Accounting software nightmare a cautionary tale for business

When John White selected the 2Clix accounting software package for his Melbourne flooring business, the risk that he could lose access to his financial data was the last thing on his mind.

Uni-Flooring Resources was growing and White, the business’s co-founder and executive officer, was focused on the benefits the new software would bring.

Shortly after buying a licence to use the software, problems emerged. White was not happy with 2Clix – it would later emerge many others were similarly unimpressed – and after a year of wrangling with the company and many thousands of dollars spent, decided he would drop it altogether.

But there was a problem. According to White, 2Clix refused to allow departing customers to take their information with them and continued to charge them for access.

“We were locked out of our data, and everyone was just about blackmailed into having to pay fees just to access their own financial information,” White says.

2Clix Australia is no longer trading, having moved into voluntary administration, although other companies associated with its directors remain registered and the company that reportedly purchased the software from 2Clix, Platinum One Business Solutions, still sells accounting software.

White has become the informal leader of a group of more than 80 companies that experienced problems with the 2Clix software, some of whom are still battling for access to their financial data.

But while the 2Clix scars remain very raw for its former users, White has some advice for the broader business community; don’t give up the right to access your crucial financial information.

“Think carefully about access to your data and make sure it is dealt with explicitly in the agreement with the software company,” White says. “When we started with 2Clix we weren’t thinking about getting our data back, and it cost us down the track.”

White’s advice is backed by John Ireland, the president of business software consultant’s association the Consulting Alliance.

“Most businesses spend more time picking the company car for the boss than they do on the software package that the business runs on,” Ireland says. “Always look at the detail of the agreement and make sure data access is dealt with so you can’t be held to ransom.”

According to Ireland, while most software providers give customers free access to their data even if they end their licence or contract to use the product, there are some out there that don’t.

“2Clix has been the trigger for these issues to come to light. There are other companies out there that hold customers to ransom; often they are net based with servers overseas, they have very onerous exit clauses and will only give you limited, costly access down the track.”

As well as looking at the contract fine print, Ireland advises owners to talk to others in the business community about the software they use and ask for client references before committing to a software package.

And it is not just accounting software that raises the issue of data access – the use of online “software as a service” products is becoming increasingly common across a range of business functions.

Dilanchian Lawyers managing partner Noric Dilanchian says businesses are entering increasing numbers of agreements and contracts connected with the web and electronic information.

While businesses will carefully read and file a contract for the supply of a good, they often don’t apply the same practice in the online context.

“There are literally thousands of types of contracts, and very few of them are standard. So whether it’s a social media site you use for blogging or online software where your data is being stored, you have to do what you would do in any other business deal – check whether the contract terms are acceptable to you,” Dilanchian says.

Read more about business contracts