Inside Microsoft Office Small Business Accounting

Microsoft is further bolstering Office with Microsoft Office Small Business Accounting, code-named "Magellan." Magellan extends Microsoft Office 2003 with a small-business accounting program that ships with Microsoft Office 2003's core applications: Microsoft Office Word 2003, Microsoft Office Excel 2003, Microsoft Office PowerPoint 2003, Microsoft Office Outlook 2003, Business Contact Manager, and Microsoft Office Access 2003.

Magellan integrates a small-business accounting package with Microsoft Office Professional 2003. Moving into a market led by Intuit QuickBooks, Magellan offers an accounting package that integrates with all of the Microsoft Office applications.

Magellan is another carrot to dangle in front of users to get them to upgrade to Microsoft Office 2003. Oftentimes, Microsoft Office's strongest competitor is a previous version of Microsoft Office. Why upgrade when your Office suite meets all your needs? Now Microsoft Office 2003 is extending its reach into particular niche markets, such as small-business accounting, to broaden the traditional Office-suite product offering.

System Requirements. In order for the program to run properly on your PC, make sure it meets the following system requirements:

• 450MHz Processor (Pentium III)
• Minimum of 256MB of RAM
• 800MB available hard-drive space
• CD or DVD drive
• Windows 2000 SP3/XP
• Broadband or dial-up Internet connection

Usability. The small-business accounting packages are designed for users who may not be accountants much less bookkeepers by trade. To make tackling accounting tasks easy, the applications make use of wizards and other job aids.

Magellan includes a familiar Microsoft Office interface. This is a positive hook for the product because it can reach a ready audience of Microsoft Office users who can easily transfer their Office skills to the new program, no matter the level of accounting experience they have. Applications such as Intuit QuickBooks or PeachTree Accounting can't offer such a transition for Office users.

The Magellan user interface has its roots firmly in the Microsoft Office 2003 family. You can customize the workspace by clicking Add/Remove Content to open the Add/Remove Content dialog box. The Add/Remove Content dialog box enables you to change the content of your Company Home Page, which lets you work the way your small-business financial priorities dictate.

Integrated company financial information. Magellan integrates a full range of business information into its user interface. You can access company financial information from the company page of the application, including reminders for business tasks such as check writing, quote generation, and money deposits.

Reporting tools are accessible from the Magellan Reports page, offering a portal-like view to your financial information. You can also access accounting and business reports, including company and financial, customers, receivables, banking, and others from the Reports page.

Job Tracking. Although Magellan isn't available in a consulting or professional services flavor, per se, it does let you track client projects on a per-client basis. With Job Tracking you can monitor total job profitability and other related factors necessary to show your profitable projects and engagements. The data also elucidates the projects and engagements that are not profitable for your small business. Job Tracking can become a financial and project management tool for your small business.

Inventory Management. Inventory management is critical to many organizations that make their revenue from selling products. Magellan uses the FIFO (first in, first out) valuation method to track and manage inventory, thus assuming that you use purchase orders to order new inventory items. These inventory items are then tracked as someone receives them into the system.

Customer relationship management. Magellan integrates Microsoft Office Outlook 2003 with Business Contact Manager to provide a small-business-level customer a relationship-management system. Business Contact Manager is an add-in to Microsoft Office Outlook 2003 and is accessible from the Business Tools menu. It has been around in various incarnations and now works within Microsoft Office Outlook 2003, so you can manage customer data. This management extends to account management, business contacts, and (potential business) opportunities and reports governing external client interactions. Business Contact Manager makes use of the familiar Microsoft Outlook 2003 user interface.

Payroll support. Magellan uses the industry standard ADP (automatic data processing) to power its payroll support. ADP is a recognized player in payroll servicing for large and small companies alike. ADP is also standard payroll support in small-business accounting packages from Intuit and PeachTree.

Cash flow management. Cash flow management is integral to the smooth running of any small business and Magellan's cash flow management feature tracks invoices, bills, and payments. If you are always peeking at your business' cash flow, the program presents it on the Company page.

Transaction tracking. Accounting packages can be intimidating if you lack an accounting background. Magellan is indeed designed for nonaccountants managing the finances of their small businesses. The program's financial tracking can also go to levels that are more sophisticated via Transaction Tracking, which enables you to drill down further into the details of the accounting transactions you are tracking.

Scalability. Although accounting package scalability may not be on your list of requirements when you embark on your business, it should play some consideration in your long-term business plan. Some businesses only stay small for a portion of their lifespan. Magellan offers a natural upgrade path to Microsoft Small Business Solutions.

Microsoft Business Solutions offers Microsoft Small Business, which serves as the next rung in the upgrade path for Magellan.

Online services. Much like its competitor Intuit QuickBooks, Microsoft Small Business Accounting extends to a number of free and fee-based online services augmenting small-business accounting activities. The Products & Services page also ties you into third-party offerings to extend and augment Microsoft Small Business Accounting.

Integrate Magellan Into Your Business

The setup for Magellan is easy. It provides wizards and other forms that you will need to process corporate and financial data.

Installation, setup, and training. Some business accounting packages are famous for requiring a professional service's engagement to accomplish the initial installation, setup, and training. Magellan does not require this. When you want to install the program, you can do so via a standard Microsoft Office install. You won't have to call your IT guy to install the application on your PC.

If you are moving to Magellan from another accounting package, such as QuickBooks or Excel, a Data Migration Wizard is available to walk you through installation and setup. When we fired up the wizard in the beta copy of the program we reviewed for this article, we noticed that the program didn't include any selections for QuickBooks Basic 2005 or QuickBooks Premier 2005. Intuit's aggressive upgrades could give this data migration feature a challenge if file formats have slight changes in new versions of QuickBooks. In addition, users who are unfamiliar with file formats and program locations may need to crack open the documentation for their previous accounting package to determine the proper file and its location prior to migrating the data into Magellan. The Data Migration Wizard lets you import the following master records: Chart Of Accounts, Customers, Vendors, and Employees. You can also import balances for all accounts.

Regardless of the accounting program, it's important that you carefully review the data you migrate to Magellan to ensure there are no errors or omissions.

Plans for Magellan training programs are still on the drawing board at this stage. Microsoft does have the proven resources of Microsoft Press and Microsoft Education to offer support and training to people using the program. Intuit does have a mature education program supporting its QuickBooks users and the channel that supports the application. Microsoft would have to play a game of catchup to Intuit, but it has the players on its team to bridge the gap in short order if the market requires it.

Set up a company. You can set up your company using the Microsoft Small Business Accounting Setup Wizard. Every company has its own home page within the program. The wizard has the same familiar feel as the wizards you may have used in other Microsoft Office applications.

The setup wizard asks for the usual company information. After you install the program, click Small Business Accounting on the Microsoft Small Business Software menu.

Using Magellan within Office 2003. The real charm of integrating an accounting package into Office 2003 is the opportunity you have to reuse corporate data across many applications. Human error can wreak havoc with financial information that you have to input across multiple applications. In addition, with Excel as a standard for financial data, much of the financial work that may already exist within a small business is already set for migration into Magellan. You can also easily repurpose Magellan financial data in any Office 2003 application.

A powerful element of the integration with Office 2003 is the flexibility it offers to external communications, which is something you won't find in Magellan's competitors. For example, you can use the Write Letters Wizard, which uses Microsoft Word 2003, to create external business communications including letters, invoices, and price quotes. The document is customizable, just like any Word document.

The customization of such small-business communications is not yet available in Intuit QuickBooks or PeachTree Accounting.

The Microsoft Office 2003 integration also offers a number of advantages, and with Magellan offering financial and corporate reporting, data is easy to import into Microsoft Excel and Microsoft Access for extended financial analysis and modeling.

Magellan vs. Small Business Edition

It's easy to think there is cross-over between Magellan and Microsoft Office Small Business Edition when you read the early press releases about the Magellan beta. Magellan integrates a full small-business accounting software package with a full version of Microsoft Office Professional 2003. Microsoft Office 2003 Small Business Edition includes no accounting features, but it does focus on recording and tracking customer information for small businesses. It includes Microsoft Office Word 2003, Microsoft Office Outlook 2003 with Business Contact Manager, Microsoft Office PowerPoint 2003, Microsoft Office Publisher 2003, and Microsoft Office Excel 2003. Both versions of Microsoft Office are due to remain in the Microsoft Office family.

Give Magellan A Try

Magellan is an intriguing option for an accounting package because of its integration with the Microsoft Office 2003 System. The integration with Microsoft Office 2003 brings a number of benefits through the reuse and repurposing of corporate financial data for analysis and communications. If you are migrating from Quick-Books or another accounting package, you should first consider the required data migration and benefits from switching to a new accounting package.

No pricing is yet available for Magellan and it is due to release in the first half of 2005.

by Will Kelly