We are attempting to profit by being the best supplier we can, proactively providing the best value, so that others will rave about how we look after them.

I am currently using SoEasy and have done so for at least 5 years.

I have read the discussion between Ian (of SoEasy) and Rod at http://blog.xero.com/2009/01/myob-end-of-an-era/ and I have read http://www.datasouth.co.nz/news/should-you-sweat-the-gst-hike.html where promises were made re companies charging for upgrading software to cope with the change in GST rate.

Sean above mentions that “It will be interesting to see whether developers attempt to profit from the release of an upgrade, although as you point out the market is getting busier and switching costs are high so it is not a reach to expect that any upgrades will be offered at a reasonable fee to existing users”

Well they are attempting to profit … well SoEasy is at least.

I bought the lastest Shrinkwrapped copy of Soeasy in August last year and have been told that if I want it to work with the GST change I would have to buy the lastest version – another $300 +GST or I could sign up to a monthly $50+ support contract which appears to mirror the Xero offering.
I hope that I speak for a number of small, one-man-band, business owners who would complain that $50 a month is too much to pay? Why is it that you software guys are all aiming for a sector of the NZ business community where competition is tough and you are forgetting about the huge number of little business owners who like to use their computer at home to do their own accounts? No wonder that only 20% of new business startups last more than 5 years – the cost of being in business is so high.

It isn’t so much to do with the quality of the vendor (though it does seem slack there is still nothing much here: http://myobnz.custhelp.com/cgi-bin/myobnz.cfg/php/enduser/std_adp.php?p_faqid=32361) it’s more about the point you mention that small business just have not kept their software up to date.

For example there are still thousands of users hanging onto NZA Gold and AuroraOne which are well out of support. Good products in their day which many small businesses have just kept trucking on with as the costs to move up to Exonet couldn’t be justified and up until now there have been few low cost alternatives.

The GST issue is therefore a great opportunity for the industry to bring small businesses up to date and get them ready for a lot of new changes we see coming.

There is so much inertia for small businesses to move that the industry needs to work hard when these external drivers present themselves. Yes that’s good for us, but we truly believe it’s good for the many small businesses who just haven’t got around to get on a modern online platform yet.

But I do get what you’re saying.

Rod

“Many businesses have not kept their licensing current for their desktop product and therefore have a big investment decision to make.” To suggest that a large portion of NZ business are using software illegaly is a charge not to be made lightly. If however you are correct then the GST changes also provide an opportunity for desktop software publishers to reign-in this illegal use of their software by compelling illegal users to purchase. I imagine a majority of desktop software users have either free support from developers or will be offered a patch or upgrade for a nominal fee.
It will be interesting to see whether developers attempt to profit from the release of an upgrade, although as you point out the market is getting busier and switching costs are high so it is not a reach to expect that any upgrades will be offered at a reasonable fee to existing users.

So far I like Xero as a product, but please present the facts fairly. MYOB, Quickbooks and the like are well established firms and as a programmer I can’t see the GST change presenting much of a problem for them, nor can I see them passing on exhorbitant costs to their customer base.

For those customers on Cashbook we will provide the calculation basis to assist with the transition GST return. We are looking at some other options and ways we can help NZ business deal with the GST changes. Xero has unlimited users, so a business can easily ask their Accountant to help with the transition calculation and ensure their return is correct before it is filed.

We will be posting updates on this important subject over the next few months and watch out for the auto updated in the Xero app.

Of course this is great opportunity for us. We’d like people to make this their last upgrade and we’ll look after them from here on in.

Keep your comments coming. It’s a good discussion.

There are problems with all the current software providers Xero included. Xero is not perfect and still has a number of faults.

I terms of the GST changes and how they are going to effect those on Xero, those who are either not using the full Xero system functions (eg cashbook) are likely to suffer the same timing difficulties (which GST rate to account for) as those on other systems.

$49 per month is around $600 per year for Xero.

An $800 QuickBooks upgrade will be for Premier and it is a ‘from-any-old-version’ price. An end user may not have upgraded for 4 or 5 years so in reality it is only costing them $150 to $200 a year to upgrade if they upgrade now.

QuickBooks Premier is not comparable to Xero as the functionality is completely different.

Someone on QuickBooks Small Business, will only be paying around $300 to upgrade to the latest version from any old version. If they haven’t upgraded for 4-5 years, an annual cost of $60.

The QuickBooks GST patch will be issued to everyone on their latest versions.

I’ve commented on Cash Basis GST issue on Hamish’s Xero and GST rate increase — Data to Knowledge.

We coped with the change from 10% to 12.5%, we coped with Rest Home mixed rates of 12.5% and 10.25%.

Some products will require an upgrade for GST changes but most will work as they did before with a rewrite of the GST 101 form.

Let’s hope the IRD have learned to do more than mulitply by 9 on the web.

Xero does not yet do some of the things that desktop software does and there are reasons for retaining desktop software, either as a desktop, or on-line hosted option.

I don’t think price should be the argument for using Xero.

But the very link you direct users to look at, the second answer on the page is
“MYOB software allows a user to easily add or edit the GST rate.”

In fact most of that page is about how they expect most of the MYOB products to work with the new rates with just a configuration change, which they intend to issue instructions to do.

Look, I’m no fan of MYOB but to say that this is some major issue where they are going to have to do a rush job to get some new software out to people who will all have to pay for upgrades…. that’s just not true on the face of it.

Its ok to compare your product with another and say it’s easier to manage the GST change with Xero, that’s fine, it’s undoubtedly true, but to spread this kind of thing, is not on at all.

…

As for adjustments… I think this is really just the IRD pulling hairs, mainly for the people who still use pen and paper accounting and the “I have a big pile of invoices on my spike, add them up and divide by nine” method of doing a GST return.

Any accounting software is going to have the GST content of an invoice recorded at the time the invoice is raised, if you get payments for an invoice raised prior 1 Oct, then the GST which goes into your GST liability account will be the old rate anyway, otherwise it wouldn’t balance.

If you pay an invoice which was issued to you before 1 Oct, then just make sure it is recorded at the old rate and the GST which comes out of your liability will be the old rate. The effect is the same as entering some “preemptive” adjustment.

At this stage personally, I won’t be recording a special “adjustment” – it’s just work for no benefit in fact it clouds the data. If the IRD comes knocking and wants to see an separate adjustment for some reason then no problem it can be calculated, by them and I’ll happily hand them the data, they’d be wasting a bunch of time because the numbers will be the same in the end.

Regards
Dan Ballard
CyberHub