Chartered Tax Advisers & Accountants

Making tax digital means using cloud accounting. But which software should you choose?

Published On: 27 June 2017
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If you’ve been following my blogs for M&S, you’ll know that I’ve been part of the pilot organised by HMRC to road-test software, the use of which will become essential for the majority of businesses once MTD kicks in.  However, knowing which software to choose is difficult.  This article does not review all the available software and, in fact, that would be almost impossible as it would require one to sign up for all of them and use them concurrently over a period of months so you could see the flaws and the benefits of each provider.  However, I have been able to compare two of the leading companies’ products, and here are my thoughts…

As I had been using XERO for some time, I asked if I could continue with it for the trial, only to be told that XERO weren’t participating.  That was a bit strange, given that they are one of the big players in the market, however I was happy enough to be experiment with one of the other software providers and allow M&S to monitor how this worked in order to help them get a better idea of how MTD might eventually pan out.

I chose FreeAgent, an Edinburgh based firm which has a growing share of the market and is particularly popular amongst contractors.  I used their software in parallel with XERO for several months (obviously not billing the customers twice!) so I could compare and contrast the two. 

It’s fair to say that they (obviously) do broadly the same things.  That was only to be expected.  The interface (i.e. how it looks on the screen) for XERO is, in my opinion, slightly better designed, “cleaner” and more user-friendly than FreeAgent, but once you get used to the latter that is not an issue.

All the normal things you’d expect to be able to do – VAT returns, invoicing, expenses/costs, setting up accounts, setting alerts, etc. - are there on both systems.  The expenses/costs side of FreeAgent is simpler to use (and therefore better) than on XERO and the invoicing sides are broadly the same, albeit laid out slightly differently, with, as noted, XERO’s dashboard being slightly better displayed and “cleaner” than FreeAgent’s.  However, I have to acknowledge that this is partly because I started with XERO and was therefore more used to it: if I’d started with FreeAgent and then begun using XERO it’s possible I’d think the other way round.

Given that, by and large, they both do what they are supposed to do, how should one decide which to use?  Well, in my opinion, the test of any company that provides a quality product is what it does when things go wrong or don’t work.  Given that many people will soon be using cloud accounting for the first time, it’s important that they choose a company that provides great customer service and answers all the questions that the new (and often not particularly computer literate) users might have.

Here, I have to say, FreeAgent is far superior to XERO.  The quality of their FAQs/help section on the website is generally better and easier to understand.  Crucially, although both companies have online help desks where you can request assistance, FreeAgent’s speed of response and helpfulness is better than XERO’s.  Not only that, but the FreeAgent support team are good at checking up after your query to make sure that things really are working properly and that you don’t have any other issues.  In addition, I understand from the team at M&S that XERO are no longer supporting them as well as they did initially: there is the impression that having got M&S signed up to encourage clients to use XERO then they are no longer important and emails are no longer returned promptly or even at all.  That’s not good and it is another reason why I’d recommend that if when you are debating which software to use for your small business you give FreeAgent serious consideration.

Alastair Blair, thePotentMix

 

 

 

P.S. Some might think that because FreeAgent knew I was signed up as part of the MTD pilot they could have gone out of the way to look after me. That may have been true in the early stages, and they certainly communicated extensively with me during the pilot, however, since the pilot finished I have seen no diminution in the level of service (in some respects it’s got even better).