Zoho Books Analyst Review April 2011

Zoho Books Product Review 13/04/2011

Features: Accounting, Invoicing, Quoting, Banking and Credit Card Management Industry: Non Specific Customers: Small and Medium Business Geography: All markets Languages: English Cost: Starts from $24/Month

Review methodology

This review constitutes an analysis based on a product demonstration and software review by qualified system software experts at Eval‐Source The demonstration Eval‐Source received from the vendor was based on their own custom vendor script, designed to validate and/or disprove vendors’ claims. The script was specifically prepared to identify functionalities and form an impartial analysis and software review for an Accounting and book keeping system.

Business Problems Addressed

The nature of doing business means managing finances, which can be a time and resource consuming task. Whatever type of business you’re in, managing your company’s cash flow is one of the most important aspects of your operation. In small businesses, people are pulled in every direction and accounting may not have dedicated resources. Being able to effectively manage your finances can help your company in forecasting and making better decisions.

When examining the financial management of your business, there are many elements that must be taken into consideration. The basics of business accounting can be broken down into two components: money in (accounts receivable) and money out (accounts payable). Businesses often have a difficult time keeping records of the quotes, invoices, bills and expenses that constitute the company’s cash flow. Another major element of business accounting is managing bank accounts and credit cards, and understanding how products and services impact the company’s profit or loss. With so many accounting tasks, it is easy for companies to fall behind, make mistakes and mismanage their finances. Streamlining the accounting process with good visibility can be very beneficial for any business.

Zoho Books is a specialized software application that addresses the accounting needs of small businesses. In this profile, we will examine Zoho Books in the areas of target markets, pricing model, solution analysis and technical analysis. We will look at the range of functions that Zoho Books offers to companies that need to manage their finances, make better decisions and stay on top of their business.

Target Market

Many businesses manage their bookkeeping with Excel spreadsheets, basic accounting tools or specific accounting software like QuickBooks. Using separate tools for bookkeeping can be confusing, time consuming, incur a high margin for error and offers limited scalability. Zoho Books offers this functionality as a service. Because Zoho Books is an on‐line tool, it caters to companies that wish to manage their finances using one complete accounting software tool with an easy point of entry. The transition from spreadsheets or basic accounting tools to an on‐premise accounting software


can be costly and Zoho Books provides the flexibility of having your accounting resources available at any location. Given the number of growing businesses with remote offices or remote workers, this tool is an ideal solution for bookkeeping. It allows collaboration and visibility of the company’s finances to any employee in any location, an ideal function for owners and small accounting departments.

Most companies place a finance tool at the top of the purchase list for business applications. Zoho Books caters to companies that want an on‐line bookkeeping tool but may need additional applications for other parts of their business. Zoho Books is standalone application, but is part of the Zoho Platform, which has over twenty other business applications. This means that companies using Zoho Books for accounting have the option to buy CRM, project management, recruiting, ticket management and support applications to fulfil their needs. This is ideal for any company that needs to manage its growth.

Pricing model

The pricing model for Zoho Books is very simple. A yearly subscription includes two months free, giving your organization a net cost of ten months for the year. Zoho Books’ flexibility gives smaller companies the option of adding another organization under one accounting entity. Additional organizations may be added to the monthly subscription if multiple accounting entities are required. This option is available with a monthly or yearly subscription, both of which offer a, net saving of two months with the purchase of a yearly package. The benefit of a monthly subscription is that small businesses with very long sales cycles are not obliged to pay for months when there is little or no accounting activity. Additional users can be added for five dollars a month.

Upon contract termination, the data export is free.

SaaS Checklist

In order to fully understand SaaS and cloud‐based solutions, Eval‐Source has created a checklist that businesses should employ when engaging a SaaS or cloud vendor. The components of this checklist cover the cloud delivery model and provide details that may require further investigation. This checklist serves as a starting point for SaaS/cloud basics that the organization should bear in mind before choosing a SaaS/cloud solution.

1. Tenancy ‐ Multi or Single: Multi ‐ tenant 2. Cloud Structure Public or Private: Public cloud 3. Subscription Terms: Monthly, Yearly 4. Data Center: Online 5. Data Security Standards by Vertical: N 6. Business Continuity/Data Recovery: Y 7. Encryption Type: 128/256 SSL bit encryption 8. Version release schedule: Depending on customer feedback for feature incorporation

Additional User

per month

$ 5

Additional Organization

per month $180 yearly subscription $ 18


9. Current Version Released: 1.0 10. Session Management: Y 11. Application Level Security: Y 12. User Limits: N 13. Data Migration Services offered: N 14. Free trials/sandbox testing offered: Yes, there is a thirty day trial 15. Application Customizable by User: Y 16. Application Customizable by Vendor: Customer Driven Development 17. Set Up Fee (admin fee): N 18. Charge for Additional Space: N

Solution Analysis

All features such as customer invoice management, expense tracking, recording and monitoring ongoing expenses, bank statement reconciliation, transaction monitoring and real‐time collaboration is included in this double entry accounting solution.

Functional Areas Zoho Books consolidates the functions for tracking money‐in, money‐out, managing operational accounting transactions and all vendor related accounting. The four main functional areas of Zoho Books are Money‐In, Money‐Out, Transactional Operations, and Banking and Credit Card Management. All accounting functions occur in these four categories. They cover the entire accounting cycle, making it easier to track incoming/outgoing expenses, manage the day‐to‐day transactional processes and include banking and credit card management. The main functions of Zoho Books are Money‐In, Money‐Out Transactional Operations, and Banking and Credit Card Management will be examined and consequent functions within each module will be explained.


Money‐In ‐ The Zoho Books Money‐In functions manages all incoming cashflow from all sources. The Money‐In functionality allows for monitoring of cash flow and invoice management. This features a wide array of functionality, which is discussed below.

Quotes, Invoices, Credit Notes etc. – The ability to generate a quote for products and services and to issue an invoice when the sales cycle is complete is rare for accounting software. Zoho Books offers a quote to invoice feature. All invoices can be tracked and managed through this portion of the application including credit notes, recurring invoices and deposits.

The invoices portion of the application is quite flexible and can customize your invoices, using either pre‐

generated templates or ones that you create yourself, which will enhance your business image. Contacts can be imported from other programs such as Zoho Sheet or CRM through a use of a CSV or TSV file. Once the invoice items and contacts are in place, businesses can create recurring invoices with an automatic date for the invoice to be issued and utilize a feature that automates follow ups within the software, reducing administration. Zoho Books is multi‐currency and multi‐lingual, and can automate snail‐mail invoices using USPS. They can also be sent using email. As part of the procure‐to‐cash cycle, businesses can track payments, accept payments online and automate thank you emails for extended customer service. The thank you emails generated from invoicing can be used to promote special offers and act as an additional marketing tool.

A further helpful feature of Zoho Books is a help menu that prompts the actions to take when creating new

invoices. These include whether to import, export, add new items, add new customers, new contacts, new tax groups and other common invoicing questions. These questions stem from a knowledge base of FAQ that Zoho has created for this application, and which proves valuable for customers new to accounting software.


Within the Money‐In portion of this application, you can create credit notes for customers to facilitate

returns, for coupon submission, gift card purchases, overpayments etc.

Money Out– This category of Zoho Books allows you to manage the cash flow within the company. It helps manage and track expenses and monitor outgoing funds.

Zoho Books provides a convenient one‐source application where businesses can record all expenses and track all payments, automatically creating the necessary records for SMB taxation, accounting and banking.

As with the Money – In section of the application, there is a convenient help menu of possible actions.

Actions include the creation of a new account or contact, bill tracking, and import/export of expenses, and all are viewable in Zoho Sheets.

Zoho Books can help manage your supplier relationships by prioritizing payments and can manage the accounting schedule for each payment. Suppliers can be paid within their own payment schedule which also helps cash flow management and may contribute to discount pricing.

Keeping invoice and expense records in one location ensures there is no duplicate payment or overpayments.

Accurately tracking and recording cash flow allows the company to have visibility of all statuses. They may then be categorized as billable, unbillable and track funds reimbursement.

Transactional Operations – As the complexities of running an SMB grow, it is important to understand that the Zoho Books transactional approach facilitates the tracking of operational tasks. Zoho Books is a double entry accounting system. Essentially, a journal entry is created to offset accounts for credits and debits, and also for expense and billing transactions. For day‐to‐day transactions, Zoho Books automatically creates journal entries. For special considerations such as fixed asset depreciation, the Account module allows for the creation of manual entries. The manual journal entry capabilities facilitate moving money from one account to another, ensuring your books balance and allowing for easy transaction correction.

A popular Zoho Books feature is the multiple base currency manager. Open bills and invoices can be easily adjusted using real‐time currency exchange rates. When converting currency the “loss” or “gain” resulting from the transaction is posted to an exchange account and the differences are recorded.

Zoho Books comes with extensive pre‐built reports to chronicle all common transactions such as trial balances

and journal reports. This provides broad corporate visibility to all balances and capital management throughout the firm. Zoho Books’ canned reports are categorized, and can offer precise solutions to any problem. The reports also have user based built‐in security so that private information can only be accessed by the correct people.

Within the invoicing module, detailed reports of all invoice criteria may be created. Items such as invoice details,

summary and aging reports are all part of the shelf packaged reports. Additional operational accounting tasks such as profit ‐ loss reports and balance sheets that provide a financial snapshot are quickly and easily created. To simplify tax collection, setup taxes are visible at any time for any defined entity to which you may owe taxes such as Federal, Provincial or Local departments.


A convenient Zoho Books feature facilitates the addition of online payments. These payment options are easy to use and simplify administrative and accounting procedures. Zoho Books has three online payments options: PayPal, Google Checkout and Authorize.net.

These online payment options enable the company to pay online, send money and receive payments. Customers can pay with a credit card or PayPal account. In order to use the Google Checkout options for online payments, a Google merchant account is required. Once setup, customers can use Google Checkout to accept credit card payments or use the Google Checkout feature for online payments. The Authorize.net integration works the same way, allowing for credit card payment or collection using the Authorize.net network, and requires a merchant account for use. The integration of these three common payment gateways provides additional security for transactions as they all are subject to the strict security policies of each gateway. This adds another layer of security to validate internal accounting processes.

Financial visibility is of key importance for any small business. The Dashboard feature in Zoho Books provides the required visibility in all aspects of the business. Zoho Books offers over 25 off the shelf reports to gauge the state of your business. Common indicators that are required such as aging reports, accounts watch list, profit/loss reports, bank and credit cards accounts summary and income and expense charts are available. Complete visibility by the Dashboard provides the organization with a clear financial picture of the state of the company.

Banking and Credit Cards Recording of transactions has always been difficult for small businesses, especially when tracking expenses. Zoho Books provides a feature to track and monitor expenses and bank account information, and then record that information in one place. The Banking and Credit Card module of Zoho Books easily reconciles many different procurement and payment streams.


This module records banking and credit card transactions (for both payments and invoice collections), deposits,

fund transfers and expense tracking. When it is reconciliation time, bank statements can be checked against the transactions in Zoho Books to validate that correct accounting procedures have been adhered to. Items such as interest on what the bank account earns, uncleared checks and institutional transaction fees are all validated using this portion of the application. In accordance to reconciliation procedures, the user can drill down into any account to view the details of a specific transaction for further clarification.

Zoho Books is different from SMB accounting software in its ability to handle multi‐decimal precisions for multi‐currency transactions. This feature is difficult to find in SMB accounting packages.

Technical Specifications

Zoho Book comes standard with pre‐built integrations to three popular payment gateways: Google Checkout, PayPal and Authorize.net. (See functional analysis for how these features work).

Zoho Books is part of the larger Zoho family of business applications platform; however each of the applications in the platform is a standalone application that is sold separately. Zoho Books integrates to Zoho CRM, Zoho Projects, Zoho Sheets and to Google Apps. The functional API’s for Zoho Books should be available around April, which will allow for a wider range of import information from existing systems.

For organizations looking to leverage an existing system with previous accounting records, there is an import option available through a data wizard for importing information into Zoho Books. These files may be imported in CSV and then imported into Zoho Books. An additional advantage of using Zoho is that the Zoho CRM is free for up to three users. The CRM contacts can be imported into Zoho Books, and companies have the functionality of Zoho Books and Zoho CRM for the price of just Zoho Books. This provides an extra incentive when organizations are evaluating enterprise software applications, by combining two applications for one price. Further integrations with rest of the Zoho platform is planned for later release.

Because of the SaaS based model that Zoho provides, there is no need for organizations to install a thin client that is interfaced through the web. The application is accessed through any major web browser and can easily be accessed from many sources. This is especially useful for organizations that have multi‐organizational entity accounting in one set of books and many different physical locations.

An upcoming service of data migration that should be released shortly is expected to simplify migrations from other systems and provide direction to SMB’s to make the transition from spreadsheets to a proper accounting system.

Quick Glance Specifications

Web browser optimization: Chrome, Firefox, Safari, Internet Explorer OS required: N/A due to SaaS model browser based delivery DB required: N/A due to SaaS model browser based delivery API’s provided: Coming in April Security practices include: Physical, Business continuity, Redundancy and People Access


Conclusion

Zoho Books is point‐to‐point accounting software for SMB’s that allows companies to manage their finances and make better decisions. The collaboration and visibility within the tool allows owners, management and accounting resources to understand the flow of money in and out of the company and help forecasting for the business. When examining money coming into a business, Zoho Books facilitates the management of invoices, quotes, and credit notes. For money going out of a business, Zoho Books manages the expenses and bills. A company’s credit cards and bank accounts can also be managed with Zoho Books. For companies that operate internationally, Zoho Books provides a wide variety of currency exchange within the tool.

Zoho Books also integrates with different applications like PayPal, Google Checkout and Authorize.net. The integration with other financial applications extends the functionality of Zoho Books. As PayPal, Google Check out and Authorize.net are so widely used, Zoho Books can be quite powerful as an accounting software tool without the need to manage multiple systems, and provides one central interface for all financial transactions.

As Zoho Books is on‐line software, it makes it easier for a company to adopt the technology and not have to worry about resources to provision and manage the tool. Once a company begins to use Zoho Books, the functionality of other Zoho applications such CRM, project management, recruit and others can be easily added to cater for other business needs. Since Zoho CRM is free for up to three users, both systems can be used for just the price of the Zoho Books monthly subscription price. The combination of this functionality makes Zoho Books a full financial management software tool for small businesses.


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