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Too busy to invoice? Consider a hosted option

If you are planning a ski trip to Whistler, B.C., you might end up at ResortAc.com, a Web site run by Troy Assaly, president of ResortAc.com Network. Assaly’s Web site lets vacationers deal directly with home and condominium owners who advertise accommodations for rent.

When Assaly set up his company about 10 years ago, all his billing was done manually. He would print invoices and mail or e-mail them and then work to track his accounts receivable. Even as he computerized, he found it difficult to get invoices out on time. “I had one-time invoices to send, as well as weekly, monthly and annual recurring invoices covering different services for different clients,” said Assaly, who also runs a Web hosting company specializing in Web sites for resorts. If he became busy, which happened a lot, several months might pass before he sent out invoices. That had a negative effect on his cash flow and on clients, many of whom expected monthly invoices and did not appreciate receiving one big overdue bill.

Assaly’s invoicing problems are now a faint memory. A year ago, he started billing online with 2ndSite, a Toronto-based application service provider ( ASP). Founded in 2002, 2ndSite offers online invoicing, employee timesheets, support ticketing, secure document management and contact management services.

Assaly is one of many small and medium business ( SMB) owners who have turned to online business management solutions.

Demand by the numbers
According to Forrester Research, 49 per cent of SMBs considered a hosted option when making software purchases in 2005. While only nine per cent of SMBs rated moving to a hosted alternative as “very important,” hosted applications are beginning to catch on, particularly in sales force automation (SFA) and customer relationship management ( CRM) areas.

Of the SMBs looking at SFA and CRM, seven per cent indicated they will choose Siebel CRM OnDemand and 24 per cent are leaning toward Salesforce.com. Microsoft’s non-hosted CRM tool remains the dominant choice with 37 per cent of SMBs considering the application. However, online applications are making significant headway. For instance, Salesforce.com, an on-demand CRM solution, is used by more than 308,000 SMBs and larger enterprise subscribers worldwide.

Headquartered in San Francisco, Salesforce.com is a publicly traded company founded in 1999 by former Oracle executive Marc Benioff. The company had revenue expectations for its 2005 fiscal year of US$165 million to US$170 million.

Demand for a particular application has reached a critical mass when Microsoft jumps on the bandwagon. And in the fourth quarter of 2005, Microsoft launched Windows Live and Office Live, two Web sites that include consumer and small business Web hosting, e-mail and other services. The online business services integrate with Microsoft’s Office productivity suite, but users don’t need Office to use Office Live.

In many ways, hosted applications are like the computer bureaus that serviced multiple enterprises in the 1960s and 1970s. However, instead of connecting to expensive bureaus using a costly dedicated data line, users connect to moderately priced (and in some cases free, advertiser-driven) ASPs using more ubiquitous and less expensive Internet connections.

Hosted applications eliminate client-side software integration issues and the need for large capital outlay for software licenses, because the applications reside on the vendors’ servers and are then accessed online.

“By eliminating significant set-up, maintenance and upgrade costs, hosted solutions like Salesforce.com provide a deployment option with lower overall TCO [total cost of ownership] than premise-based solutions,” said Sheryl Kingstone, program manager at Yankee Group’s CRM strategies planning service.

In practice
Over the years, Assaly has been through the ringer with accounting packages. First he used Simply Accounting, then QuickBooks, then NetLedger, then an obscure accounting package recommended by his accountant. Along the way, he ran into difficulties because he continually fell behind in invoicing and needed remote access to his records for multiple users.

Assaly now securely accesses 2ndSite’s application online through his Web browser. For each customer, he sets up an online billing account that includes the amount and invoice recurring frequency. Invoices are sent automatically, clients pay online by credit card and funds are automatically deposited in Assaly’s business bank account. Assaly can change invoice amounts if a client purchases additional services, and the system can automatically generate reminders. “If an invoice is not paid, I receive a reminder and so does the client,” he said. This makes it easy for Assaly to keep track of receivables or even cease services for clients who are in arrears.

In the past, he often failed to follow up on outstanding accounts, and reports the key benefit of 2ndSite is that he is now “collecting more money with less effort.” Before using 2ndSite, Assaly spent four hours invoicing each month. With 2ndSite he now spends about an hour each month. And he is paid faster because online invoicing saves his clients time.

Assaly does not have to send clients receipts as 2ndSite automatically generates them. Come tax time, Assaly no longer hands his accountant a shoebox full of paper. He doesn’t even print reports. Instead, he gives his accountant access to reports on 2ndSite.

Companies that bill based on timesheets can keep track of time spent on a job on 2ndSite and then generate their invoices based on their online timesheets. BillingOrchard is one of a number of U.S. companies that provides online timesheet and billing solutions to SMBs. Like 2ndSite, the company provides automatic recurring billing options as well so business owners can be invoicing while they sleep. BillMyClient lets users send invoices via e-mail or the United States Postal Service, all without licking an envelope. But, if they prefer, BillMyClient clients can even print and mail invoices.

Any PayPal user can send detailed business invoices in minutes with the free PayPal Invoicing tool that lets users send business invoices for goods or services via e-mail. The invoices can be broken down into detailed line items by specifying quantity, unit price, item description, shipping details, tax and currency; PayPal includes up to 10 invoice templates. Companies that receive PayPal invoices can click and pay online by credit card or electronic cheque.

In most instances, small business owners do not have to have a credit card merchant account to use online invoicing services, so they can integrate with PayPal and other third-party credit card transaction companies.

QuickBooks offers an online edition that provides tools to create professional-looking sales forms online and lets users send e-mail invoices, track who owes money and when payments are due, and automatically generate recurring invoices.

Assaly’s main problem with accounting packages was the time it took to get set up. He said he was invoicing instantly with 2ndSite. However, business owners who are dependent on particular software accounting packages can generally find third-party plug-ins or programmers to help automate billing tasks.

In addition to billing, CRM and SFA, the SMB market is looking seriously at hosted applications such as human resources, order management, customer support, business intelligence and procurement, according to Forrester. Many industry insiders expect online applications and on-demand computing to become the most pervasive business computing model within the next five years.

Assaly agreed. He can’t see going back to accounting systems that reside on his computer, not when going online has made such a difference in the way he runs his business.

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