Financial management is the delicate balancing act that transforms marketing success, operational results, and managerial savvy into a viable, durable business.

In order for a small business to be efficient and effective in managing its finances, computerized accounting and digital financial services tools must become part of its daily kit. While such tools are traditionally desktop-based software programs, a new breed of online financial management applications has emerged in the last few years, taking advantage of the growing confidence that businesses are developing in the Web as a safe business environment. Now that entrepreneurs are indeed becoming comfortable with the “software in the cloud” model and the inherent benefits it offers, they are in growing numbers starting to look beyond e-mail or office productivity to more sophisticated and sensitive applications like financials.

Web-based financial management applications are not new -- think online brokerage and banking. But fully featured online packages are just now fully blooming, not only rivaling in functionality their desktop-based counterparts, but also extending their usefulness through value-added online services such as bill payments, electronic checks issuance, digital invoicing, or customer credit verification. Moreover their collaborative features, such as multi-user access and accountant view make it a natural fit for the “on the go” lifestyle of most modern small business managers.

Accounting online

The heavyweight of small business accounting, Intuit, has launched an online alternative to its Quickbooks software that can be finally considered a valid option. While its previous attempts were not very successful, the current version of Quickbooks Online, priced from free to $34.95/month, is a quality product that, while not as powerful as the desktop version, does a pretty good job.

Peachtree, a longtime small business favorite, also has debuted a well featured online version starting at $150/year and representing a very viable alternative.

Notable new online-only accounting packages for small businesses include Clarity Accounting and Less Accounting which is nicely integrated via mashups with Web favorites such as Basecamp, Shopify, and PayPal. Almost ready to re-launch is NetBooks, a product with a bit of a troubled history, but with a very interesting and complete set of features and now in final Beta release. Accounts can now be opened and used for free.

A truly superb product, designed for mature small businesses is Intacct. Created from the ground up as a Web-based application, it provides very sophisticated accounting features and it natively integrates with a number of other Web-based software offerings such as

For even more mature and large organizations, requiring not just accounting but a comprehensive online suite of business management applications, NetSuite is the leader in the space.

Online bill payment

If you think for a moment about what it is truly involved in paying your business bills using the traditional checkbook and snail mail, it is not difficult to imagine that there must be a better way to do it. Well, there is, and it is called “online bill payment.” While banks have offered similar services for quite a while as part of their online banking offerings, there are independent services that go well beyond the electronic check, and make the process of receiving, screening, tracking, and paying bills extremely efficient.

Both Paytrust -- owned by Intuit -- and CheckFree can receive bills on your behalf, scan them, make them available to you in digital format via a secure Web interface, and allow you to pay them with a click of the mouse, issuing an electronic check or an EFT order.  This approach can be adopted for all vendors and all invoices, and cuts the average time needed to process a bill by more than 50 percent -- in my experience -- and greatly simplifies the record keeping aspect, eliminating paperwork.

Online invoicing

When it comes to get paid, or at least to efficiently issue and send invoices, there are a plethora of Web services available. The most notable is Freshbooks, a pioneer of the Web 2.0 era, which allows for efficient time tracking, billing, quoting, and more. 

Intuit has its own offering tightly integrated with Quickbooks online called Billing Manager, while Zoho Invoices comes as part of the Zoho online productivity suite.

A roster of other minor offerings fill various professional niches and differentiate on price and unique features, including: Free Agent, Simply Invoices, Invoice Place and Billing Orchard.

The Web is opening the doors to scores of new software developers every day, reducing the costs to develop new products and services, creating competitive opportunities for better, less expensive products. Online financial software is just now entering the realm of full acceptance among small businesses. Expect an explosion of new, more tailored applications from large players such as Google and Microsoft as well as upstart companies. New products will surface on the horizon in the next couple of years offering true integration with banking, invoicing, billing, and all the other financial services that small businesses use every day, together with more robust ways to analyze performance, giving way to a new generation of well managed and more robust small enterprises.

Andrea Peiro is the Small Business Market Expert at the Palo Alto Research Center (PARC). Founder of the Small Business Technology Magazine, a recognized authority, author, analyst and speaker on high-tech marketing and use of information technology in small and mid-sized businesses, he has been frequently interviewed and featured in such media outlets as The New York Times, The Wall Street Journal, and Inc. You can reach him at