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Defence against a tax

Defence against a tax

When - following years of public debate - the broad-based consumption tax, also known as the Goods and Services Tax, finally received the green light a few months ago, two things suddenly came to light. First, there weren't going to be as many `winners' as Prime Minister John Howard promised to the impressionable public during the GST campaign. And, second, the cost of implementing the changes was going to be significant with small businesses (SMBs) bearing the financial brunt.

While no exact figures on the cost of the introduction of the GST are officially available, the National Tax & Accountants Association (NTAA), a professional non-profit advisory body, claimed earlier this year that achieving compliance could cost the private sector more than $15 billion. The NTAA based its forecast on the argument that most businesses would have to spend upwards of $10,000 on automating and upgrading their accounting systems and ensuring their staff are properly trained to handle the new systems.

Needless to say, a big percentage of these figures could and should find their way into software and hardware resellers' pockets.

`There is a strong probability that every small business in the country will have to buy either an accounting software package or upgrade their old package in preparation for the GST,' says John Adams, managing director of Australian-owned accounting software vendor Sapphire. `We had some market research done for our company that showed up to 90 per cent of SMBs plan to change their accounting systems after January 1, 2000 in order to avoid dealing with the Y2K issue.'

There is no question that, whether the private sector starts preparing for the GST before or after January 1, for the next eight months demand for hardware and software reseller services is likely to outstrip supply. In the context of assessing the number of GST winners and losers, that means that resellers are sure to come out on top at least in the short term.

But in the long run it is the quality of service that resellers provide to SMBs that will determine whether the quick buck they made during the pre-GST rush will translate into customer satisfaction, as well as whether those newly formed commercial relationships will have a future.

When it comes to providing GST support to their customers, resellers should learn from accounting software vendors. Realising they had an important role to play in preparing resellers for the task of servicing the rest of the market, most accounting software vendors have spent this year on the road, educating resellers about the GST.

For instance, 100 per cent channel-oriented Sage Group is training the resellers of Sage solutions in bookkeeping and accounting and even has a Canberra-based GST consultant to advise them on the GST issues. Meanwhile, Exchequer Software is preparing a series of hands-on seminars to be held at the beginning of next year.

`This is because the size of the issue is much bigger than generally anticipated,' explains John Kennett, general manager of Exchequer Software in Australia. `People tend to overlook the fact that the GST is not only about automation, but also about understanding the GST as such. The SOHO market has no resources or systems in place to deal with the GST and they have only a small window to get their systems up and running, which means they will rely on resellers for information and support.'

Yet while vendors are trying to help resellers grasp the concepts they will ultimately have to explain to their SOHO customers, the amount of enquiries they claim to receive from small-business owners seems to indicate resellers have not been as active in seizing and servicing the SMB market as they could be on their GST market quest.

The case of Maureen Kosovich, the principal of Sydney-based TMC Electrical, illustrates the point. `I don't know anything about the GST apart from that it is going to cause me a headache,' she complained. `I sort of have a grasp of the idea; however, I pretty much have to rely on my accountant to fill me in on the details.

We use MYOB for our accounts, but even though they said they've got updates prepared for all subscribers to their support group, I haven't seen anything yet.' Far from being passive about it, TMC management has actively sought guidance on the issue.

But how many businesses out there are looking for advice on GST solutions and upgrades, not really knowing where to turn for help? According to the Australian Bureau of Statistics (ABS), approximately 1,004,000 Australian companies in the private sector fall into the category of small business and only around 28 per cent of them currently use computers for tasks other than word processing. This means that as many as 723,000 businesses could currently be on the lookout for some sort of GST-ready hardware/software solution.

Yet, as Catherine Rickwood, Quicken Australia's general manager for marketing, points out, only a fraction of those businesses can be considered computer-literate and as such require a kind of service resellers aren't necessarily accustomed to giving.

`It is extremely important to take a proactive approach to this market, especially when working with small businesses,' Rickwood advises. `SMBs are out seeking information today about how the GST is going to work tomorrow and they want to know what the solution is and how to get it.'

Based on Quicken's experience, Rickwood asserts that SMB customers want easy-to-use software and total GST support from their resellers. In addition, Rickwood said that despite the fact the GST is unique to Australia, customers will generally seek to buy software with `a solid reputation in the marketplace and the experience of handling value-added tax in other markets'.

Most importantly, however, customers will look for total solutions creating a great opportunity for resellers to earn good margins bundling software with hardware solutions.

`The GST-related sales of new hardware are going to deliver huge profits to resellers, provided their hardware is up to spec and includes Internet services for businesses to be able to report to the ATO online,' Sapphire's Adams contends. `But resellers have to keep in mind that a lot of small businesses will not be able to afford the whole solution and selling to them should be considered a long-term investment in customer relationship.'

Practising what it preaches, Adams' company has taken a unique approach in giving customers a single-user version of its GST-ready software for free, hoping they will come back for more once their companies become bigger and change to the client/server model. `We have taken a very long-term approach, but we believe our customers will appreciate the assistance we're giving them with the GST by coming back to us later on,' Adams explained, adding that Sapphire is looking for more resellers interested in bundling the Australian-made software with their hardware.

In fact, most accounting software vendors are looking to make the most of the GST introduction by putting more reseller feet on the ground. But Exchequer's Kennett, who himself wants to bring more partners on board, says resellers should be careful about who they get into bed with.

`It is important for resellers to keep in mind the next thing their customers will be looking for,' he explains, `so software that has e-commerce capabilities, software that can be integrated with other SOHO products or software that has add-ons such as point-of-sale and project management capabilities is the way to go.'

Resellers should also keep in mind Adams' warning that a lot of SMBs won't be able to afford total solutions and consider reselling packages such as Quicken that come with organised finance for resellers to offer to their customers.

Put bluntly, in these times when every customer is a potential swinger and every vendor and its Web site a potential direct competitor, the introduction of the GST represents a great opportunity for resellers to (re)claim the wavering customer and win the trust of those who are only being initiated into the world of computers and automated accounting for the first time.

And in that game, resellers should go not only with the most experienced vendor, but also with the one who can show them the best way to guiding the customer through the GST-introduction nightmare. And then, as unhappy small business owner Maureen Kosovich points out, you should be out there, helping your customer get what they want.what's new from . . .

. . . Exchequer

Exchequer Software has released a new e-commerce and accounting system for small-to-medium businesses.

Priced from $7500, the system purports to offer a complete solution to the new GST-based tax system to be introduced next July.

Exchequer developed in a GST environment in the UK and was well positioned when New Zealand introduced a GST several years ago, the company claims. It has also demonstrated the first e-commerce transaction using the new XML-based standard developed by BASDA.

This provides a unified e-commerce environment, allowing transactions between disparate systems, and enabling e-business to trade over the Web using e-mail, without having to use expensive EDI or value-added networks. Prior to the development of the standard, all transactions had to be manually re-keyed as exchanging orders electronically between disparate systems was not possible.

Research showed that businesses could waste up to 700 hours every year processing Web-based orders that way, according to Exchequer.

The company has launched a white paper titled E-commerce and Accounting, which explores how e-commerce has put accountants at the heart of the integrated business.

The paper focuses on the technical and business issues facing companies embarking on an e-commerce strategy.

E-commerce has expanded the accountant's brief to include areas such as e-mail, production scheduling, warehouse management and customer care management.

Exchequer software also includes a product, job and time costing module, which allows managers to control costings at all levels of the system.

Last year Exchequer won the mid-range accountancy software prize from the Business and Accounting Software Developers' Association.

Exchequer (02) 9380 6220

. . . MYOB

GST functions, flexible ageing and multiple customised forms are some of the new functions on the MYOB FirstAccounts Version 3 - the most substantial upgrade to the program ever, according to the company.

MYOB has updated purchase and invoice screens and matching printed forms to calculate and record the applicable GST. The Spend Money and Receive Money screens now handle GST on cash and receipts.

Craig Winkler, MYOB's CEO, said: `We have enhanced some of the core tax functions of MYOB FirstAccounts. The effort has been all about making it easy for customers to deal with the nuances of the Australian GST now and into the future.'

Version 3 allows input of both the present ACN and the new Australian Business Number (ABN) and offers customers summarised and detailed reports of collected and paid for GST, and cash and accrual accounting methods.

Later versions will include tax reform requirements as they unfold from the Australian Taxation Office.

The program introduces flexible ageing for both receivables and payables, with a choice between the ordinary 30, 60, 90 days or, for example, 7, 14, 21 days.

Customers are able to change the look and content of their printed cheques, sales invoices, statements, and purchase orders.

They can create a library of customised forms and also customise pay advice, quotations, sales tax exempt forms and GST tax invoices.

Fully Y2K compliant, MYOB FirstAccounts Version 3 costs $199 and is compatible with Windows 95/98, Windows NT 4.0 or later, and Mac OS 8 or later.

MYOB (03) 9222 9888

. . . Quicken

Quicken has released new versions of QuickBooks and QuickBooks PRO accounting software for small and medium businesses.

The company says its new QuickBooks Version 6.0 offers a range of new features, including increased efficiency, easier tax returns, more convenient financial reporting, customised company documents, enhanced security and professional help. QuickBooks can now code each transaction appropriately and create tax reports to assist accountants in the preparation of tax returns.

32-bit optimised performance, including right-mouse-click functions, makes using QuickBooks even quicker and easier, the company claims.

QuickBooks PRO Version 6.0 has all the same features but it allows up to five staff in the same company to operate it at once.

Staff can work on different tasks such as invoicing or bill paying, or the same task at the same time.

The administrator can control which areas of the company's accounts each member of staff has access to, as well as being able to track who is working on which tasks and which changes have been made.

Both programs require Windows 95, 98 or NT Platforms and are Y2K and GST ready. Existing customers can receive a GST upgrade free of charge.

Quicken has also released a new version of QuickPayroll software, which accommodates the latest tax office regulations.

QuickPayroll Version 6.0, to be used with QuickBooks Version 6.0, offers easier group certificates, more flexible wage payment, and is easier to use, while the PRO version also offers additional cost tracking benefitsThe RRP is $199.95 for QuickBooks, $349.95 for QuickBooks PRO, $149.95 for QuickPayroll and $399.95 for Quick Payroll PRO.

Quicken (02) 9562 7900

. . . AttachŽ

AttachŽ Business Partner is accounting software designed for small-to-medium businesses with five to 100 staff.

The program uses a modular system so customers choose which features they want and when.

The modules on offer are General Ledger, Customers, Order Entry Invoicing, Products, Payroll, Report Writer, Cash Register, Purchasing and Suppliers and the system will also support third-party extensions.

AttachŽ Business Partner is fully GST and Y2K compliant, easy to learn, fast and locally supported by trained consultants, according to the company.

The software also has a multi-user option, allowing key staff to access the system at the same time.

The price for Attache Business Partner starts from $1000, depending on which options the customer chooses, and there is a free upgrade annually.

There is also the opportunity to rent through a monthly licence agreement, which spreads the costs and ensures you remain fully up to date.

AttachŽ (02) 9929 8700

. . . Sapphire

Australian-owned Sapphire Software is so confident of the benefits its financial software offers small businesses, the company has been giving it away.

Sapphire recently began giving away single-user versions - which used to cost $3000 - on magazine covers and over the Internet, anticipating that many customers will like the product enough to eventually pay for the full client/server version.

The software is a 100 per cent Australian-owned and developed financial management system, which is able to run on Windows NT, Windows 95/98, Mac OS 8 and OS X simultaneously.

Sapphire is applicable to small businesses because it handles cash and accrual, which is ideal for companies with revenues under $1 million. The software is also highly scalable, which allows it to meet the needs of single PC operations as they grow, with the client/server model able to handle hundreds of users, the company claims.

The 6.5 version of the software, which will interface with the ATO, will ship in February. Customers will be able to download the free upgrade from Sapphire or order a CD in exchange for a postage and handling fee.

Sapphire (02) 8394 8000 sales@sapphire.com.au by caitlin fitzsimmons


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