When you’re a small business owner, especially if your business is still in its infancy, your time comes at a premium. Often, what financial and human resources you do have are focused on the vital functions and running the business, leaving you to handle the more logistical and, let’s be frank, mundane administrative duties like your accounting.
But if accountancy isn’t your strong suit or passion, it can be tricky to decipher and harder to organise. Especially when you’re more inclined to put it on the backburner in favour of an aspect of your business you’re more passionate about. Unfortunately, not prioritising your accounting, or simply not knowing enough about the processes, can lead to the development of larger, more destructive, issues in your small business. But how do you solve these problems if you’re not a trained accountant?
First, let’s identify some of the accountancy problems that typically affect small businesses in this position.
The Top Accountancy Problems Affecting Small Businesses
Properly managing your cash flow is usually the number one problem for start-ups and small businesses. It’s vital for the continued functioning of your business that you have enough money in the bank to cover your costs, however, this can be difficult to manage in the transition from a regularly salaried job to running your own business.
Unfortunately starting a new company does not automatically make you a Payroll or HR whiz, and carving out the time to properly figure these things out can be difficult alongside your other duties. From sorting out how you’re going to pay your employees, meeting the correct HMRC legislation, to what tax code your new employees should go on, the associated issues with Payroll can quickly snowball into a time management black hole.
Keeping On Top Of Expenses
Keeping track of all your business expenses, or rather the specifics of your business expenses can be one of the main ways you’re tripping yourself up with your business accounting. Keeping itemised receipts and knowing what you spent, where and when, is important for accurate accounting but one that is often hard to keep on top of.
Working From Historical Data
Whilst the ability to identify and assess the patterns of the past is necessary in order to make accurate predictions for the future of your business, it is equally important to be able to access real-time performance data, to make accurate and sustainable financial decisions. Typically, with a spreadsheet or ledger, getting an up to the minute picture of where your business is at financially is pretty much impossible, and wholly dependent on the effort you’ve put into maintaining clear records. So when it comes to those important business performance indicators, you’re always a few steps behind where you need to be.
Lack of Communication With Your Accountant
Often one of the most frustrating things when trying to work out your business’ financial topography is the disparity between the information you and your accountant are working from, and the valuable time it takes to get you both back on the same track.
If you and your accountant are working from two separate ledgers, which is often the case, then you’re most likely working from two different sets of information, depending on the last time either of you exported and sent over your files – which again, takes time. Moreover, if both you and your accountant live far apart, it can be hard to set aside enough time to meet up and discuss your financials. Quick questions fall by the wayside in fear of the amount of time it would take to reconcile your sets of information to provide the answers.
Whilst all of these issues can have a lasting effect on your business, they are by no means infallible. You can easily solve these problems by using an integrated accounting software like Xero. But what is Xero Accounting Software?
How Xero Software Can Help Your Business
1. Automatically Updating Bank Feeds
Using the bank feed feature of Xero, you can automatically import your account transactions from either your bank or your Paypal, account. Once these are up and running, Xero automatically downloads your recent transactions, in order to give you a real-time insight into the financial coming and goings of your business. Now, whether you’re on the go, as long as you’ve got a working internet connection, you’ll always be up to date with your banking.
Xero software is linked with certain banking associations, meaning it’s pretty simple to link your bank feed with the software. However, if your bank is not one of those, you can use Xero’s in-app add-on Yodlee, in order to translate the information into your software.
2. Improve cash flow and get paid faster
Your business needs to get paid, and with Xero, you’ve got all the tools to get paid faster and safer than before.
- Online invoicing: with online invoicing, you can go beyond traditionally printed invoices and give your clients the option to pay you online, directly from your invoice. You can also see the open rate, so you can keep tabs who may have forgotten to pay.
- Automatic payment reminders: having customers that pay on time is essential to maintaining a steady cash flow, but inevitably, there will always be one or two late payments. In Xero, you can set up automatic payment reminders, that will be sent every seven days to your clients until payment is received.
- Real-time updates: The ability to see an accurate and up to date representation of your accounts whenever you sign in decreases the amount of time spent worrying about money, and improve your money management.
3. Let Xero do the heavy lifting
There are a lot of reasons to love Xero, one of the reasons being that it automates a lot of the work for you. Meaning you can spend less time performing tedious accounting tasks and more time focusing on growing your business.
Whether it is setting up invoice reminders that can chase down overdue payments for you; the Find and Recode function, which can save you hours of manually updating records; or integrated payroll assistance – Xero does the grunt work so you don’t have to.
Xero can even take care of sorting and filing your expenses for you. Using the Xero mobile app, you can immediately take a picture of a receipt to match against a transaction made on your automatic bank feed, so it’s logged and ready whenever you need it.
4. Collaborate with your advisors
Usually, collaborating with your accountant can be a tedious process, especially when working with two different software systems which are not necessarily compatible.
Xero offers a new way of working that reduces friction and emphasises efficiency. By creating a Single Ledger and hosting it on the cloud, Xero creates a single set of data that both you and your advisor can work from, no matter where you both are.
Not only that but with Xero, there is no limit to the number of people you can share your data with. With your permission, relevant team members can access, analyse and action your financial data, making it easier to collaborate with who matters.
5. Xero grows with you
Xero is both flexible and scalable, meaning no matter what your business objectives are, or however malleable, Xero can meet them both in the present and grow to meet them in the future.
Xero does this through its integration software, which can align with your Gmail or Office 365 email accounts, and its in-app ecosystem. Like the Apple Store, Zero’s app marketplace enables you to easily download software so you can tailor your Xero experience. Whether it is industry-specific solutions such as Shopify, or Vend – or universal apps like Yodlee – there are over 400 apps to fully customise Xero to suit your accounting needs.
It’s this flexibility that has lead Xero to surpassing over 1 million subscribers in 2017, worldwide.