Why use Xero?

With so many online accounting products in market today it can sometimes become daunting, not to mention confusing, to make a change to your usual systems. However, with careful consideration, there is a lot to be gained from a move to Xero. Of course, the initial transition may be a bit of a learning hurdle, but the time invested in jumping that hurdle is a worthy investment.

So, what are the benefits of moving to Xero? Here are my top 5 reasons to make the jump.

Bank feeds

Moving to automated feeds was a big motivator for me when moving my accounting systems to Xero. Having bank feeds automatically updated within my accounting software saved a great deal of time and stress as it allowed us to review and update transactions on a regular basis and match them easily against bank statements. It also allowed us to create numerous automated systems to speed up data entry whilst also removing a lot of manual data entry. Which brings me to my next reason, ‘Bank Rules’.

Bank rules

Bank rules are a total life saver! Essentially, you can create custom rules in Xero for all of those  transactions that you see in your bank on a regular basis. For example, bank fees, merchant fees, loan repayments, insurance direct debits and so on. Creating bank rules in Xero makes automated data entry a breeze. Once set up, you can elect to have these transactions either auto-reconcile and save in Xero, or you may choose to review the transaction before reconciling. Either way, bank rules rock and are an essential time saver!

Customised Reports

Creating Custom Reports in Xero is a cinch and once set up, these report templates are a great way to save time in getting the information you need within a report. There are many different reports you can create to suit your business and once saved, they will appear on the ‘Custom’ tab in the Reports area of Xero for you to use over and over again.

Access everywhere, the single ledger & Xero Mobile

OK, so really this is 3 reasons but the reality is that all 3 provide similar benefits…

Access everywhere – What I love about Xero is the ability to sign on at anytime and anywhere I have an Internet connection. This means that I can work remotely and access what I need at moments notice. Cool when I need to get a report to the bank asap or if I need to process wages on the road.

Single ledger – So what is a single ledger? Simply explained, it is one point of truth for all users. What does that mean? Well, all users access the same information and regardless of how many users are logged in at one time, when the file is updated, it is updated for everyone. This means that there are no more mix ups with duplicate files, issues with old and new software, issues with uploading of transactions or problems with cross compatibility such as using a Mac or PC. Another bonus is the ability to allow your advisors to access your file so that they are able to review the same data as you. You may then collaborate with your advisor and get up to date advice, assistance and opportunities to work on building your business.

Xero mobile – The Xero app is a great tool for users that need the convenience of automation on the fly. So what can you do that is so beneficial? Here are my top reasons for using the app:

  • Create quotes and/or sales invoices and email them directly to clients. This is a great way of getting on top of your invoicing and removing the need to do it later when you’d rather be doing something else
  • Create a system where staff can capture and enter reimbursable expenses and add them to Xero for processing and reimbursement
  • Save and upload all of those pesky thermal receipts that would otherwise fade and become illegible in your wallet or on your dashboard. Once uploaded, you can attach these files to your transactions and keep the tax man happy with your new found efficient filing system; &
  • Check your bank accounts and transactions on the road. Know how much you have to spend and/or if your clients have paid you.

Automation, automation, automation!

So I have ultimately saved the best till last. So what is automation? For me, its all of the tools that are available as standard in Xero and all of the add on products that can remove the need for unnecessary data entry. Thus saving me a huge amount of time and stress. This is my all time favourite as it has allowed our business to save time in so many areas where we normally might have utilised manual processes or separate systems. So what are my favourite automations? Here’s my go to list:

Automation built into Xero:

Xero file library – The ability to upload, add or email any file directly into the Xero library is a wonderful way of getting files that you would either like to either save against transactions, or to save in Xero’s main library, for later reference. The way that both of these work is as follows:

  1. Invoices, receipts and sales documents may be attached directly to transactions from the file library thus reducing the need to keep physical copies. Great for the environment and for immediate reference from within a transaction. Also great if you are ever audited as you will have a permanent record of the transaction attached as proof. This process may also help reduce your accounting/bookkeeping fees as there is less time spent on queries as the attached document/s clarify any queries that may otherwise have been raised. Both great for you and your advisors as it leaves more time for business improvement collaboration instead of responding to basic admin tasks that add no value.
  2. Create separate folders in Xero’s library to hold files for later reference. Examples of folders you may create and use in Xero’s library may include: Lease agreements, contracts, sales agreements etc. Be careful with this though, if these documents are sensitive you may not want to save them here, as most users are able to access the library folders within Xero (at the time of writing). So, use this functionality wisely to ensure you only publish information you’re happy to share with other users in your Xero file.

Xero’s lock functions – Sick of having someone mess up your data? To avoid this, you can lock down dates in transactions to avoid your data being changed. Great when you have closed off a BAS or IAS and want to ensure transactions aren’t changed without authority.

User limitations – Keep sensitive data away from prying eyes. Set user permissions to only allow access to functionality, permitted by you, in Xero.

Add ons that I use to expand Xero’s capability to suit my business:

There are so many add ons for Xero that the list sometimes seems a little overwhelming. However, Xero have created grouped lists to suit particular businesses, industry and functionality type. Therefore, searching for a suitable app for your businesses circumstances is helped with Xero’s custom app groupings.

My favourite add on apps for my business:

Hubdoc: This is my go to app to fetch bank statements for my business and for my client’s businesses. This app also automatically fetches statements from suppliers through a direct connection (where available) such as Vodafone, Telstra, City West Water etc. But best of all, this app completes the data entry of invoices and receipts. All I have to do is to either upload or email the receipts into the app and these documents will then be entered as transactions which then feed directly into Xero. Once in Xero, I can then match these transactions to the bank feed statement lines.

The app does require a little ‘training’ to get things right, but once set up, no more time is wasted in boring day-to-day data entry. This is one of my favourite apps as it has also removed the need for me to request client information, such as bank statements, thus removing the hassle of follow ups and wasted time. It also negates the need for me to ever have to log into a clients bank account, which I hate doing….. I personally don’t want that level of access, but it is a common process handed to trusted advisors, accountants and bookkeepers. Any enhancement to security is always a big win in my eyes, therefore a wonderful win-win situation for all!

E-way: A proven way to get paid faster is to offer more efficient payment options to your customers and this is what E-way allows us to do in Xero. Adding this service to Xero makes the ‘Pay Now’ button live in Xero and provides your customers with an option to pay via credit card. Other great customisations within this facility is the ability to set up an automated on–charge of your merchant fee to your customers, should you elect to do so. Since the charge back of merchant surcharges is now regulated, it is important to set the fee at the same percentage fee level set by your Merchant. To learn more about this legislation visit: ACCC – Credit, debit & prepaid card surcharges. In short, a business is not required to impose a payment surcharge, but if it chooses to then it is only allowed to pass on to the customer the costs that the business was charged for accepting payment of that payment type. This app allows you to do this and more. In summary, a great tool to improve your cash flow and to provide greater payment options to your clients.

T-Sheets: A mobile time sheet app for staff that integrates into Xero. It allows time sheet scheduling, job reporting, management approvals, the ability to add breaks, GPS location tracking, ability to see who’s working and who’s not and reminders to clock on and off. In summary, a wonderful time saver for staff and management with some really high end functions to track staff activity.

Transfermate: This app adds multi-currency integration and payments into Xero. Once set up, payments made are posted back to Xero. A great time saver if you have to pay overseas staff and/or suppliers. Also cheaper than the banks.

Futrli: Need further data insights? Futrli does this for you. This app is used by advisors to drill down into their clients data to provide incredibly useful information and feedback on the performance of a business. E.g. Cashflow reports, calculation of Debtor and Creditor average payment days, liquidity ratios, sales performance results, forecasting tools and so much more. Reports are visual and easy to use to present a full picture of business operations and ways in which the business may be improved.

GovReports: As a registered agent, I need to lodge a number of reports for both my business and my clients businesses. GovReports takes the data straight out of Xero and pre-fills my lodgements prior to submission. I can then choose to save that data and lodge at a later date, or lodge when I  am happy that I have all of the information needed. With this app, there is no need to log into ATO portals for lodgements and I am able to lodge even when the ATO’s portals are down or under maintenance. A real time saver and stress reliever!

So that’s it, my summary of what I truly love about Xero. I could go on, but these are my favourite tools and automations that have specifically helped in my business. The time and stress saved has been absolutely invaluable. Hopefully, this will provide you with some inspiration to work towards a more automated, stress free accounting process. Time vested in better processes will not only save you time and money, but will allow you the freedom to pursue other ventures. Whether that be business, or personal, I wish you the best on your Xero journey.

Yours in productivity, efficiency and automation

Melissa Foote