According to some informed insiders, a fixed asset register is the second most requested features for one of the big three desktop accounting software companies, beaten only by advanced and highly flexible reporting .
I’ve never really worked out why fixed assets aren’t covered by the incumbents, by my way of thinking it’s a legacy continuation of the sub-optimal status quo – ie that businesses do their day to day data entry but any of the heavy lifting is handed over to accountants to perform. This doesn’t quite gel with me for two reasons;
1) Fixed assets registers are a piece of cake to maintain. Perhaps, it could be argued, they need some technical setup at first but thereafter they’re simple as pie
2) Depreciation has a bottom line impact on a business, not being able to run a fixed asset register leaves a hole in the ability of businesses to see their true financial health – this is especially so for those businesses were fixed assets, and the depreciation thereon can form a large part of their profitability.
So until now I’d been left feeling a little quizzical as to when SaaS accounting products would start offering this functionality. The SaaS model, which enables accountants to take a real time look under the hood, really works with this particular sort of functionality – online accounting software shouldn’t be just putting the old processes online, but rather changing the way businesses and their accountants work together.
So it’s nice to hear that this morning Xero is offline while they’re rolling out a fixed asset register functionality – depreciation can be entered on a monthly basis so P&L can be that one step closer to being deadly accurate. Of course with the congratulations goes my standard plaintive wail – now that all other classes of assets are accounted for, there is one glaring hole that affects the accuracy of the P&L: inventory. I long for the day when SaaS accounting applications that are designed for micro businesses, will complete the functionality loop and give us the ability to see with 100% accuracy the monthly profitability of a business.
In terms of the specifics of Xero’s roll out – their take on fixed assets allows monthly depreciation, automatic gain or loss on disposal of an asset, multiple types of assets allowed. Below is a screen shot of an individual fixed asset item showing all the details about the item.
And the depreciation schedule – music to an accountant’s eyes;
This is an important update at this time as most small business’ financial year ends at the end of March. They’ll now be all ready to start FY10 with their depreciation automated. Instructional video below;