Microsoft's Accounting System

If you're a Microsoft office junkie, this accounting program might be the all-in-one tool you need to bring your business's books in line.
Magazine Contributor
5 min read

This story appears in the March 2006 issue of Entrepreneur. Subscribe »

Are you tracking your income and outgo in Microsoft Excel? Creating invoices with Word? Managing vendor, customer and employee lists in Outlook? If so, you're an ideal candidate for the newest addition to Microsoft Office: Small Business Accounting 2006. After a couple of failed attempts, Microsoft has delivered a surprisingly well-appointed accounting program that's a strategic component of Microsoft Office.

Small Business Accounting is unlikely to make a dent in Intuit QuickBooks' 80 percent-plus market share; nothing has in more than a decade. And this first version of Small Business Accounting would make an even poorer substitute for the other top entrepreneurial bookkeeper--Sage Software's Peachtree Complete Accounting.

But according to Microsoft, a very large share of entrepreneurial businesses is still wide-open to wooing. Its research shows that accounting programs are used by only a little more than half of all entrepreneurial businesses, with the rest using a patchwork of spreadsheets, contact managers, paper records and outside bookkeepers.

Could it be that Peachtree and Quick-Books are in some way deficient? Certainly not. Both deliver 99 percent of the core accounting functionality needed by any small business. They differ mostly on the margins, the choice between them often turning on an entrepreneur's preference for an implementation or reliance on a particular feature. For example, one entrepreneur I know uses FIFO (first in, first out) to cost his current inventory, but builds in a little cushion for his margins by using a Peachtree LIFO (last in, first out) report to tell him how much to pay for new, price-sensitive commodities. He couldn't do that in QuickBooks or Small Business Accounting--and few small businesses need to. But many entrepreneurs have unique ways of using these all-purpose tools.

That tendency could work in Microsoft's favor because even the first incarnation of Small Business Accounting promises versatility. More than just an accounting program, it's an integral part of the company's grand vision of enterprisewide information management that will get reinforced with the year-end release of Office 12.

With a familiar interface and a street price of $49 to $149, the stand-alone version of Small Business Accounting is an easy buy. But its true utility is only realized as part of Microsoft Office Small Business Management Edition 2006 (about $500 street), and as with any accounting program, its real cost can't be measured in dollars, but in time either saved or lost.

Nice Debut
Microsoft Small Business Accounting 2006 is a remarkably capable accounting system with perks like inventory, job costing, online banking and a robust data-sharing structure (see " The Bottom Line ".) Many features are shallower than those in Peachtree or QuickBooks, but that's to be expected with a new code base.

Microsoft deftly mixes the features and conventions competitors have developed over years of trial and error with those borrowed from Office. For example, Small Business Accounting opens up to a home page where you're reminded of things to do today--vendors to pay, debtors to nudge, products to order. A flowchart-and-tabs navigation method is mixed with an Outlook-like desktop, making it easy to visualize common processes--like the path from job quote to payment--or to hop among the main accounting modules.

Allowing you to set access permission levels for five concurrent users, Small Business Accounting is a comfortable fit for companies with up to 25 employees (depending on transaction volumes). But it lacks an accountant's review capability that would let you delegate some functions to an outside accountant.

The program's centerpiece is its ability to address a problem familiar to most of us: having to manually update the same information in several different Office components and other Windows programs. Small Business Accounting can synchronize its customer, vendor and employee databases with those in Outlook's Business Contact Manager. You can maintain and share customer histories, track opportunities, and easily e-mail quotes, purchase orders and invoices. Small Business Accounting also seamlessly integrates with Word so you can create templates that put your company's personal stamp on external communications and end-of-period financial statements.

Small Business Accounting's own financial reports are minimal, but it easily swaps records and lists with Excel, where you can what-if various business opportunities and do advanced budgeting, charting and sales forecasting. QuickBooks and Peachtree have similar links but aren't quite as adroit.

Microsoft's Small Business Accounting offers many potentially time-saving capabilities, but only for those already committed--or willing to commit--to Outlook and other Office applications. From the overhead that SQL Server imposes to the use of Outlook as your company's nerve center to the many other choices in productivity tools, with their ensuing update schedules and security issues, choosing Small Business Accounting has a lot of implications.

If all you need is accounting, Peach-tree or QuickBooks will be simpler, better alternatives for the foreseeable future. But if you're ready to sign on to Microsoft's vision of end-to-end information management, Small Business Accounting 2006 could be a great leap forward.

The Bottom Line
Pros: A familiar interface and wizards ease the setup of your books, importing from Excel and QuickBooks, and data sharing with Microsoft Office components. A broad set of accounting tools includes inventory, job costing, an informative cash-flow forecaster, an audit trail for backtracking, and online connections to banking, bill paying and ADP payroll services.

Cons: Many modules--inventory, for example--lack depth and flexibility, and SQL Server slows the program. There is no easy way to share limited accounting data with an outside accountant, and some Office components have proved insecure in the past.

Mike Hogan is Entrepreneur's technology editor.


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