Open source software for cost accounting

The total cost of ownership of open source software

Although not limited to software, open source is dominated by this particular technology and by the open source software community. Open source software does not just mean access to the source code. The distribution terms of open-source software must comply with the following criteria:

  • There must be free redistribution.
  • The program must include source code, and must allow distribution of the source code along with the compiled form.
  • The license must allow modifications and derived works, and must allow them to be distributed under the same terms as the license of the original software.
  • The license may restrict source-code from being distributed in modified form only if the license allows the distribution of “patch files” with the source code for the purpose of modifying the program at build time.
  • The license must not discriminate against any person or group of persons.
  • The license must not restrict anyone from making use of the program in a specific field of endeavour.
  • The rights attached to the program must apply to all to whom the program is redistributed without the need for execution of an additional license by those parties.
  • The license must not be specific to a product.
  • The license must not place restrictions on other software that is distributed along with the licensed software.
  • The license must be technology-neutral.

There are many different variants of open source licenses (Apache, GPL, Lesser GPL, Eclipse, etc.) with some subtle and not so subtle differences between all of these variants.

It’s free:

Open source software is software that is freely licensed to use, copy, study, and change the software in any way, and the source code is openly shared so that people are encouraged to voluntarily improve the design of the software.

This is in contrast to proprietary software, where the software is under restrictive copyright and the source code is usually hidden.

This has made open source software very attractive to many companies.

Open source software is free, which is good. But is it really free?

Total cost ownership:

Total cost of ownership is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. It is a management accounting concept that can be used in full cost accounting.

The average price of a new car in the USA tops $33,000, according to car-buying site Kelley Blue Book, so buying a vehicle is a major financial move. While many consumers may focus on the sticker price or the monthly payments, that overlooks many other costs. You have license fees, registration fees and taxes. You need to buy insurance, fill the gas /petrol tank, have regular maintenance, etc. And your car loses value from depreciation every day you own it. The total cost of ownership of a new car is not the same as the sticker price.

The same applies for a software product. The total cost of ownership is the purchase price of the software product plus all of the additional direct and indirect costs associated with taking the software product into use.

When choosing among alternatives in a purchasing decision, one should look not just at the software product’s short-term price, which is its purchase price, but also at its long-term price, which is its total cost of ownership.

The software product with the lower total cost of ownership is the better value in the long run.

The purchase price of the open source software product is zero, but what is its long-term price or total cost of ownership?

The components:

In order to calculate the long-term price or total cost of ownership of a software product, one needs to identify all of the different components associated with taking a software product into use.

I suggest that these include at least the following:

  • The initial license fee for the software product (zero in the case of an open source software product).
  • Any costs associated with hardware or software tools to develop or test the software product.
  • Any costs involved with customising or configuring the product.
  • Any associated hardware costs to deploy the software product.
  • Any hosting costs.
  • Any maintenance costs.
  • Any support costs.
  • Any additional software license costs.
  • Any costs associated with feature or functionality updates.
  • Any license costs to access other 3rd party software.
  • Any insurance costs.
  • Any direct or indirect costs associated with future updates / upgrades.
  • Any training costs.
  • Any warranty costs.
  • Any direct/indirect liability costs.

This list is not exhaustive and there may be other components to consider.

Costs associated with open source software risks:

Of course, total cost of ownership is an issue for both proprietary software products as well as open source software products.

However, some additional components may need to be consider when trying to calculate the total cost of ownership of an open source software product, namely the costs associated with managing the risks involved, which divide out into the following categories

  • Legal issues
  • IP issues
  • Operational issues
  • Security issues
  • Business issues

(These additional components are explored in more detail in another paper already published).

The bottom line:

When you are comparing cars you like, you should go beyond sticker price. You should research the ongoing costs of driving and maintaining each model, so that you get a true understanding of affordability. A realistic estimate of a vehicle’s total cost of ownership is crucial in helping you choose a car that fits your budget. The same applies to purchasing a software product, regardless of whether it is an open source software product or a proprietary one.

Donal O’Connell

Accounting software is a necessity when it comes to managing billings, debts, stocks, invoices and any other kind of financial transaction. You might require something for your personal finances or perhaps for enterprise-focused accounting software. No matter what, it is important to consider open source solutions available (especially being Linux enthusiasts).

So, in this article, I list out some of the best open source accounting software that I think would come in handy for you. At the end of the list, feel free to suggest your favorite ones in the comments.

Best Open Source Accounting Software

Note: The list is in no particular order of ranking.

1. Skrooge

SkroogeSkrooge

Key Highlights:

  • Personal finances manager
  • Tailored for Plasma Desktop but compatible with others too
  • Cross-platform (Windows, Linux, and macOS)

Skrooge is one of the most useful personal finances manager by KDE. It is originally tailored for the Plasma Desktop but other desktop environments are compatible.

Supports most of the basic features (reporting, budgeting, etc.) and allows you to work on some pretty big data sets.

2. Akaunting

AkauntingAkaunting

Key Highlights:

  • Online accounting software
  • Completely free and open source
  • Client portal
  • Invoicing
  • Expense tracking
  • Reporting
  • Cashflow

Akaunting is an interesting online accounting software that’s available for free. Yes, surprisingly, there’s no hidden subscription charges or additional upgrade options. It is totally free. If you are looking for a FreshBooks alternative, you should give it a try.

Ranging from invoicing to managing deposits and transfers. A whole lot of features. You can either utilize their hosting (again, it is free!) or host it yourself. It’s fit for both personal and enterprise needs. Try it out!

3. Apache OFBiz

Apache OfbizApache Ofbiz

Key Highlights:

  • ERP & CRM
  • Developer-friendly
  • Powerful Java Web Framework
  • Cross-platform (Linux and macOS)

We’ve already mentioned this in our list of best open source CRM software. Apache OFBiz is an impressive open source solution that incorporates an ERP system and a CRM suite for various types of requirements.

It’s completely free – however, you will have to host it yourself (or just hire someone to do it). In addition to all the basic features needed for accounting software, it lets a developer extend/enhance features easily while being a Java-based web framework.

Apache OFBiz

4. iDempiere

IdempiereIdempiere

Key Highlights:

  • Community-focused
  • Simple and useful
  • Cross-platform (Linux and Windows)

Originally based on ADEmpiere ERP. It is a community focused accounting software maintained by an active group of people. iDempiere aims to utilize technologies like Apache Maven to provide a business suite ERP/CRM/SCM.

There’s a ready-to-use Virtual machine available to download. In addition, you can utilize it on Windows or Linux.

5. Openmiracle

OpenmiracleOpenmiracleOpenmiracle

Key Highlights:

  • Plug-ins available
  • Completely free

Openmiracle is a quite popular open source and free accounting software. There’s no premium plans to it. So, you can utilize all the power and flexibility for free.

It features all the necessary options needed in an accounting software. From setting the budget to managing the payroll, there’s a lot of things to explore.

6. GnuCash

Gnucash ScreenshotGnucash Screenshot

Key Highlights:

  • Cross-platform (Linux, Windows, and macOS)
  • Fit for personal and small businesses

GNUCash is a great open-source financial accounting software to manage stocks/income/expenses for small business or individuals.

From reports to quick calculation features, it has a lot to offer. And, the best thing is – it is available across multiple platforms (including Linux), so that’s a plus.

7. LedgerSMB

Ledgersmb ScreenshotLedgersmb ScreenshotLedgersmb Screenshot

Key Highlights:

  • Dead simple open source ERP
  • Optional commercial support available
  • Cross-platform (Windows, Linux, and macOS)

A powerful yet simple open source accounting solution. It has been tailored to small and medium sized businesses. Starting from managing invoices to inventory – you also get the ability to translate (up to 45 languages supported). You can try pre-release version or just get the latest stable build to test it out yourself!

8. GNUKhata

Key Highlights:

  • GST, VAT compliant Invoices if you are based in India (tailored for Indian users)
  • Easy to use
  • Simple user interface
  • Cross-platform (Windows and Linux)

We already covered an article on GNUKhata, if you want to dive into the details.

However, it is simple and robust accounting software that is available for free. From the looks of it, the setup is easy and anyone can get used to it. Feel free to try it out and explore.

9. KMyMoney

KmymoneyKmymoney

Key Highlights:

  • Simple and functional
  • Cross-platform
  • Easy-to-use

KMyMoney happens to be yet another free and open-source software managed by KDE. You can easily utilize this for managing accounts, transactions, ledgers, and a lot more.

It offers a simple user interface but gets the job done. As you can see in the screenshot above, it appears to be a full-fledged (if almost) solution. You can get it installed from the software center – however, you can also choose to install it from git if you want the latest version.

10. Odoo

Odoo AccountingOdoo Accounting

Key Highlights:

  • Web-based app
  • 15-days trial (not completely free)
  • Bunch of 3rd party integrations

If you might have read about the best open source CRM software, you could have noticed the suite of open-source web apps offered by Odoo.

Fortunately, they also offer something for accounting. If you do not mind paying for accounting software (maybe for your enterprise) while having an open-source solution, this can be your choice.

Try it out or check out their GitHub page to learn more about their suite of apps available.

11. HomeBank

HomebankHomebank

Key Highlights:

  • Cross-platform
  • Simple and easy-to-use

HomeBank may not be a popular choice – however, if you want just another alternative to take a look at, HomeBank is a decent tool.

Just like some others, you can also find it in the software center. However, if you want the latest version installed, you can follow the official download instructions for Ubuntu by adding a PPA.

Wrapping Up

In addition to all these, you can also take a look at Flowlog (which happens to be an open-source solution) – however, it’s in a public beta phase for a year now – so it may not be the most reliable option yet.

Overall, these are our recommended picks for open-source accounting software. If we missed listing your favorite open-source accounting software, let us in the comments below.

Written by Jane