Facing the Future with Confidence

None of us know what the future holds.  We can make plans and seek advice, acting with confidence but still not knowing what the outcome will be.  In a challenging business climate having confidence in the future is even more difficult.  Many businesses that would have been considered sound just a short time ago are now in administration.  Some businesses are in trouble because of the cascading effect of their customers being in trouble.  However even in a difficult climate some businesses are still thriving.

What is their secret?

Each one will have their own story.  Some of them have been lucky.  Some of them have exploited a niche.  Some of them have gritted their teeth, rolled up their sleeves and got on with the job.  Companies need to show that they add clear value to their customers and other stakeholders, and that is especially important in a contracting economy.  If your business adds clear value that is understood by your customers then they will still buy from you.  If the value that your business provides is clearly understood by a lender then they will be prepared to lend.

When things are difficult it makes sense to concentrate on what you do best.  Outsourcing part or all of your accounting function may help you produce meaningful accounting information and free up more of your time to work on your business.  Properly presented accounting information can help to reassure lenders and secure any funding required.  Working with an accounting partner using the Online50 service allows you to access the system at the same time as your accountant and ensures that your information is as up to date as it can be.

In This Issue:

Sage License Change

We recently announced an important change to the way Sage licenses their software to our customers.  Online50 is a multi-vendor service and we have lots of users that choose to run accounting software from Sage, who are the clearly established favourite in the UK marketplace.

The Online50 service started with a pilot in 2001, but there was no commercial launch until September 2003.  This is because the use of Sage software was considered essential for the service, and Sage did not allow any kind of remote access or hosting of their software at that time.  Once a commercial agreement with Sage had been signed the service was launched and quickly gained a strong user base.  The license with Sage was adapted to meet the changing nature of our service in 2005 and still remains available for users wanting to run Sage software online allowing them to access their software and data from anywhere.

Sage have advised us that the latest version of their Small Business division license now has a provision that allows the software to be hosted by a third party - this means that users who have already purchased a qualifying license will not have to pay the monthly license fee as well.  This license has been issued with only the most recently purchased desktop software.

For users that already have a qualifying desktop license this change will save them a considerable amount of money over time.  Instead of having to effectively pay for two licenses (one for use on their desktop, and one for use on the Online50 service) they now only need to pay for one license.

We are actively encouraging users to register qualifying licenses with us to allow us to reduce their monthly invoice.  Online50 Chief Executive Rob Lambden comments:

"Our users who have a qualifying Sage license can now save considerably on the cost of their software.  Some users may save in excess of £100 per month.  As a service provider we want to provide our customers with the best possible service at the best possible price and if customers no longer need to pay additional fees to have an existing desktop license hosted then they will be able to start saving immediately.  This fits very comfortably with our 'only pay for what you use' pricing philosophy."

If a user does not have a qualifying license the cost of the monthly license compares favourably with the cost of equivalent desktop licensing.  We have produced a comparison of the cost of monthly and desktop licenses that shows that the desktop license is equivalent to between 3 and 5 years of use of the monthly license.  If you would like a copy of this document please contact our sales desk on 0800 195 0835.

The monthly licensing option is still attractive for users who do not have a qualifying license, and also provides considerably increased flexibility.  For example if a user has a seasonal business they can change the specification of their license on a monthly basis, allowing the costs of their licensing to reflect their changing needs over time.

Why Use Online50

When Online50 was first launched the available options for online accounting were limited.  There is now a much broader range of products available, and most people who contact us are considering a number of different options.  Online50 still has a very distinct offering in the market but what are the reasons that real users actually choose the Online50 service?

There are two primary reasons: standard software and flexibility.

Standard Software

Online50 is run by a service provider, not a software vendor.  We are a vendor neutral provider carrying a range of software products that users can choose to use.  Our most popular accounting product is Sage 50 - hardly surprising when you look at a survey of market share.  We offer Sage's software as a fully authorised Sage Application Service Partner with a binding legal contract with Sage.  Because we offer standard software users can choose whether to operate the software on their own computers or on the Online50 service.  Going online is as easy as restoring a backup, and coming offline is as easy as taking a backup.  Users do not have to worry about training staff or staff resistance to the new system.

We also allow users to host more than just their accounting software.  This means that users can integrate their accounting data with Microsoft Office (for example using Excel for management reporting).  Some users choose just to have their accounting software hosted so that they can work more closely with their accountant - others choose to host all of their software and effectively run their business IT online.

Flexibility

We charge for use of the Online50 service on a calendar monthly basis.  We only ask for one full calendar month's notice for a reduction (or cessation) of service and allow users to change their use of the service at any time.  Whether it is to cope with seasonal changes in use, or to support more flexible workers for a period of time, Online50 users only need to pay for what they use for as long as they need to use it, they do not have to commit to long term contracts.

We also offer the accountants who partner with us a range of options, allowing them to choose the best way to work with us and their clients.  For example accountants have a choice on how to sign up with us and whether they want to bill clients directly or have us do it (in which case we bear the credit risk and have the contractual responsibility, but the partner receives the same margin as we issue them a credit note each time we bill the client).

Online50 - Partnering with you for the long term

As the use of the Internet and software continues to evolve, Online50 is adapting the services we offer to meet the needs of our users.  We have been providing our users and accounting partners with a robust, commercially proven, and fully supported platform for 8 years.  Although we only have monthly usage terms and don't  create any barriers for users choosing to leave the service we enjoy a high level of user retention.  We are proud to be providing a valuable service to thousands of business and we look forward to continuing to provide valuable services in the years to come.

Year Ends with Online50

As many businesses run their financial year to 31^st March we are now in the season where a large number of our users and accounting partners are processing year ends.  When an accountant or their client first processes a year end on Online50 they are often surprised at how painless the process can be.

One comment we have repeatedly heard from accountants is that prior to moving a client onto the Online50 service they would expect to find that the adjustment journals were not posted and ledgers not reconciled.  This left the accountant with an increasingly messy job each year.  Because the accountant has real time access to the accounts of a client on the Online50 platform they can ensure that any year end work is properly completed to the live accounts, eliminating the need to duplicate work at a later date.

The same is true of monthly management journals.  Where an accountant is providing monthly or quarterly management accounts they ensure that the books are kept in order throughout the year, greatly simplifying the work required at year end.

One accountant told us: "I normally set aside three days to complete the year end for (a particular client).  Our bill is agreed in advance each year and so problems with the year end are unrecoverable and lead to us battling to increase the fee for next year.  I went to site for my initial meeting with the client's book keeper and managed to complete the year end processing in half a day!  This is thanks to the fact that our staff have kept the system tidy by providing monthly management accounts and we don't rely on our client to post any adjustments or reconcile the ledgers.  The client is happy because they now have a much clearer idea of where they are."

If you aren't using Online50 yet and you'd like to talk to us about how a faster and smarter approach to accountancy services can save you time and increase service levels, please call the Sales Desk on 0800 195 0835.

Financial Results

Our financial year runs to 31^st March.  The year ending 31^st March 2009 presented a number of challenges as businesses in all sectors were more discriminating on expenditure.  As a premium service provider Online50, while offering excellent value, has never been the cheapest option.  We have not published our results yet and so we are not providing detailed figures, but as a summary the results for the year show:

Operating Profit UP by 25%
EBITDA UP by 56%
Net Fixed Assets UP by 60%
Trade Debtors DOWN by 38%
Long Term Debt DOWN by 27%

As a result of our successes for the year we chose to repay 25% of our outstanding loan stock 15 months early (included in the Long Term Debt movement above).  We would like to take this opportunity to thank all of our customers, accounting partners and users.  As we look forward to the coming financial year we will continue to strive on your behalf to provide the best possible service at the best possible price.