Right now for many business owners every penny counts. So reviewing what your business outlays are is essential to see if savings that can made.
Whilst necessary for keeping on top of your business finances, one cost outlay that often creeps up on people is the amount that they spend on their accounting software. Over time this cost may have increased from your original outlay. You may not even realise that you are paying for software if it is wrapped up in your accountancy fees.
How much does software cost?
At the time of writing this blog, a quick review of the market revealed the following is the cost of software amongst the top four market players:
|Software||Price per month*||Annual cost|
*The price quoted is the midrange (standard or essentials) package. The cost is for comparison purposes and the actual cost that you pay may vary (be more or less) based upon your specific needs.
Sage, QuickBooks and FreeAgent offer an initial discount being 50% off for 3 months with Sage and half price for 6 months for both QuickBooks and FreeAgent. Other discounts may apply e.g. FreeAgent offer a reduction in costs if you pay annually.
Plus 20% VAT
The price for the software quoted will have VAT added to it which means that if you are not VAT registered, and therefore cannot claim this back, the software will cost you an extra 20% on top of the amounts shown.
How to save on software costs
Unless there is a unique feature or add on that you are using within your software system then changing your supplier could result in these cost outlays being eliminated entirely.
FreeAgent, who are owned by NatWest, give FREE use of their software while you retain a business bank account with NatWest, Royal Bank of Scotland or Ulster Bank, or make at least one transaction a month through a Mettle bank account.
OK so there may be a bit of admin to do to make the changes to a new bank account and a new system but if that puts extra money into your pockets, by way of increased profits, then the pain should be worth it.
It’s easy to open a new bank account these days. For example a Mettle account can be done entirely online via the Mettle App.
How to migrate to a new system
If you do choose to take up the free FreeAgent offer then you will need to migrate your data from your existing software provider to FreeAgent. The best time to change is usually at a year end but you can actually change systems at any time during the year as long as you plan this and undergo a cut over exercise. This isn’t as complicated as it sounds. You just need to be a bit organised and follow a few steps:
- Decide on your cut over date – choose a month end at a time when you’re not too busy and can do the bit of admin involved in the change
- Make sure that all transactions are in the old system up to the cut over date, the bank feeds are up to date and the transactions explained (posted) to the relevant accounts
- Pull off a trial balance report from your old system for the current accounting period – these are your opening balances to be posted into FreeAgent as your starting position
- Make sure that you back up everything from the old system as you will lose access to this once you stop paying for it
- Start loading bank feeds and posting expenses into FreeAgent from the cut over date explaining the transactions as you go
If you’re uncertain about any of this your accountant should be able to help or contact us.
Once you’ve taken up the offer of free software from FreeAgent, and if your accountant had been charging you in their fees for your previous software solution, then do remember to ask them for a reduction in their fees!