What is Xero Accounting?

1st September 2017

For the majority of small business owners, spending hours slogging over your own accounting is definitely not the main reason you went into business. And, if you’re unused to managing key functions like payroll, filing orders and other accounting administration, you’re likely finding yourself spending an inordinate amount of time just trying to understand what it is you’re meant to be doing than anything actually productive.

Yet, the smooth running of your accounting is fundamental to the continued functioning, stability and long term success of your business. So, how do you find a way to balance the time spent on your accounting, with the other, more enjoyable, aspects of your business

Xero is an innovative cloud-based accounting software that understands both the necessity and pain of accounting for small business owners and introduces a number of solutions for each through its functionality and online connectivity.

As specialist Xero accountants, we’ve helped many companies acclimatise to the software, and watched many businesses grow as a result. But we understand that switching to a whole new system of accounting can be daunting, so we’ve written a series of guides to better inform you of the benefits, and hopefully, assuage your fears.

From Zero to Xero

Xero has grown at a rapid and extraordinary pace since it first hit the market. Beginning as a small start-up in New Zealand in 2006, over the last decade it has developed to become a successful dual listed company on the NZX and ASX, with over 1,000 employees across the globe. And just as it has expanded in size, its value has risen in parallel. With stock peaking at more than 800% above the offer price after listing in 2012, it now still trades at a more sustainable $15.56, with an annual revenue of around $70 million.

At the core of Xero’s rapid rise to fame, was its early adoption of cloud technology. Whereas the majority of small business were, and to a lesser extent are, still utilising rudimentary accounting systems like Excel spreadsheets, Xero centred its approach around cloud connectivity.

By providing an accounting platform that allows small businesses, accountants and bookkeepers to work symbiotically and instantaneously, Xero revolutionised the functionality of small business accounting.

Despite other companies similar adoption of cloud technology, Xero remains a firm market lead, with over 500K global users and a sign-up rate of 300 new customers daily.

The scale of Xero as it is now is supported largely by the early integration of an add-on app marketplace. Much like on Android or iOS application markets, third party developers are able to distribute apps that open with Xero via its API, such as Spotlight and Fathom, and today the platform supports over 350 apps.

These applications add to, and emphasise Xero’s multi-point functionality, and continue to do so as Xero’s customer base consistently expands. For instance, for full business integration, there are apps that, if you are managing a chain of bars, for instance, you can use to monitor data to identify which specific beer is selling the most.

By developing an internal ecosystem through these applications, Xero has extended its software beyond a simple accounting platform, to a full-scale practical business management platform. Alongside managing their money, small businesses, through Square, can now link point-of-sale transactions directly through their Xero accounts, or process tax lodgements.

But why should all this matter to you?

Why Should You Use Xero?

Let’s face it, no one has ever looked at accountancy and considered it a glamorous profession. But with Xero’s slick functionality and minimalist aesthetic, a level of star quality has been reached by the industry that was previously unknown.

Efficient, powerful and smooth, consider Xero the James Bond of the accountancy software world. Allowing you to ditch your outdated systems of spreadsheets and paper piles, Xero bundles up all your data onto the cloud, meaning that both you and your team can handle your accounts on the move, anywhere, anytime.

They key word is connectivity.

As Xero is cloud based, it can work across multiple devices, tablet or phone, Mac or PC, meaning as long as you have a working internet connection, you’ll never be out of control. You can monitor your business performance, update your accounts, apply for business loans and build your business network.

Using Xero makes accounting painless and easy, even billing your customers, creating and sending invoices or keeping on top of your expenses can be done instantaneously on the app.

Moreover, with Xero, there’s no time-consuming installation process or manual updates. The software updates automatically and integrates fully across your devices, even allowing you to send and receive emails using its services.

Even bank reconciliation tasks are somewhat less dread worthy. Xero’s software imports statements, allowing you to use its single button reconciliation function.

Xero hands you back greater control and oversight over what and how you’re running your business, meaning no more surprises, leading to more intelligent and better-informed business decisions.

Most importantly, Xero doesn’t limit the number of users you can add to your account, meaning that you, your team, your bookkeeper and your accountant can all access, update and monitor your accounting information in real time. So everyone can stay in the loop and up to date, all the time.

As well as drawing a far more realistic portrait of the state of your finances, this accessibility means that both you and your accountant can save resources and address issues as soon as they may come up, without the need to waste time coordinating schedules. Using Xero for your payroll and accounting means that your accountant is by your side no matter the time.

Video, on the Xero network effect

How Do I Use Xero?

Switching to a cloud based accountancy software can seem like a huge leap, especially if you’re used to using spreadsheets, but whilst moving over to Xero will be a large shift, that doesn’t necessarily mean it’ll infinitely more difficult, in fact, it’s the reverse.

Xero integrates all of the accounting functions you could possibly need into one piece of software, meaning that you can switch from A to Z seamlessly and easily. And locating the correct information in a second is a breeze.

If you choose to switch from your current manual or online system to Xero, as qualified Xero accountants we can advise you across the move, facilitating your training and remaining on hand for any troubleshooting necessary. We’ve even created a free 7 day course to ease the switch over, which you can access here.

We’ve spoken about how Xero empowers you with more control over your own finances, but it doesn’t necessarily mean saying goodbye to your accountant. In fact, we love Xero. By upgrading to Xero you’re enabling your accountant to give you better advice and more support than ever before. And if you’re business is happy, that means we’re happy.

By connecting us more closely with your financial data, and providing us with immediate access, all we need to do is log in to check that your accounts are all flowing smoothly, or to immediately spot and solve a problem before it causes any damage.

If you’re still unsure whether Xero accounting is right for your business, consider the issues that you, and many small and medium sized business owners, struggle with in your accounting.

The majority of small business owners we’ve spoken with seem to have, across the board, consistently struggled with the following four accounting functions: controlling their cash flow, getting paid on time, managing their time and reconciling their bank statements.

Xero accounting software was specifically created to offer a solution to these common accounting issues.

Every time you use Xero, you will receive an accurate real-time view of your cash flow, no matter how far away from your business you are. For small businesses and startups, being able to consistently access up to date data and analyse your performance is imperative for making sustainable business decisions. Xero allows you to do this, without having to set in place time-consuming measures, so you can get out there and promote your business, knowing that you’ve got it right there in your pocket with you.

Moreover, the integrated Xero invoicing system allows you to create, send and receive payment notifications on invoices in the app. That combined with Xero’s one touch bank reconciliation function dramatically reduces the amount of time and resources you would usually spend on either task.

And that’s not even the half of it.

The following Xero features enable you to manage all of your business finances at the touch of a button 24/7, 365.

  • Create invoices, send them to your customers and see when they’ve been opened.
  • Track inventory, control stock and transfer items to invoices.
  • Organise and manage your payroll, no matter how complex it is.
  • Reconcile your bank and major credit card statements with ease.
  • Work on the move using the Xero mobile app.
  • Control every accounting aspect of your business and monitor your performance from the Xero dashboard.
  • Pay your bills on their due date and monitor your costs.
  • Record, claim and manage expenses and receipts.
  • Prepare quotes.
  • Enjoy the reports you want and need to monitor your performance.
  • Get paid sooner by accepting online payments.
  • Keep control of your purchase orders.
  • Monitor foreign currency balances and transactions across multiple currencies.
  • Keep your accounts in order using an easy to set up filing system.
  • Enjoy a bird’s eye view of business performance from your Business Performance Dashboard.
  • Benefit from having all your contacts and lists in one place.
  • Process your VAT online.
  • Make light work of Workplace pensions.
  • Manage your fixed assets simply and efficiently.
  • And all of this is available to you, no matter where you are and no matter what time of

How Does Xero Work?

Xero has been consistently hailed as one of the most beautiful and functional accounting solutions on the market today, largely due to its easy to use interface and cloud connectivity. Working on your PC, Mac, phone or tablet, Xero accounting software allows you to stay in touch with your business performance, no matter where you are, no matter what time of day it is.

But how does it do it?

Your data is stored on remote, secure servers, which can be accessed through a personalised login on any desktop, tablet or phone with the Xero software installed and a working internet connection. On top of this, your data can be accessed by your other team members, accountants or advisors through the secure Xero portal, allowing them to view your data in real time.

We understand that one of the biggest worries in switching over to a cloud based software, especially one with the sharing capabilities of Xero, can be its security.

Storing your data in the cloud, although at first may seem a little daunting, especially if you’re used to holding paper copies, protects your data from site specific loss or theft. Similarly, who accesses your data and how much of it they access is entirely up to you. You can control the level of access each member of your team is allowed, whether they can input data or just read only.

Where Can I Buy Xero Accountancy Software?

Whilst you can buy the software directly from Xero, it’s worth pointing out that if you buy it from your accountant, you often get a lot of additional value in terms of support and training that you wouldn’t receive otherwise.

We understand that for some, the software package alone is where the value is held, but it’s our belief that Xero is even more powerful with knowledgeable people to guide you.

If you’re in the market for Xero, shop around to find out what your, and other accountants, will offer on top of the white box option. Usually your accountant can offer you a multitude of packages at various price points dependent on the service required, but for specific prices it’s best to discuss your expectations with your accountant.

If you’d like to speak more to us about Xero, or our Xero accountancy service, with zero expectations, don’t hesitate to contact us on 01634 540040.