Cloud based accounting software, Xero, markets itself towards small to medium businesses. Picture this: Your business is in its early days, and you’ve got a million other things you need to focus on. Getting your head around a new online system is the least of your worries so you ask yourself, ‘Why should I bother?’. Well, when outsourcing this function isn’t an option, becoming well versed in a platform such as Xero can be extremely advantageous.
Benefits of Xero
- All your important company data is readily available and in one place – once it’s correctly entered, it is stored here easily accessible to yourself and whomever else needs you deem to need it.
- Useful for tracking purposes – ever find yourself asking, ‘How much have we spent on marketing this month?’ or, ‘How many employees do we have on a casual basis?’ Xero allows you to jump in and take a look, providing you with a numerical, definitive answer to many of your questions.
- Ability to generate reports – whether you want to see where your working capital was spent or whether you need to show potential investors your ‘books’, Xero provides several options for reporting purposes e.g. Cash Summary, Profit and Loss. It also gives you the option to generate custom reports, pulling out only the information you require.
So you’ve been persuaded into agreeing that becoming familiar with a platform like Xero will benefit your business, but you haven’t got a huge amount of time to devote to becoming a Xero guru. Xero has many functions, which should you focus on?
- Sales (accounts receivables) – if you don’t have a CRM or other way of invoicing clients for your work then this is by far the best function in Xero. You can create smart, professional looking invoices to send out which even include your logo. When payments are made, you can match up to the corresponding invoice which allows for an accurate picture of revenue and outstanding payments.
- Purchases (accounts payables) – if you’re budget conscious and like to know exactly where your business’ money is being spent then the payables tool is a perfect way to track spend. Although storing all payable invoices in either a physical folder or an online folder (such as Google Drive or DropBox) is useful, entering them into Xero allows you to compare easily and report on spending. You can decide which account to place each spend against and attach a PDF copy of the invoice so it won’t get lost for future reference. Another valuable function of the payables section is the ability to enter a due date on each invoice. It is better for cash flow to pay invoices when they are due, rather than upon receipt. However, it’s hard to keep track of due dates without placing them in an email folder which requires constant monitoring. Xero payables splits your invoices into ‘paid,’ ‘awaiting payment,’ and ‘overdue’ so that you clearly see which need your attention.
- Payroll (HR) – an easy way to collate all the data you need from your employees such as contact details and salary information. The pay run function uses this information each time payday comes around, giving you access to an ABA file which you can load into your online banking service. Paying your employees’ wages is a task that should be carried out with precision each time and Xero enables you to do so with minimal room for error.
Spending some of your valuable time learning how to use the key functions of a platform such as Xero may seem cumbersome but will be beneficial to your business’ operations in the long term.