Tag: Xero

Cloud Accounting Adoption Grows, But Desktop Solutions Still Pay the Bills

Intuit continues to lead in cloud accounting adoption among small businesses and microbusinesses in North America, with almost 1.9 MM companies on QBO in the US.  QBO continues to make strides outside the US, with 800,000 companies in their latest user statistics.  Xero continues to grow in the US, with 132,000 North America users as of the end of March, but we expect that those numbers will grow more quickly due to possible synergies from the Hubdoc acquisition in August.

QuickBooks Online Self-Employed, a product which is designed to track the cash receipts and disbursements of independent contractors, grew to 750,000 subscribers this period.  Although the number of subscribers bundling this solution with Intuit’s TurboTax income tax preparation software was not disclosed this quarter, last quarter approximately half of QBOSE subscribers also purchased TurboTax.

Intuit has quietly launched a new product targeted at companies with 10+ users called QuickBooks Online Advanced, with premium support, and priced at $150/month.  Industry observers I speak with tell me that they expect this product to go upmarket top serve larger businesses over a period of years.  A strategy for involving accounting professionals and software consultants in QBO Advanced has not been launched yet, as the product is not available on wholesale billing for ProAdvisors at this time (9/2018), and we have not heard of a QBES-style “Intuit Solution Provider” VAR program for QBO Advanced at this time.

Despite these improvements, desktop accounting continues to be the dominant platform for small business.  Intuit’s most recent revenue statistics (under the old GAAP standards, not the new ASC 606 rules) show that revenue for the QuickBooks desktop ecosystem continues to lead the QuickBooks Online ecosystem by a significant margin.  While this will evolve over time, the ratio of QBD ecosystem revenue to QBO ecosystem revenue for Intuit’s quarter ended 7/31/2018 is 1.36:1. (source: Intuit)

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While we don’t have a method of providing a true “apples to apples” comparison of QuickBooks desktop user counts as compared to QBO user counts for a number of reasons, it’s clear that desktop has a larger share of revenue.  The online ecosystem continues to grow, and it’s hard to quantify the impact of the recent QuickBooks Enterprise price hikes on that desktop revenue.  Sage and Xero continue to be a worthy competitor to QuickBooks in many segments, new products like BQE Core and AccountantsWorld Power CAS continue to show promise.  Ultimately, if artificial intelligence and machine learning can even partially live up to the hype surrounding them right now, the whole game could change – but for now, the desktops are paying the bills.

CPATechBlog.com Cloud Accounting Dashboard as of 5/24/2018

I’ve updated the CPATechBlog Cloud Accounting Dashboard for the latest statistics on cloud accounting adoption for the most recent earnings and public company disclosures from Sage, Intuit, and Xero.

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Highlights from the most recent updates include the following:

  • Intuit continued to dominate the cloud accounting space, with 1.82 million companies on QBO as of 4/30/2018, as compared to 132,000 in North America for Xero.  The other competitors in this space do not break out North American adoption stats or are private and do not have to disclose adoption stats to the public.
  • In addition to the 1.82 million companies on QBO in the US, Intuit reported another 720K QBO companies outside the US, as well as 680K users of QBO Self Employed.  The 720K QBO companies outside the US compares unfavorably to the 1.25 million companies on Xero at 3/31/2018, but both performed favorably against the 431,000 reported on Sage Business Cloud Accounting (the product formerly known as Sage One) at 3/31/2018.
  • Intuit disclosed that 330,000 of the 680,000 total QBOSE users bundled the product with TurboTax, which may make some of you practitioners nervous about recommending that product – don’t forget that there’s a way to connect QBO for Accountants to your client’s QBOSE, and Intuit says that they won’t try to sell TurboTax to your QBO self-employed clients – if you need details, drop me a line – Brian at bftcpa dot com.
  • I still estimate that the ratio of QB Desktop users to QBO companies is 1.30:1 as of the most recent earnings release.  What’s more important for you, the gentle reader of this blog to know is two things:
    • While the ratio of QBD users/QBO companies is 1.18:1, the ratio of the desktop QB ecosystem revenues to the QBO ecosystem revenues was 1.42:1 – so desktop versions of QuickBooks are still essential to the QuickBooks business for Intuit.
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    • The really bad news for users of desktop versions of QuickBooks is the forward looking information about desktop versions of QuickBooks – and I’m quoting directly from their Q3 Earnings Call Script here.  “Desktop Ecosystem revenue grew 3 percent in the quarter and is up 7 percent year-todate. For fiscal 2018, we expect QuickBooks desktop units to decline mid to high teens and Desktop Ecosystem revenue to be up mid-single digits.”  While we’ve known for some time that Intuit passed on a price increase to QuickBooks desktop users, it tells me that we should probably expect prices on desktop software to continue to climb as Intuit continues to try to make it financially advantageous for users to switch to QBO, where they have more control over the ecosystem, as opposed to QB Pro/Premier/Enterprise.

While Intuit has a lead in US cloud accounting, if the much vaunted machine learning and artificial intelligence capabilities which the cloud brings us in the next few years ever actually happen, accounting software may become something that people used to use – like buggy whips.  Truthfully, if the technology winds shift quickly – it’s still anybody’s race.

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Dear Brian: Clearing Out Old Vendors, Customers, Items, and Accounts in Desktop QuickBooks

Dear Brian:

My client has been using QuickBooks Pro for well over 10 years.  They upgrade every few years however the file size is getting very large.  They do not want to switch to another program and do not want to switch to QuickBooks Online.

I was under the impression that the newest versions of QuickBooks allows you to purge old data or allows you to reduce the file size.

What should I do?

Sincerely,
Carl in Philadelphia


Dear Carl,

You may want to consider using the Condense Data feature in QuickBooks (File, Utilities, Condense Data from the menu)- it will let you remove the old data as well as the old list items – vendors, customers, accounts, etc. which you haven’t touched in years.

You can download a PDF file with directions on how to do this by filling out the form below:

Cloud Accounting User Counts

I’ve been tracking the user counts of cloud accounting tools for microbusinesses from publically available sources for about seven years now.  My latest cloud accounting user counts appear below.  Note that Intacct probably shouldn’t be in this list (especially since we also didn’t include other mid-market apps like Oracle NetSuite, as they’re both a little “up market” for most users of this.  As you know, FreshBooks and Wave are private, and don’t have to report anything publically, and with Kashoo doing more as a bookkeeping service instead of as a software company, the user counts there (which were hard to get anyway) are a little less relevant here.  We expect to have new data from Intuit, Xero, and Sage sometime in late April/early May.

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P.S. Tipsters who have good public (non-confidential) data sources for user counts (e.g. court filings, press releases, etc.) which are more detailed or more current than this (as I write this on March 27, 2018), I share Starbucks cards with those who point new things out – I’m @BFTCPA on twitter.

P.P.S. If any software publishers want to be included in this list on a going forward basis (or want any of the analysis which goes along with this), including some work on cloud vs. on premises for user counts, reach out to me and we can discuss.

Xero to Simplify Accountants Work by Building Out Export Capabilities

Online accounting software publisher Xero announced today that they have created a direct interface to two applications commonly used to work on business tax data – Intuit’s Lacerte Tax and ProSystem fx Engagement. This is the Company’s first foray into exporting data from Xero into U.S. tax and accounting applications, although the local versions of Xero for Australia and New Zealand have already created integrations with acquired products like Spotlight Workpapers which automate work for accounting professionals.

Xero’s US President, Jamie Sutherland, said, “We know our accounting and bookkeeping partners who prepare tax returns are looking to get data from Xero into tax software this tax season. We worked hard to create an easy export from Xero to Lacerte Tax and CCH ProSystem fx Engagement. Accounting and tax professionals will spend less time worrying about getting the data and writing up tax forms and more time advising and guiding clients on tax issues.” “We recognized that ProSystems fx and Lacerte Tax are the major players in the tax space but we’ll be looking at other tax software as their SaaS solutions come to market to make the accounting and tax workflow even more seamless.”

Xero partner and accountant Steve Chaney, CPA, owner of Chaney and Associates, a Roseville, California accounting and consulting firm is excited about the new feature and its immediate impact on his practice this tax season. Chaney said, “When you are managing tax filings for hundreds of clients, these efficiency gains add up and go straight to the bottom line.” Chaney’s firm was established in 2002, serves clients in six states, and positions itself as a leader in the effective use of new technologies by accounting firms.

Online accounting software Xero has a strategy of reducing and eliminating data entry for accountants and clients where possible by importing transactions from financial institutions and using user-defined rules to assign accounts to the transactions. Last month, the Company announced an integration with time tracking and invoicing application Harvest, and in 2012, the company launched a proprietary tool (the Xero Practice Manager) for its US accounting partners.