I was poking around the various small business online accounting sites today researching our next Online Banking Report and thinking about which service would suit our business, given that Microsoft is pulling the plug on Money.

I was already familiar with Outright.com (a Finovate 2009 presenter; demo video coming soon), FreshBooks, and LessAccounting. But I was completely surprised by one contender in the free category: Intuit QuickBooks Online.

The software giant offers three flavors of online-only accounting (see screenshot below; full comparison here):

• QuickBooks Online Free: Create and send invoices, print checks, track money flow for up to 20 customers and run basic reports; even includes email support
• QuickBooks Online Basic: In addition to the above, for $9.95/mo, users can manage an unlimited number of customers, set permissions for others to access data, and choose from a library of 40 standard reports
• QuickBooks Online Plus: Full-fledged QuickBooks for $34.95/mo, mimics most features of QuickBooks Pro (see comparison here)

Financial institution opportunities:
All four online accounting companies offer free versions and premium fee-based options (note 1). Consider linking to them from your small business resource center. For extra credit, develop a co-branded version you can offer your customers or negotiate discounts for the fee-based versions.

Intuit's QuickBooks Online product line (14 Oct 2009)

Notes:
1. Outright.com is currently free for all users, but says it is working on value-added, fee-based options.
2. For more info on the small biz space, see our Online Banking Report: Small & Microbusiness Banking (June 2004). Note: Anyone who purchases the 2004 version now, will automatically receive the newer version when it's published later this month.

www.quickbooks.com

While still trailing the contact managers in integrating Web functionality, QuickBooks still does an admirable job. Navigating QuickBooks feels like being on a good Web site.

Here is the main navigation screen and the pop-up reminders screen. The main areas are shown vertically in the lefthand column:

•  sales and customers
•  purchases and vendors
•  checking and credit cards
•  payroll and time
•  taxes and accountant
•  company
•  business resources

The Company: Intuit is a publicly held (NASDAQ: INTU) company based in Mountain View, CA. In fiscal year 1998, the company had revenues of $593 million. At the end of September its market capitalization stood at $2.7 billion. Its flagship product is Quicken with 10 million users. Yet Quicken accounts for less than 15% of the company’s revenues. QuickBooks and other small business products account for 50% of total revenues.

The Product: QuickBooks 6.0 and QuickBooks Pro appeal to small businesses that have graduated from cash-based accounting with Quicken. Intuit says that five of the six million small businesses in the U.S. that do their books on a computer use Intuit products. Two million of those use QuickBooks, first launched in 1992. According to Intuit, 90% of QuickBooks users have an accountant.

Software Costs:

Features & Benefits:

•  Download transaction data directly from 40 participating banks into QuickBooks
•  Online bill payment via Checkfree
•  Apply for loan and lease funding via built-in hooks to Intuit’s Cashfinder.com Web site
•  Online payroll taxes and direct deposit
•  Offsite data file storage via Safeguard Interactive; data is encrypted and stored on Safeguard servers; cost is $4.95/mo for just the QuickBooks data file or $9.95/mo for unlimited storage of all user files

Some day small businesses will simply dial-in to QuickBooks.com to do their books and access customer account records. This will also make it easier for off-site accountants to monitor their clients’ books.

•  Integrated Web browser for “one-click access to the Quicken Small Business Channel” www.quicken.com/small_business where users can find business management advice and financial services, including Business CashFinder (see OBR 6/98).
•  100 customizable reports and graphs
•  Customizable invoices and business forms
•  Print checks on any printer (Intuit sells blank check stock)
•  Full-fledged double-entry accounting; but users only enter data once making it “as easy as Quicken” (to use)
•  Pop-up calendar
•  Payroll set-up wizard
•  Check register can be sorted by date, check number, amount, etc.
•  Job-costing functions and estimates
•  Inventory tracking
•  Accounts receivable tracking
•  Calculates finance charges on overdue invoices
•  Accounts payable tracking
•  Tracks purchase orders
•  Tracks customer information
•  Tracks tax records
•  Prints 1099s, W2s, W3s, 940s, 950s
•  Tracks employee time
•  Multiple password protection for various levels of access for different users
•  Multiple-user ready (QuickBooks Pro only)

Contact: Jim Heeger is SVP Small Business at Intuit (415) 994-6000.

Computer or accounting advisors can pay Intuit $229 per year to become a QuickBooks Professional Advisor. Membership includes a free copy of QuickBooks and a listing on Intuit’s Web site, which includes contact info and services provided. There were 165 advisors listed for Seattle (9/28/98).

The Business Resource section contains links to various Intuit Web services:

•  CashFinder (OBR 6/98)

•  Small Business Tools

•  Find an Advisor

•  QuickBooks and your industry

If you serve a typical mix of small businesses, you can expect the majority of computer-literate owners to be using either Quicken or QuickBooks. This presents some problems and opportunities.

Problems:

•  Customer lock-in: If you think it’s hard to get someone to change their checking account, try getting them to switch accounting packages.
•  Competition from Intuit’s financial partners and advertisers: Don’t worry about Intuit, worry about the financial institutions partnering with the software company. Ever since the Quicken credit card issued by Travelers was launched in 1993 (OBR 4/95), Intuit has been successful in attracting financial institution partners. The 55 banks currently supporting Quicken include most of the largest retail banks in North America. CashFinder (OBR 6/98) and QuickenMortgage (OBR 5/98) have also been successful in attracting big-name partners.

Opportunities:

•  Partner with Intuit: Luckily, Intuit provides an effective, albeit costly, way to link your banking services to QuickBooks and Quicken customers. The direct link program is currently used by 55 banks and 15 stock brokerages. Forty of the banks and none of the brokerages support QuickBooks www.intuit.com/banking/filist.html

  The drawback is the six-figure investment which may be hard to justify across your small business client base. It’s been primarily a big bank solution. But there are signs it may become affordable to smaller banks in the near future. Intuit has just announced a partnership with M&I Data Services that allows M&I to pay the six or seven figure tab for the connection to Quicken 99 and then spread that cost among dozens or hundreds of banks they resell the program to.

   

•  Download in .QIF format: A far less expensive way to support Intuit users is to download banking data in Quicken format (.QIF). This allows users to import the data into Quicken, avoiding the necessity of keypunching the data. There are no license fees to pay for this solution, just a few thousand dollars in development expenses. But importing data is a less-than-elegant solution which is labor intensive and prone to error.
•  Build basic PFM/accounting features on your Web: This isn’t as far-fetched as it seems. We predict that numerous bookkeeping and accounting functions will be ported to the Web by Intuit and other software/Web companies. Businesses with simple financial needs don’t need all the bells and whistles of QuickBooks or even Quicken, and would be grateful to find solutions that they could master in an hour or two of playing with templates.

Here is the basic project plan:

1. Find a Web developer, and/or accounting firm, interested in forming a joint venture to develop a Web-based accounting program (we have searched the Web and were unable to find anyone doing this so far).

2. Retain an accounting professor, Ph.D. candidate, and/or practicing CPA to consult on the project, making sure that all technical accounting guidelines are followed and ensuring the integrity of all calculations and worksheets.

3. Concentrate on essential functions as outlined in the Virtual CFO section .

4. Integrate local services and content, such as a directory of local CPAs, to differentiate your services from those available from national providers.

5. Leverage the Web-based accounting program you create by licensing it to others; launching it as stand-alone accounting site on the Web; selling the joint venture outright; taking it public; creating a standalone bank around the program, etc. 8

Looking to Add Meaningful Interactivity to Your Small Biz Web Site?

Intuit sprinkles its small business Web site
www.quicken.com/small_business with simple “advisor” search buttons that link to the GTE Super Pages for a zip code search for any of the following:

•  accountant
•  advertising counselor
•  business consultant
•  computer consultant
•  employment agency
•  financial planner
•  graphic designer
•  lawyer