In the early days of operating your business, you don’t need to worry too much about managing your cash flow. Soon, however, managing cash inflows, outflows, accounts receivables and payables becomes a herculean task. It’s tempting to file all receipts in a shoebox (or, in my case, stacks of shoeboxes and extra large ziplock bags), and then wait until quarterly or annual tax filing deadlines to reconcile them. Then, I would sit at the dining table, muttering about the tedium that lay before me, counting up and categorizing all receipts. The problem was, I had no real-time visibility into my business’ cash flow, customer spend, or vendor expenses. I needed to answer questions like – “Who are my most profitable customers?”, “How much is this customer likely to spend in the next 12 months?”, “Which customers have not bought from us lately?”, “What is the cost of goods of the business?”, and “How much cash am I generating every month?”
Bookkeeper or QuickBooks Software?
To answer these questions, a business owner or office manager typically needs accounting help, or lots of time spent wrestling a spreadsheet to the ground. As far as I knew, I had two good choices – hire a bookkeeper/accountant, or purchase Intuit QuickBooks software to manage the books by myself. Hiring a bookkeeper seemed appealing because it was hassle-free, but I had the feeling that the costs would add up over time – at anywhere from $25/hr to $75/hr in San Francisco, estimating 8 hours a month, would cost between $2500 and $7500 a year, not counting first time setup expenses, which could be just as much. While not a terribly large amount, I wanted to explore more cost-effective ways of solving the problem. Hiring a bookkeeper doesn’t allow business owners to get immediate answers to the questions previously posed.
The other option was buying QuickBooks software – the mainstay of accountants everywhere. However, Quickbooks was designed for accountants/bookkeepers, not business owners/managers. Moreover, traditional QuickBooks software runs on a single computer – a PC or a Mac. If you are sitting in a cafe, or using a different computer than the one where the data is stored, or in a hotel while on the road, you may not have access to that computer. And what if your computer got stolen, or, as it happened to me recently, fried completely because my kids accidentally poured water on the keyboard? Even after being diligent about backups, it could be days before you had a replacement computer with all the business’s financial data on it – and that’s if you’re lucky. And you’ll always worry that your entire business finances and accounts were now in the hands of some unsavory character.
Cash Flow Management Software in the Cloud
There is, fortunately, another option: the Cloud – always-on, available-everywhere, browser-accessible, online software to manage your cash flow. This is software that is designed for a business owner, not a finance type. It runs on any computer, wherever you are. The data is stored securely, always backed up, and cannot be easily stolen. I narrowed my search to four companies that deliver cash flow management software that is 100% Cloud software. Cloud software runs entirely in any major web browser of your choice (Internet Explorer, Safari, Chrome, and Firefox, for example), which means you can access your financial data from anywhere, even if you are on vacation and obsessed about how your business is doing. That’s not you, right? Right. Me neither.
The nominees for cash flow management software in the Cloud were: InDinero, Intuit (QuickBooks Online), Kashoo, and Outright. These are a few of the companies trying to solve the problem of managing your business cash flow online, but I chose these either because I recognized their brand, because they appeared in Google search results for phrases like “cash flow software”, and had websites that were intuitively designed. The last criterion was important to my evaluation, because a company that has a well-designed website indicates that the company takes the online channel seriously, and it makes you more productive to navigate through the site information, e.g., if you want technical help or support.
Outright emerged as the winner in my evaluation of cloud-based cash flow management software. Outright’s web application was fast, the product easy to learn, connecting to bank accounts and credit cards was both easy and accurate, technical support was excellent, and the resulting graphs and reports gave me rapid insights into my business cash flow, customer spend, and expenses.
A close second was InDinero, which in fact had a more intuitive and flexible user interface, with many of the same features as Outright. Business owners will prefer Outright because it is designed from the ground up to answer the questions that business owners/managers have – e.g., “Which customers are spending more or less over time”, whereas inDinero was designed from the bookkeeper’s perspective, e.g., “What does my income statement look like?”
Detailed Review of Outright and inDinero
I evaluated the cash-flow-in-the-Cloud software products on these capabilities:
Bank/Credit Card Account Sync. To use Outright effectively, it really helps if you already have bank accounts and credit card accounts from which you can easily download your transactions, e.g., from Wells Fargo/Citibank or American Express/Visa, though practically any bank/credit card today has these online sync capabilities to connect with products like Quicken. Outright connects to your online accounts with these financial services providers and others, and synchronizes your Outright register with your credit card/bank. The synchronization is very sophisticated and accurate – e.g. my American Express Gold card account has 5 different credit cards – three for business, and two for personal use. Outright was able to download all my transactions and allow me to exclude credit cards that were not used for business expenses. inDinero worked almost as well, but was not as robust in connecting to my Amex credit card account and sorting through the different cards. inDinero’s customer service suggested that I delete the Amex account I had created, and reimport the transactions – but this had no effect; it correctly read one card’s transactions accurately, but another card’s transactions were intermingled with the personal card, and this caused a problem. If you have a business account, say with American Express OPEN, with several corporate credit cards for yourself and employees, I would not recommend inDinero. On the other hand, if you have separate business credit card, not an account with multiple cards, such as a second Visa card that you use just for business, inDinero’s account sync features will work very well.
Transaction Register Management. Like with any software, it takes time in Outright to massage the data into a format that makes it useful. For example, your bank deposits might be imported as “Deposit #22546″, and you would manually need to change these to indicate that it’s a payment by a customer, e.g. “Acme Manufacturing”. Once you edit the name of a customer or vendor, Outright remembers this, so that, next time, it automatically does the renaming for you – a very useful feature. inDinero has a better interface for managing all your transactions – it has a great Filter view that allows you to only view transactions from one or more accounts. inDinero’s transaction register was well designed, and more modern than Outright, with a fast, snappy feel that promises to make you very productive.
Importing Data. In Outright, I should caution that importing financial data from a spreadsheet is tricky, and prone to errors if you are not careful, so be prepared for the pain you must go through to make your data useful. Some banks, like Wells Fargo, don’t allow websites like Outright to download more than 90 days of transactions; so it’s likely that you will need to go to your bank’s website, and manually download your older transactions to a spreadsheet, which you can then import into Outlook. In my tests, I made the error of importing the same spreadsheet more than once, resulting in many duplicate transactions. However, it was confusing in Outright to figure out how to delete recently imported transactions, and I ended up deleting legitimate transactions as well; this all took some time to figure out. inDinero‘s better transaction register makes it very easy to search for the transactions you just imported, and delete or edit them if you need to.
Business-Oriented Reports. In all of the evaluation factors, above, Outright and inDinero were mostly evenly matched. Outright has more robust account sync, while inDinero has better transaction register management, for instance – and in the end there was a tie. The tie-breaker went to Outright, for its excellent business-oriented reports. Outright has reports such as Best Customers that show the income from your top customers, sorted by revenue, and Biggest Vendors, which shows which vendors you spend the most money on. These reports really speak the language of business owners, and my wish is that Outright add more such reports, such as “Who are my most profitable customers?” and “Which customers haven’t bought from us in some time (and therefore, those we should call)?”. inDinero had perfectly good reports, but these answered standard accounting questions such as Income, Cash Balance, and Spending, but nothing that specifically answered the questions most business owners have about their customers’ spending, profitability, and recurring purchase patterns.
Price. All in all, Outright was an excellent business financial management application, and for $9.99/mo, a Web app that I recommend to small business owners or managers. You can try Outright by signing up for a 30-day trial. inDinero has a free version (FREE is a very powerful marketing message), and pricing begins at $19.95/mo for a full-featured version that allows you more than 3 months of transaction history. You can try inDinero by signing up for a free account.
- QuickBooks Online‘s web app made me feel like I was living in the 1970′s – it has a very outdated user interface that had not changed very much from the familiar QuickBooks software (that you install on a Windows or Mac computer). Though QuickBooks Online was more “web-ified” than it’s Windows/Mac-based versions, I realized that it would take me days to learn how to use the product. QuickBooks Online is clearly designed for a bookkeeper, but not your average business user who is not an accountant by training – and this is why it’s just not suited for most small business owners. You should be able to cost effectively understand your business’ cash flow without spending loads of time, or hiring accountants. As the newspapers say, Intuit did not return our calls for comments – and this itself tells you something about the company; it has grown so big that it’s management doesn’t make it a priority to help small businesses uses its products to its fullest.
- Kashoo doesn’t yet allow you to connect to your bank accounts or credit cards, so it’s not yet a very useful cash management application for businesses. All businesses run on credit card transactions and bank checks, so Outright and InDinero had the right idea – to make you very productive by automatically importing these transactions from your financial services provider into your accounting books. Kashoo’s customer support team tells us that bank/credit card account syncing is coming in October 2011, so it’s great that they have anticipated a much-wanted feature.