Nina Hendy for The Age writes: Not asking for a written quote has cost Oscar de Vries dearly.
The founder of shaving preparation brand Oscar Natural hired a Sydney accounting firm in July last year to convert his accounting software from MYOB to Xero, favoured by a growing number of Australian small business owners.
He was told in an email it wouldn't cost more than $9000, and de Vries was given the impression it would take a week or two.
But months on, he's still waiting for the conversion to be finalised and has been trapped in a cycle of bill payments.
The frustrated business owner is speaking out to warn others in business to be wary of the subscription model offered by Xero, which he says can effectively lock business owners out of their own accounting system.
He's accused the accounting firm he hired of holding his financial information to ransom. He receives regular bills for services rendered, so far forking out around $20,000 to the firm.
De Vries didn't realise the firm would take out the Xero subscription in its own name, instead of his, meaning he's effectively wedded to the accountant.
“I'm effectively being held to ransom and they refuse to transfer the subscription into my name, so I'm stuck with bills I never signed up for. This could amount of restraint of trade, but I've so far been unable to get the issue resolved,” he says.
“I should have insisted on a formal quote, as I clearly didn't sign up to have this firm continually bill me for ongoing support.
“I've been stung, and it's taken an enormous amount of time to try and resolve this. I want other small business owners to be aware that they need to take a Xero subscription out in their own name, and not let their accountant hold the subscription,” de Vries says.
He admits he hired the accountant in a hurry because his business couldn't afford any downtime.
A subscriber has to give authorisation before a subscription can be transferred, he says.
“I have a new accounting firm lined up, which has given me a written quote and is ready to take over. However, while the current firm continues to control the subscription, it has full insight into my financials and could delete all other users, including me. It truly is an outrageous situation.”
He's not alone. Andrew Simpson is the owner of Sydney industrial design firm Vert Design. He's been stung in exactly the same way.
“Xero offers great software and I love using it, but the bookkeeper makes a margin if the subscription is in their name, and continued to send me bills.
“The thing that really worried me was that I was having a financial dispute with someone that had control over my invoices.”
The bookkeeper appeared to be logging in and seeing payments made by his clients, then would send a bill, he says.
“I've got another client in exactly the same position at the moment. I had a quote for the work, didn't keep it, and the costs just keep rolling in, so spent more on bookkeeping than I ever bargained on.”
Simpson applied pressure to his bookkeeper to convert the subscription to his name, but wanted to warn others.
Rival accounting software provider MYOB has heard of similar cases from small-business owners who have concerns with the Xero subscription model, according to general manager of the business division, James Scollay.
“For example, a Xero customer's ex-business partner went bust and the subscription licence belonged to the other party, so that customer wasn't able to access their data.
“As in any industry, but especially in technology, early adopters sometimes like to try out shiny new toys and applications.
“We've had accountants and bookkeepers bringing groups of clients back to MYOB in their hundreds because they're unhappy with the competitor's experience, and have realised they were on to a good thing with MYOB.”
Xero Australia managing director Chris Ridd says the company is aware of the case between de Vries and his accountant, and has attempted to help resolve the dispute. The accountant is not acting as an agent for Xero, he says.
He advised small-business owners to consider who they wish to act as "subscriber" when signing up to Xero.
“If necessary, a small business owner can register for Xero and assume the subscriber role, and limit the accountant's involvement to that of 'invited user', which is a user with certain rights set by the subscriber,” he says.
A growing number of accountants are being recruited to sell online accounting software, including Xero, MYOB, Reckon, Intuit, Saasu and Freshbooks, Melbourne CPA accountant Simon Wilson says.
Accountants are being enticed with reduced subscriptions, extra software and marketing support, he says.
Business owners need to read contracts carefully, he says.
“While you can subscribe to these packages directly, the preference is that it goes via an accountant, who can offer set-up and ongoing support,” Wilson says.
If you want to change accounting software, firstly speak to your existing accounting firm to get their advice, he advises.
Flying Solo - Micro Business Community
Flying Solo in Australia had a conversation about this article, you can read it below.
Cloud Accounting users - Beware!
Just a reminder to be very careful with your subscriptions and your data with cloud accounting providers.
http://www.theage.com.au/small-busin...417-36u7a.html  |
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 Re: Cloud Accounting users - Beware!
As with anything, check it out first.
Personally, I changed from a traditional package to an iCloud package at the beginning of the last financial year, and haven't looked back. But I am the subscriber and I can give authority with reduced access for either a long time or a very short time to certain people, when needed, including accountants. I can remove that access at any time. The person/firm in question who are not allowing the business owner subscriber access to their files is obviously the main problem, not the provider of the software, iCloud or otherwise. Every business owner should have a vested interest in checking their own accounts and balances regularly, despite whether another person has access to do the accounts and payments for them. |
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| Re: Cloud Accounting users - Beware!
Good article.
Your book keeper or accountant shouldn't hold the master account for your cloud accounting in their name. It should be in the name of your business and from here you can grant access to whoever you choose under your terms. You should be able to drill down and give these helpers rights to only view or edit specific sections you open up to them. With a system like this in place, this issue wouldn't of happened to Oscar. While the popular cloud accounting solutions do create a level or vendor lock, a clued up book keeper can easily migrate an entire business from one to the other within a few hours.
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Evolved Sound - evolve your business with on hold messages & in store background music. QW Direct - made to order promo, security, identity & new concept products. |
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| Re: Cloud Accounting users - Beware!
$20,000 for a Xero conversion! Unfortunately there are plenty of people who are charging too much for Xero conversions at the moment as it is so popular. Best like everything in life to get 2 or 3 quotes.
Some of the other conduct sounds like a dodgy firm of accountants less about the dangers of cloud based software...
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Alan Maddick - Accountant & Financial Adviser Small Business Accountants Self Managed Super |
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| Re: Cloud Accounting users - Beware!
Great article an unfortunately, an easy mistake to make but can easily be avoided.
There's no problem with having a professional set the Xero subscription up for you. I do it for clients all the time. What's happened in Oscar's case is the accounting firm set themselves as the Subscriber. There's no reason for this to happen as it sounds like Oscar intends to use (and pay for) the Xero subscription himself . An accountant or other external party can have an Adviser Role, but this is something different.. Without delving the depths of O-O programming, you have to bear in mind that both companies and users are distinct "objects" (entities or things) in Xero and other similar systems. They are linked together by object "attributes" (e.g. user Roles) and a system of permissions that only allows certain people to do certain things in a given company object. Xero users have a range of attributes described collectively as Roles which has been standard database practice since Adam was a lad. Many users can be in Read Only, Standard or Adviser Roles all at same the time but only one User can be the Subscriber. The Subscriber attribute is set during the company setup process and once it is set - it is set, until the Subscriber chooses to pass it on. I would emphasise that from a systems design perspective this is not an experimental or new innovation from Xero. It's a widely used sensible way to control multiple users across multiple locations. The setter-upperer can allocate the Subscriber role to a current Xero user or have an invitation to join Xero sent to any email address if the Subsciber is not yet a Xero User. The Subscriber should always be the person who intendes to literally "own" the subscription - usually the person authorising the bill payment. From reading the article, I have great sympathy for Oscar's plight and others caught in the same trap. Once you're stuck, there are potential methods to get around the problem without a great deal of hassle or controversy, but it's better not to get in the situation at all. Accountants and bookkeepers all have their own (free) subscriptions to accounting software. There's no need for anyone outside the company to own the subscription. What really surprises is the $9,000 quoted by said accounting firm to do the conversion - and the fact that Oscar was willing to pay it. Database conversions should only be done by I.T. professionals with appropriate skills and experience. You wouldn't ask your accountant to upgrade your network or switch you from Windows to Linux, and it's the same for database conversions. Don't forget, at their core - Xero and are big, fancy databases with flashy web-browser interfaces. If Oscar, Andrew or anyone else concerned by this article would like ideas or advice, feel free to get in touch. Particularly if you have $9k to spend on a small business conversion.
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Tim Burrows Customer Conversion Lead | Principal K2G Know 2 Go - business software conversions http://know2go.com.au Last edited by Tim B; 3 Days Ago at 05:59 PM. Reason: readibility |
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Slightly tangent to the discussion, I feel uneasy about Xero. Your business's financial data is on their server and they control your access to your own data via the Internet.
I would feel safer if the data is sync to a local copy on my computer. That way, if anything happens to the cloud (eg Xero goes bust, their server got hacked/wiped, Internet connection outages), my business can still function by reverting to the traditional computing. Of course, keeping backups of my computer is still important.
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Terence Kam eStrategyPro - Internet Business Strategy Consultants Google+ Profile |
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| Re: Cloud Accounting users - Beware!
At an ATO webinar yesterday the ATO said they are still not satisfied that cloud is safe enough to keep any more than the most basic of information on. Yet here are Aussie businesses signing up for it in droves and storing all their info on it.
Food for thought. regards Evan
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Night Tax & Accounting Public Accountant & registered Tax Agent http://www.nighttax.com.au |
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| Re: Cloud Accounting users - Beware!
Nighttax ... Is this an official or personal view.. Surely this would be on the ATO web site or in correspondence if an official view
I believe the most important point of the original article is that when agreeing to a major change to your business practices such as changing accounting packages is to understand all the costs and implications..including reading the engagement letter
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Scott Wastell (B. Bus) CPA, BAS Agent SAASU Partner Stellar Profits Your Business Partner |
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| Re: Cloud Accounting users - Beware!
Hi,
For a firm to be considered as a bronze, silver or gold partner with Xero they need to have 3, 25 or 100 clients. To qualify the firm must be the subscriber. It is not enough that the firm is invited in as an advisor, to qualify they must be the subscriber. So how the article gels with the basic underlying business model of Xero will be interesting to watch I think. It seems designed to minimize Xero's risk to cashflow if nothing else Its a great program but has a number of weaknesses (as do the majority of cloud based accounting and other programs) particularly the ability to take a local backup. To my mind, to satisfy safe and easy record keeping, there needs to be the ability to archive, backup and sync and while sync is well addressed, the inability to created archived copies and running backups is, in my opinion, as serious flaw.
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Marc Taylor MCom(ProfAcct) MIPA Small Business Management Services www.acclaimbookkeeping.com |
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| Re: Cloud Accounting users - Beware!
Quote:
The advice was presented as the ATO's current official position on cloud hosting. When you think about it the banks and credit card companies and google who have a lot more money to spend on protection from hacking than xero, saasau, myob etc and certainly a lot more money than the cloud hosting companies and yet the banks, credit card companies, google etc all still get hacked. How is that people think cloud hosting is safe? Of course if I was selling xero or saasau or myob or whoever - of course I would be totally convinced that it was all the safest way in the world:-) regards Evan
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Night Tax & Accounting Public Accountant & registered Tax Agent http://www.nighttax.com.au
Re: Cloud Accounting users - Beware!
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I'd say a lot safer than the typical home or small office computer linked to the internet, if they're using desktop applications. The stats on botnets and systems open to control by others are a lot scarier (and more prevelant) than Cloud hacks. Good Cloud companies have some of the smartest people on the planet working to secure their data. Your average business and personal PC user has little or no clue ... there's lots of articles about various businesses getting their non Cloud data hijacked. If you connect to any network you are at risk, better to connect to one where the other end is a least trying to stay secure. Don't know about anyone else but I have no desire to go back to reconciling cheque butts in a paper and pen ledger. I do think the option to download the data as backup, is a good idea though (essential in fact, if you're sensible). All innovation has bugs, it's whether the cost benefit (and ease of use) outweighs the risk. Currently consumers seem to be voting with their feet and wallets ... I don't think even the ATO can reverse this trend. Does anyone have any actual stats on how often these services get hacked? I've not seen one reported. My bank seems to trust them enough to let them access data, via transaction API's. Speaking of banks, they seem to wear the costs associated with hacking without too much public complaint ... guess they figure the cost benefit is worth the risk, I've never known my bank to be doing anyone a favour at a loss. |
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