Moving Out Of The Stone Ages: Switching From Pastel To Xero
It's not everyday that something that costs as little as R250 a month and that can be setup in a few hours will bring about so many benefits to your business that it alone makes you feel like your business has moved out of the Stone Ages. This is the experience I had, at SYNAQ, when we switched from our on-premise accounting package to our new online accounting package called Xero.
As the MD of SYNAQ, having as close to real-time access and visibility of our financials is something that I regard as being critical to the success of growing and managing our business – allowing us to respond proactively to issues as they occur rather than only being able to respond 1 month later when looking back at the management reports that were compiled for the month that past. The move to Xero has for the first time placed us in a position where I believe we can do just that.
To give you some background, SYNAQ had been using the same accounting package for just over 7 years. A piece of proprietary software that we needed to install on our own hardware called Pastel. We got onto Pastel because at the time it seemed like everyone was using it and all accountants we spoke to, could support it. Being a Linux company we hated the fact that we had to install a Windows machine and proprietary software onto our network but crumbled and installed Pastel.
Pastel served us relatively well over the years but brought with it a number of limitations that I believe would have been common with any other proprietary on-premise accounting software (such as Accpac or Quickbooks), namely:
- Lack of access and visibility
As a start, our management team of four all use Mac or Linux desktops and to access Pastel needed to remote desktop onto the Windows accounts server, login to the server, open up their own instance of Pastel (which sometimes caused issues with Pastel itself) and only then would we be able to access the information that we required. Any reports generated would then need to be generated on the accounts server and emailed to ourselves if we wanted to manipulate this information from our own workstations. In addition to this, if we were out of the office we would have to first VPN into the network before being able to remote desktop onto the accounts server.
The process was so cumbersome that we just bypassed it and would email our Financial Manager (Liza) asking her to generate whatever information we required and email it to us. I must have done this at least 3 times a week.
Today with Xero, we're all able to login to the Xero online web-interface from anywhere in the world and on any type of machine (Windows, Mac or Linux). Each person is given their own secure username and password which can be linked to different types of access rights and now everyone is able to access the information they require in less than a minute – emailing Liza for a cash flow report, debtors status or income statement is a thing of the past.
- Complex to use
Pastel was designed for accountants, bookkeepers and financial managers alike. It's recommended that they go on specific training to get up to speed with how to get the most out of it and ensure that you don't make any errors. Using an accounting package designed for accountants is great if you’re an accountant but not-so-nice if your the Technical Manager, Marketing Manager or MD who needs access to the information but doesn't necessarily want to become an accounting package expert. The Pastel interface is complex, clunky and difficult to understand – often giving the feeling that if you clicked somewhere incorrectly, you'd break something somewhere else.
Xero's payoff line is “beautiful accounting software” and have done a great job at simplifying their user interface so that even I can use it and that Liza could go from 7 years using Pastel to migrating to Xero in less than 24 hours and without any training.
- Limited reporting
Pastel provides the basic financial reporting that you would expect from an accounting package – income statements, balance sheets, 6-month cash flows, etc. If you want more advanced reporting you need to purchase an additional business-reporting module. We went for the advanced module and still found the reporting to be quite lacking so we built our own dashboard using excel highlighting the 6 to 8 metrics that we thought most important to monitor from a financial perspective. This had to be done manually each month taking Liza an extra day of work to compile.
With Xero you get over 40 different financial reports at no extra charge – the most impressive being the monthly management report. Xero automatically compiles a management report that starts with an executive summary highlighting key performance trends and then goes into more detail on subsequent pages. There are a number of additional comparative reports that can be compiled quite easily providing as much (and more) reporting insight then Pastel (even with the expansion module) and again at no additional charge.
We wanted the ability to dig even deeper into our financials and hopefully replace the manual dashboard that Liza had to put together each month with an automated dashboard (one to remove the manual work and two to be able to get the analysis in real time rather than having to wait till the end of the month). Originally we thought we'd have to write our own by integrating with Xero's open API but to our delight came across a Xero add on written by Australian company called Fathom that provides probably the most impressive financial reporting software that I've ever seen. The setup of which took about 5 minutes and now gives us simplified dashboards highlighting key performance KPI’s.
To be able to retrieve information out of Pastel into a 3rd party system you need to know how to integrate with Pastel's Pervasive Database so you either have to have this skill-set in-house or contract with a 3rd party to do the development or customisation – it's not something that I would recommend tinkering with yourself because you're messing with the core financials database, so if you break it, there goes your finances.
With Xero, it's a completely different ball game. Xero has an extremely rich open API that allows for 3rd parties to build add-ons that automatically plugin to Xero without having to have any technical skills (think Apple AppStore). We needed a better way to manage and collect on our debtors, we installed DebtorDaddy, we needed more detailed financial analysis, click click and welcome Fathom HQ.
In summary, if you were looking to improve the financial visibility and access that you and your management team require, I’d take a serious look at what Xero can do for your business.