Using a cloud based accounting software such as Xero is a very important step for small businesses who want to have a productivity and profitability edge over its rivals. This is because a cloud based system allows for work to be carried out on any device and location so long as there is an internet connection, there is no IT server/maintenance costs, disaster recovery is handed by the vendor, data storage limitation is not an issue, upgrades to systems are not required and the cost of running the software is lower. Essentially, it allows businesses to work smarter and faster.
Small business accounting software which is not available on the Cloud will restrict the business from having access to real time data and thereby prevents owners from making informed decisions instantly. The problem with the traditional accounting software is that it devours the time and effort of small businesses to a great extent which otherwise can be used for adding values to the business. Some of the drawbacks of traditional accounting software are outlined as follows
- The accounting data in the system is not live and up to date
- It only works on one computer and USB drives are used to transfer data from one system to another which is not secure and increases the risk to infecting a system with viruses
- Only one person has user access if only one license is purchased
- It is costly and complicated to keep backing up the data
- Upgrading the accounting software can be expensive and time consuming
Xero is an example of a popular Cloud based accounting software which has additional powerful features to help small businesses to run their business efficiently and smoothly. Xero can automate many tasks which otherwise requires significant time to get it done thereby helping business to focus on its operational affairs. Xero supports unlimited users and incredibly advanced user permissions. As a cloud-based software, Xero is compatible with any device so long as you have Internet access. The below are some of the key features of Xero.
- Dashboard – Xero provides you with a customisable dashboard which features a beautiful user interface with graphs showing your bank accounts, accounts receivable, accounts payable, expense claims and other business performance graphs.
- Invoicing – Xero offers time-saving necessities including recurring invoices, automatic invoice reminders, default payment settings, bulk invoicing, and the previous invoice replication.
- Contact Management – Xero has some of the best contact management features. You can add the expected basic contact information, including a default discount and VAT rates for customers. But Xero takes this a step further through contact groups and smart lists. Smart lists act as marketing tools, allowing you to target certain groups of contacts. For example, you can create a list for loyal customers or customers in a specific state in order to offer promotional deals. You can also use these lists to invoice an entire group at once.
- Accounts payable – Adding bills is very similar to creating invoices. You can easily create recurring bills and purchase orders (that can later be converted into bills with a few clicks).
- Bank Reconciliation – Xero’s smart categorization remembers the past transaction categories you used and automatically categorizes new transactions for you. Xero has strong bank rules feature and makes it easy to split payments and transactions when needed.
- Inventory – The track inventory option will record stock levels, average purchase costs, and the number of items committed to quotes.
- Payroll – You can customise pay schedules and keep track of benefits, deductions, overtime, bonuses, sick days, paid vacations, time off requests, and employee earnings all in one place.
- User permissions – There are five levels of user permissions. You can also require users to send completed invoices, bills, etc. in for approval rather than granting them access to send things freely.
- Reports – Xero offers 65 reports (including 20 that are specific to payroll). These include everything from basic balance sheets and aged payables to detailed budgets and depreciation schedules. All reports are completely customizable and can be run with various time periods as well. You can star your favorite reports for quick access.
- Tracking – Xero allows you to set up tracking categories and are basically ways of organizing your information. Some users create categories for locations, teams, manufacturing, and more.
- Expense Claims – Xero allows you and your employees to file expense claims for reimbursement which can also be done using its mobile app.
- Multi-Currency – Xero supports over 160 currencies. Currencies are updated hourly through XE, and reports can be customized and run in different currencies.
If you would like to know more about Xero or would like to take up our free implementation offer, submit your contact details here and one of our consultants will be in touch.
This article has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of its contents.