We’re already working with Grant Thornton for Australian reports and work will start soon for the UK, then the US shortly after.

This functionality is a fundamental part of Xero's "one ledger" strategy: to build integrated client and accountant side accounting tools around one dataset. Report Packs are the "accountant side" part of the equation.

One cannot argue with the logic of a "one ledger" strategy. It seems common sense to have the business's internal management reporting and the accountant's external financial reporting driven from the same transaction database. I do wonder, however, if accountants (in the UK at least) will embrace the Xero ideal.

The accountant side of reporting in the UK is currently handled by specialist software packages, provided by specialist suppliers. My old firm uses IRIS for accounts production, for instance.

The main benefit of using IRIS is that, as the accountant, all one needs to do is input the final trial balance numbers for a particular accounting period, and IRIS will do the rest: the rest being produce a well laid-out, multi-page report in the prescribed format, complete with cross referenced notes and accurate pagination.

This might sound pretty straightforward, but trust me, automating this publishing process provides a massive time saving for the accountant, compared with a manual process, perhaps using Excel or Word.

As far as we were concerned, our work effectively stopped once we had the final trial balance numbers. My concern is that might not be the case with Xero's Report Packs, and if not, accountants might want to stick with what they already have.

If Xero has default layouts that cover most common scenarios but, crucially, can also handle exceptional circumstances, without user intervention, then everyone will be happy. If the accountant is often left to manually add, edit and reorder text then I suspect accountants will prefer the IRIS way.

From the little I have seen, Xero seem to be building rich functionality to allow accountants to format and manipulate reports in a really flexible way. I just wonder if the accountants really want to be involved at all.

Making an appointment this morning was not easy. "The system is down" I was told. Although a somewhat vague assertion, I think we could all guess that this meant that the computerised appointment and practice management software was unavailable to the staff due to a technical fault.

Eventually, I was told to turn up at 11:00 and wait until someone could fit me in.

I was quite content in the waiting room as I had the latest version of The Economist to read on my Android app. But I did notice the sighs of exasperation coming regularly from behind the counter. I also had to listen to the same explanations and apologies being endlessly repeated to other patients as they came in.

After a short while, I spotted a perspiring young man almost running up the stairs carrying a large black aluminium box. "That'll be the server" I mentally noted. Whatever, it was not back online by the time I had returned to the waiting room after my treatment. Exasperation was still the mood of the day.

To bring my little story to a conclusion, when I offered my debit card to pay, the girl told me that they were unable to process cards while "the computers were down". Since I had rushed into town and was not carrying cash, I left with the promise to pay next week instead (which of course I will).

Driving home, I pondered how things could have been so different for my dentists.

They clearly had an on-premise server, running installed software over an old-school, wired LAN. They also, clearly, had no on-site technical support staff (why would they?) and therefore needed to rely on a third party company to respond to their emergency and fix the problem for them.

If only they had been using a SaaS appointment and practice management service. No need for on-premise hardware, software or expertise then - instead experts and a controlled environment in the cloud. In this scenario "the system is down" becomes "we have lost our internet connection" - something altogether more manageable and easily fixed.

As for me not being able to pay by card, there are solutions out there that allow for the taking of credit card payments using the mobile phone network. And Barclays in the UK announced yesterday their new Pingit service, which should accelerate the use of mobile payments everywhere.

The technology exists to have prevented the pain and suffering in my dentist's office today, had they chosen to adopt it. Perhaps, following this experience they will.

For once though, it was nice not to be the one on the receiving end of the pain and suffering.

Online accounting software provider KashFlow launched a new marketing website and logo design yesterday, in what really amounts to a revamp of its corporate image.

The traditional colour scheme has been retained but toned down and made more business-like in my opinion - the pink is less, well, "girly", and the blue less "baby blue". The new logo is tighter and cleaner and just seems more substantial somehow.

In my opinion this represents a substantial step forward and statement of intent.

KashFlow is in the vanguard of new cloud accounting software providers in the UK, together with Xero and FreeAgent. However, I have always felt that the other two players have presented a better corporate image: somehow appearing more serious. Clearly, appearances can be deceptive and KashFlow is a very serious business, but the fact is the old corporate style and presentation lacked somehow.

From yesterday, that (mis)perception has been dispelled.

After recently sourcing funding for expansion, KashFlow seem to be, for the short-term at least, in a position to slug things out with their better financed rivals - after years of punching above their weight.

Yesterday's revamp looks like being the start of interesting times at KashFlow.

At the moment, it seems some are thinking about ways to avoid the cost of software purchased solely to support clients. Whether its trying to read QuickBooks data in Excel, or looking for the cheapest way to support Sage practitioners are baulking at the cost, and looking for alternatives and workarounds - some possibly not strictly legal.

Why is this becoming a new phenomenon?

Until the recent past, the typical owner-managed business in the UK would have chosen installed software to keep their books - the choice really being one of either QuickBooks or Sage. The accountancy firm acting for the business would have copies of both these software packages (often in many different versions) to enable them to accept and process the data files coming from clients. This was an accepted state of affairs and accountants had no choice but to swallow the software licence costs.

However, during the last four years or so, new SaaS providers like Xero, KashFlow and FreeAgent have entered the accounting software market, with their online delivery model. These new players allow small business owners to invite their accountants "in" to their accounting software, as additional users - usually at no extra cost to the business. Certainly at no cost to the accountant.

So, we now have accountants used to being able to work on client accounting data at no cost, and with no software to install. For newer firms, the need to purchase and deploy software just to be able to support one new client is beginning to jar - i.e. "to have an unpleasant, annoying, or disturbing effect".

Hence the hand-wringing and data acrobatics being suggested on places like Accounting Web.

The accountants don't want the pain of software they don't actually want, they just need a way to work with their clients. On this front the SaaS products tick the box.

P.S.

Ledgerscope, solves the Sage and QuickBooks problem for accountants :)

It's a good article, which applies some common sense to the hype surrounding all things "Cloud" at the moment. I thought I agreed with much of what James Colgan says but then it struck me that we can't view "businesses" as one, homogenous whole. I think small, owner-managed businesses and larger, enterprise businesses are very different markets for SaaS vendors.

For starters, much of the on-premise software used by smaller businesses is consumer software. It's the likes of Microsoft Office, Outlook or Photoshop. These tools are now available, in various forms, as SaaS products - often free of charge. Small businesses are unlikely to be "power users" of the software they use, so even if online alternatives have less functionality they will still be good enough.

Even where small businesses do use non-consumer software, such as accounting products like Sage or QuickBooks, these are relatively low-investment, shrink-wrapped software purchases. With little investment in them, making a change to a Saas alternative is not a big deal.

Larger businesses may also embrace online alternatives but are more likely to retain the need for desktop versions because they use the advanced functions of the software and require more fine-grained control over settings and options. Additionally, they may well have a host of other applications that interact with their consumer software - Microsoft Word and Excel typically - and these interactions only work at the on-premise level.

Secondly, small businesses tend to have simpler business models, with more basic administration and logistics processes. The work they do will also likely be less complex technically than might be the case for larger businesses. If a business is developing a new drug, or undertaking complex modelling, I argue it is more likely (not in every case I admit) that it is an enterprise not a small business.

This means that the computational speed and power that, currently, only on-premise software can provide is mainly needed by large businesses.

Finally, small, owner-managed businesses can be more nimble and decisive when it comes to changing software products or delivery models. In particular, an owner-manager can quckly assess risk and do so without the worries and constraints of corporate responsibility to other stakeholders. The small business can make changes, and reverse them if needed, with much less risk and cost than an enterprise.

So, for the reasons outlined above, I think SaaS software is, and will continue to be, much more successful in gaining adoption by small businesses. But for larger, enterprise businesses, on-premise software will, indeed, be around for a long time yet.

WorkflowMax is the developer of online job, time and invoice management software that has latterly been extended in scope to become a practice management solution for accountants (and other similar trades).

Xero have long stated their commitment to a "one ledger" strategy: integrated client and accountant side accounting tools around one dataset. This acquisition is a bold move towards implementing this vision.

Traditionally, client businesses have used accounting software such as Sage and QuickBooks to maintain their accounting records. Their accountants have then taken the numbers from this "front-end" software and transferred them into their own "back-end" practice software, to produce properly formatted, compliant final accounts and tax reports for filing with the authorities.

Xero, together with other new new entrants, have disrupted the established "front-end" software market with their online model and innovative features. With the WorkflowMax purchase it seems Xero are now hoping to muscle-in on the "back-end" software business too.

In their Market Release on the acquisition, Xero state:

Not only does it help us win the entire practice, it places us in a very strong position against incumbent providers.

So how far will this bold strategy go?

There are various elements that make up the back-end software used by accountants. Of these, the practice management bit is, I would argue, the easiest. Far, far more complex, and therefore expensive to develop, are the tax requirements. Professional corporation tax and income tax software for the UK is complicated and expensive. Similarly, company secretarial software is not simple stuff.

Xero have produced tax filing software for the New Zealand market (in partnership with WorkflowMax) but I can't see that they would want to tackle tax compliance for lots of other jurisdictions, like the UK and Australia. And the US?

Since the back-end software accountants use is usually integrated around a central database, I would have to question how Xero could disrupt the practice management market without covering tax. Even nailing the final accounts element without the others would mean loss of shared data and the need for re-keying accounts numbers into tax software.

Then again, there are plenty of firms who use "best of breed" software, from different suppliers. In this scenario the shared, central database is not a hurdle for Xero to overcome.

Interesting times ahead.

I have just started to build a Pearltree which I have called "The Accountants Web".

I am gathering links to web resources that I believe accountants working in independent practices will find interesting and useful. It's early days, but the tree will grow.

As information overload is a problem, maybe curated "mini-internets" such as this will help.

If you have suggestions for sites to include, please shout.

The above numbers assume a higher-rate taxpayer has generated some self-employed income, perhaps by working evenings and weekends, and has generated £60,000. The new after-tax earnings are spent on a new family car. Unfortunately, our hard-working taxpayer dies suddenly after.

At the end of this little real-world saga, of the extra £60,000 earned, £46,726 ends up in the hands of the Treasury, being paid over in VAT and the various forms of taxation. That's a 78% tax burden.

And we wonder why there is a cash economy?

UPDATE

For the benefit of @RichardJMurphy here are my caclulations (per TaxCalc) of the Tax and NI due before the extra income and after the new self-employed income. The liability increases from £10,010 to £33,333, an increase of £23,323. Add the Class 2 NI paid separately of £130 and we get the figure of £23,453 shown above.

The self-employment work for our example taxpayer consists of advising the general public. Since they cannot reclaim VAT, and he is in competition with other providers on price, he is unable to add VAT to his fees and must bear the cost himself. Working from home, via the internet, his expenses are negligible and he has no cost of sales.

... householders have a duty to ensure that other people do not evade paying their share of tax.

Really?

He goes on to say:

Paying a builder or cleaner in cash, allowing them to evade VAT or income tax, will result in even deeper government cuts to public services ... People who contribute to the cash economy cannot then complain about austerity measures.

Oh dear Dave, you are wrong and out of touch with public sentiment. He should take a look at the results of the poll taken as part of the Telegraph article, which asked "Is it OK to pay cash in hand to tradesmen?".

There were also more than 1,200 comments added by the public when I last looked. The general summary of them making two points:

1. Householders do not believe it is their job to act like the Gestapo on behalf of HMRC, and
2. Small businesses are paying more than their fair share of the country's tax burden.

When in practice, I was often asked by clients if it was OK to pay suppliers in cash or, indeed, receive payment in cash. My answer was always an emphatic yes. The mechanism of payment is irrelevant to the tax position.

Mr Hartnett has made his fair share of PR blunders. HMRC's public perception is currently at an all time low, I suggest. Publicly inferring that all tradesmen who receive cash are, by default, "evading paying their share of tax" is a scandalous thing to say.

Shame on you (again) Dave.

Apparently, one of the new ideas announced today is the European Cloud Partnership.

I was intrigued when I saw the announcement but when I read the text of the speech I was a little lost. I am not sure exactly what this new initiative is designed to achieve. There is talk of first results in 2013 but no clear explanation of what results are hoped for.

What we can clearly see, is that the project will have a budget of $13 million.

Now, I assume that as far as the supplier side is concerned, Cloud vendors would be very happy to talk about how to remove barriers to their wares being purchased. So no cost there. The Eurocrats on the buyer side, representing government procurement, are presumably already salaried and so already paid for their input. This leaves me wondering where the $13 million will be spent.

First class travel, expensive hotels, restaurants and meeting facilities?