As a (partial) answer to the massive financial calamity hitting it’s economy – the UK has decided to drop it’s VAT rate from 17.5% to 15% effective in a matter of only a few days.
In a traditional software environment this would be a nightmare – having to get patches out by mail or auto-update is a deal-breaker. Dennis points out the sleepless night some traditional software vendors will be having over the next few days
Not so in the SaaS world – already Saasu and Xero have proudly claimed they’re all ready for the changes. No doubt other affected SaaS offering are also being updated as I write.
People – this is agility in action – and only SaaS can deliver upon it – we’re heading for more and more instability, you absolutely need the flexibility that SaaS delivers.
Soap box duly descended from.
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Ben,
With most traditional accounting systems, the change will be done in the system options somewhere, where a tax field or line in a table will have to be updated. That’s it! Jobs done!
Granted, many users with monolithic system may not know how to find these options etc., but I don’t think a simple change like this is going to require patches to be shipped out?
Don’t get me wrong, I am all for SaaS, but I think that inadvertent scaremongering like this will do more harm to the movement than good – take the great GST changeover debacle here in Oz – those software companies that were hell bent on sowing fear, uncertainty and doubt amongst the population just made it harder for the rest of us to get on with the job.
Cheers,
Devan
I don’t get it – why should any major changes be needed just to support a change in VAT rate?
The bigger problem is the FLat Rate Scheme. The rate is changing mid period and this will be a real b*tch to report on for most software users.
Users of our SaaS solution – KashFlow – had the solution rolled out this morning – now THAT’s agility in action! : )
I think this is more an issue of good vs. bad software design than On-premise vs. SaaS. I certainly hope there aren’t accounting packages around with hardcoded tax-rates..
Talked to a business advisor this morning who was fretting about his clients and had been emailing them all with instructions to help them manage their accounting software. He didn’t know much about online accounting until we spoke, and was enthralled by the prospect of being able to log on and check that clients have changed their VAT rate setting.
Companies who are on the Flat Rate Scheme and also use cash-based reporting have a particular challenge because they’ll need to calculate their VAT liability based on a mix invoices that have been paid in the same period but which were raised both before and after the change in VAT rate. Those that were raised before the change must be reported on the old flat rate, the others on the new flat rate.
There are probably quite a few software packages that will only be able to report based on one rate, not a combination of two. Businesses and accountants will need to do a lot of cross-checking to make sure they report the correct figure to HMRC.
Users of e-conomic can simply change their VAT rate setting and carry on using the system and rely on the provided VAT reporting to give them all that they need, including the tricky cash-based FRS scheme.
@Devan – true, most systems may not require a patch – but they require user intervention. With SaaS it can all be done centrally and the user doesn’t event need to think about it
@Zoli – stranger things have happened!
@Mark – nice – great foresight!
We are running an online survey to ask all our clients, accountant partners and contacts what do they really want to do about the new VAT rate…
Results will be published Friday 10am GMT on our VAT rate information page.
Andrew
Pearl
Pearl – cool – drop me a line with results… or maybe you want to guest post with your findings?
Flick me an e ben AT cloudave DOT com