If you are running a small business or a startup, then you probably know how important good financial management is to the success of your company.
New and small businesses need to manage their money effectively, so they can be better prepared to handle the ups and downs of entrepreneurship and cloud accounting software can play an important role in this.
One of the best solutions available today is Xero.
In this post, we look at the benefits of cloud accounting software and using Xero for your business.
What is Xero Accounting Software?
Xero is a cloud accounting software solution that has been designed specifically for the needs of small businesses in mind. Launched in 2006, Xero offers businesses instant visibility of their financial position. As a business owner, you can use Xero to manage your entire accounting process.
From bookkeeping basics to accepting online payments, paying bills, submitting VAT returns online and even automating your accounting. In short, it makes it easy to manage your finances and helps your run a healthy business.
Why Use Xero Accounting Software?
Xero is one of the fastest-growing and most popular cloud-based software solutions on the market thanks to its ease of use and versatility. Indeed, Xero is packed with features and integrations that make it suitable for multiple types of businesses and sectors.
Based on the thousands of Xero reviews on Capterra, 96% had positive things to say about Xero’s user interface, and 95% shared positive thoughts about Xero’s ease of use. What’s more, it was named a “Top Performer” for 2021.
The accounting software from Xero is specifically meant to make life better for small businesses and to help them grow and thrive.
Their online accounting platform provides a complete business foundation by connecting businesses with their bank, payment services, accountant and over 700+ third-party apps.
At last, Xero can be tailored to cater to your specific business requirements
Is Xero Accounting Any Good?
Today, there are more than 2.7 million people subscribed to Xero. Small business owners, bookkeepers, and accountants across the world use Xero thanks to its powerful features.
The New Zealand company is one of today’s top providers of accounting software.
Xero is highly rated and rules over the cloud accounting market in the United Kingdom, New Zealand, Australia and North America. Forbes named Xero one of the most innovative growth companies in the world in 2014 and 2015.
Xero Online Accounting Benefits
Using Xero for your small business is a good idea since the software will perfectly suit your needs. The following are seven key benefits that your business can get by using Xero.
1. Get Paid Faster
Late payments are a big problem in the UK, it is estimated that 30% of invoices are not paid within the agreed terms and that 1 in 5 insolvencies are attributed to late payments. So, if you want to avoid cash flow problems you need to put in place a good strategy to manage your accounts receivable.
Online Payments
Luckily, Xero can help you get paid up to twice as fast by connecting you to online payment platforms like Stripe, GoCardless and others. As a result, you can use this to add a “pay now” button to your online invoices and send the PDFs by email. You can even see when the invoice was opened which makes it easy to track payments.
Customers are more likely to pay their bills if you make bill paying easy. Offering online bill-paying will let clients just click a button and see their invoice disappear!
Recurring Payments
Also, if you provide recurring services you can use online invoicing to set up automatic payment collection from repeat customers on the due date through either bank-to-bank or credit card payments.
Automatic Payment Reminders
Lastly, you can automate the chasing of unpaid invoices by using one of the many Xero add-ons like Chaser. This nifty app allows you to personalize your payment reminders and schedule them at the best times so it looks like you are the one sending them.
2. Time Saving
Store documents online
First, Xero is a huge time saver because as a 100% cloud software it can store all your documents online so you won’t need any more paper records.
Not having to sort through boxes and folders of bills, bank statements, invoices and receipts will save you many hours and your sanity.
Automated Bank Feeds
Second, one of the most time-consuming aspects of the bookkeeping process is managing your bank transactions and ensuring bank reconciliation.
Xero can save you time by connecting to your bank and importing transactions every business day so you can avoid countless hours of manual data entry. Having automatic bank feeds gives you the chance to reconcile daily so the accounts provide an accurate up-to-date picture of your business finances. It will even suggest matches and categorise transactions for you.
Extract data automatically
In addition, through their Hubdoc app, it can extract data automatically from bills and receipts. Simply snap a photo with your phone or upload a document and Hubdoc will turn it into usable data and even do the data entry for you by creating a draft transaction.
The Hubdoc add-on for receipt and file management
Up-to-date reports
Lastly, it has powerful reporting capabilities that allow you to get a clear overview of your business finances. For example, you easily create reports to monitor accounts payable and cash flow. This is a very valuable feature for business owners who need to have access to this information easily.
3. Access From Anywhere and Anytime
Xero is a cloud accounting software that makes it available anywhere and at any time using a computer or mobile phone with internet access.
When traditional accounting software was first introduced, it had to be installed on your computer. This meant that you had to use the software only on your computer and needed to pay extra for using it on other computers.
If you’re using spreadsheets to keep records then you know that unless you’re using some sort of collaborative online feature or cloud storage your data is only available on the computer you used to create the file. This limits accessibility and poses both data loss and security risks.
Unlimited Users
With cloud software, all these limitations are removed and an unlimited number of users can work simultaneously on your accounts if needed. Also, your data is stored on a cloud server securely and is encrypted.
You can collaborate in real-time with your entire team when you use Xero. Wherever you may be, work will not be affected since you can use Xero with your team. As a business person, you may have to travel a lot. Wherever in the world, you can connect to your bookkeeper or accountant through Xero and ensure your accounting is up to date.
Mobile App
Xero is also available in the form of a mobile app both for Android and iOS platforms. When you subscribe to Xero, you get free access to the mobile app. You don’t need a laptop to use the software, you can even do it from your mobile phone while sitting in your car. It is that convenient!
Xero user interface shown on the mobile app, desktop and tablets view.
4. Data Security
As one of the leader in it’s field Xero adheres to the strictest cloud security standards and has implemented multiple layers of security to protect your personal and financial information.
For example, all information is encrypted with bank-grade encryption protocols and your data is held tightly in secure data centres that are monitored 24/7/365.
Xero employs a multitude of cloud security measures and even publishes a full report on the subject.
If you want to learn more about Xero’s security practices you can visit their resource page here.
5. No Need for Updates, Upgrades and Backup
Real-Time Updates
One of the major advantages of cloud bookkeeping software is that it doesn’t require any updates. Traditionally a big source of stress for many business owners, keeping up with software updates was something left undone until something broke and a call to the “IT guy” was due.
Online accounting software is always up to date because automatic updates happen in the background on the company’s servers. A dedicated IT support team ensures the financial platform runs smoothly all the time without you lifting a finger.
Easy Upgrades
Previously if you needed additional features you had to outright purchase a new upgraded version. Worst yet, if your old version was too outdated to be compatible with the latest operating system you also had to upgrade to the newer version. Lastly, if your other employees needed to also work on your accounts you needed to upgrade your license again.
That’s now a thing of the past. Online accounting software like Xero allows you to upgrade to a higher-up version and access the extra features at the click of a button. It will only cost you a few extra pounds per month. It’s that simple!
No Backups Needed
Xero takes care of protecting your data for you, so you don’t have to worry about corrupted drives or deleting your data by accident. Xero performs all the necessary backup in the background on their servers so you don’t have to.
These backups servers act as data replicas to minimise the risks of data loss and outages. In the unlikely event that something does happen, Xero can seamlessly switch to a backup to keep your business running and restore your information.
So you can rest assured, that unlike losing your device, your accounting data will stay safe and sound no matter what.
6. Improve Business Efficiency
Another important benefit of cloud accounting is the improved business efficiency most business owners will experience. That’s due in part to the increased productivity provided by the time-saving features mentioned earlier but there’s more.
What makes Xero special is those 700+ third-party integrations we spoke about at the beginning of this article. This allows not only the automation of accounting processes like chasing unpaid invoices but also other parts of your business as well such as reporting, employee management, expense management, financial monitoring and others.
Imagine being alerted when there is a sudden change in your financial position like a drop in your cash flow or a sudden rise in expense claims. Or you can schedule and pay suppliers automatically, record mileage on the go or directly bill projects as they advance. All that and more is possible with Xero.
Xero app marketplace
7. Financial Information Availability
Xero can be much more than just online accounting software. It can act as the financial hub of your entire business and give you a real-time view of finances from wherever you are. If your business requires you to travel a lot or be connected to your accounting data often, Xero will be perfectly suited for your business.
Out of the box, it has a set of standard reports available like profit and loss, balance sheet, VAT and that functionality can be further extended by connecting other online tools like Fathom or Spotlight. These add-ons allow you to create automated, beautiful, visual and custom made reports with the right KPIs for your business.
Here is an overview video for the Fathom reporting add-on.
Powerful forecasting
What’s more is that you can even create budgets, forecasts and plan different business scenarios. Xero gives you powerful insights without the need for a background in accounting. This makes it easy to determine the impact of positive or negative events on the bottom line of your firm.
For example, you could forecast a best-case/worst-case scenario if your marketing campaigns really take off or if you have to close down temporarily due to due COVID restrictions.
Conclusion
As you can see adopting Xero for your business has a host of benefits. If you’d like to try it for yourself they do offer a 30-day trial. During this period you can try all features, set up your company or play around with an example company and get familiar with the software. No credit card needed!
What’s better is that at BrooksCity we’re certified Xero partners so as Xero accountants we can help you set up in the right manner for your business and show you around. If you’d like to learn more on how to make cloud accounting work for your business you can request a free consultation right here.