-code sales invoices and expenses to an account so that when your bookkeeper reviews them she can know how you categorized them. Freshbooks also allows you to upload images of expenses that aid the bookkeeper in knowing how to categorize a transaction.

Inevitably, however, there are questions that need to be asked by the bookkeeper to the client or team member and in those cases, the only option I see available in Freshbooks is to compile the questions into an email and send it off.

Xero

Accounting Report Communication

Xero bills itself as a full accounting system and has backed that up with some pretty good reporting and collaboration features inside the platform itself.  Xero has a few features that are particularly helpful for accountants and entrepreneurs that are aimed at making communication about the reports easier.

  • Reports can be stored inside the system
  • Links to reports can be sent to anyone with access
  • Footnotes and comments can be added to any line on the reports

Xero_Report_Screen

Xero makes reviewing reports very easy with small business owners.  In my experience, I can share a link to the report in Xero with the client (the report is a snapshot and locked down so no data can change), and we can review the report together and drill down into expenses on the spot.

In addition, if I’m really wanting to impress, I can include footnotes at the bottom of the report referencing line items above that provide explanation and visibility into the financials that the small business might find helpful.

If a PDF is preferred, I can send that out via email. Here is a great example of a PDF report with footnotes.

Communication of Bookkeeping Tasks

Aside from the nature of the cloud being a benefit for collaboration, Xero has built in some particularly useful features to aid in communication surrounding bookkeeping and transactional questions.

Perhaps the most used and best feature is the ability to leave comments on any transactions in the reconcile screen.

Reconcile_Screen_-_Collaboration

Any user with access can go in and write comments in there. You can also just copy the web address for this page and send it to a team member or customer and have them go in and add comments.  I do wish there was some notification that went out to the customer when there were comments for them to answer, but it is still a very useful feature.

Secondly, Xero records a log of all activity on a transaction, which can be viewed in the notes area. If I’m reviewing work done by another team member, I can look at this log to see any comments, notes, and actions taken against the transaction.

Notes_-_Collaboration

Conclusion

Xero has built in some great features for team members, bookkeepers, and small business owners so they can communicate better and make the accounting process more streamlined.

Quickbooks

Accounting Report Communication

For collaboration, Quickbooks Online is very similar to Freshbooks.  You can export reports via a PDF or excel file, and it doesn’t have any custom theme or design to it. The reports cannot be saved in a file within Quickbooks and must be maintained elsewhere.

QBO does allow for linking of their reports so you can send a custom report link to a client via email for a phone call regarding the financials, and be looking at the same data.  However, there isn’t a footnote or other commenting feature on the reporting, so you can’t highlight certain parts of the report to the client.

Communication of Bookkeeping Tasks

Quickbooks has implemented some very useful features to collaborate within Quickbooks with your accounting team or small business owner.

On any transaction that has been posted, you can add “messages”and send it to any user in the organization. This user is notified via email and can click a link that will take him/her to the transaction to reply.  Additionally, in the dashboard screen of the client, an “activity” area shows all the current messages that need to be addressed.

I do wish that Quickbooks had this same feature for unclassified transactions that come through the bank account, but it doesn’t minimize how great it is to use it for all other types of transactions.

A video on how to collaborate has been created by QBO themselves and serves as a good example.


Conclusion

The two best here are clearly Quickbooks Online and Xero.

Looking through how they compare, they both do different things better. Quickbooks has a message system that Xero doesn’t, and Xero has reporting, sharing, and notation features that Quickbooks doesn’t. Based on the criteria here is how I rate these two:

How do accountants and business owners communicate about accounting reports?

Xero – 8/10

Pros: Has deep linking, footnotes on reports, and storage of reports within the system.  

Cons: No notification system for when reports are ready.

Quickbooks – 5/10

Pros: Has deep linking and can email reports out.

Cons: Cannot annotate on reports and cannot store reports inside system.  No notification system when reports are ready.

How do bookkeepers communicate about bookkeeping tasks and transactions to small business owners?

Xero – 7/10

Pros: Can comment on transactions in reconciliation screen, can leave notes on posted transactions.

Cons: No notification system to involved parties within system. Notes on reconciled transactions are difficult to find and not apparent enough.

Quickbooks – 8/10

Pros: Can leave questions and notes on posted transactions.  Users are notified and a link sent directly to them so they can easily answer.  The dashboard shows notifications and current conversations.

Cons: Cannot leave notes on unclassified transactions, which is where I’d think you’d have the most value.

Overall Winner – Xero

That’s it for our collaboration review.

Stay tuned for our final comparison between the platforms, as we will comparing the reporting capabilities of Quickbooks, Xero and Freshbooks.

Also, feel free to review the rest of the Best Cloud Accounting Software for small business series:


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