The most important thing for a small business – or indeed any business – is to be able to track regularly and accurately the state of the cash flow. This means knowing how much work has been invoiced, controlling credit, closely monitoring costs and managing client accounts.
However, if it’s the most important thing, it is probably also the routine task that can get overlooked, forgotten or that gives way to more urgent daily issues.
When I joined Simpleweb as office manager a few months ago, I was introduced to Freeagent, the accounting software designed to help small businesses do all this.
Great, I thought. All good stuff that is going to make life easier. Providing the information goes in methodically and accurately, the current situation can be monitored daily.
So, what do we like most about Freeagent?
Well it’ s free! (well almost. There is a small monthly license fee of about £22).
The dashboard on our home page gives a great point of quick reference. It is graphic and clear and shows at a glance the state of the bank account, how much has been invoiced out, payments received and a debtors list so I can see immediately who needs to be chased for overdue invoices. It also shows a tax timeline with key payment dates for PAYE/NI, VAT and Corporation Tax and a quick reference profit and loss summary.
The contacts database means you can keep all your contacts up to date and the work flow section allows you to project manage work for key clients, generating estimates, time sheets and invoices. We use the invoicing function as it links into the payment details and bank reconciliation – but for project management we prefer Basecamp
To manage the cashflow, providing you upload your latest bank statement regularly to Freeagent, you can easily reconcile and account for money in and money out. The information you put in here is categorised into cost centres and feeds into the accounting section and profit and loss making costs monitoring and end of year accounting much easier.
The My Money section can be used for PAYE & NI, generating payslips, keeping records of expenses and more.
What do we not like so much?
Well, three months on, you can imagine my disappointment with one very important, you could say vital, aspect of Freeagent that has turned out to be seriously lacking: the PAYE and National Insurance calculator.
By their own admission, Freeagent say on their website: “. . . this is a simple payslip calculator” and that “if your payroll needs are more complex than the simple calculator supports, you can always use another payroll calculator and edit Freeagent to match”
We were nearly caught out by this simplicity and had been putting blind faith in the payroll figures generated by Freeagent. However, it turned out that there were some discrepancies in the NI payments, albeit small differences. Luckily we realised quite quickly that the system was not really robust enough to cope with the nuances of our payroll and the complexities of UK tax and NI deductions so we have handed the payroll function to our accountant who runs it all through Sage. Peace of mind. I do not think we will be duplicating effort by replicating the data in Freeagent. The net salaries and tax paid will still be accounted for in Freeagent, but not the calculations or payslips which will come from Sage.
Like any system, Freeagent is only as good as the data that is put into it and we have made a judgement call about which parts are really useful to us and then to make absolutely sure that we keep those sections routinely and accurately up to date – then it really does make life easier!