Why is bookeeping still not straightforward for small business owners?
When it comes to your business bookkeeping, it still feels like a bit of a chore for most small business owners. There are good reasons why that’s still the case despite the huge promise and benefits brought by cloud accounting tools like Xero.
Firstly, bookkeeping is a skilled task. It requires training and experience. Whilst software like Xero can really help make it much simpler, there will always be an element of knowing what you’re doing, understanding the underlying mechanics of the software and being up to date on things like tax rules, VAT issues and so on.
Secondly, most small business owners who attempt their own bookkeeping are not bookkeepers and never planned to be. It is important to know your limitations in this area. Don’t assume the software is doing most of the legwork for you. And you can still get it wrong even if you’ve watched software training videos or had support from software companies. This is because most support covers the software features only, not the validity or accuracy of your data and transactions!
Finally, getting the most out of your software and your bookkeeping requires plenty of experience in how to use cloud accounting tools, how to link them effectively and how to carry out specific spot checks to ensure your figures make sense. This isn’t something that you can learn going solo. In fact there are plenty of accounting firms who “do Xero” but lack real experience in this digital skillset.
How can you make it better?
There are a number of things small business owners can do to improve their bookkeeping process. First and foremost, you can take a bookkeeping course to understand the basics. Secondly, get one-to-one training from a Xero advisor and accountant who can help streamline the way you work with Xero. Finally, you can simply outsource your bookkeeping to experienced professionals. This is how we work with many of our clients at Satori Accounting, saving you hours each week and giving you much better information and data to help run your business, make decisions and get all those HMRC returns filed on time!
If you really want to get stuck into getting the finance arm of your business working much more efficiently, then keep in the mind the need to ACE your bookkeeping!
How do you ACE your bookkeeping?
ACE – Automate, Capture, and Entry – is a powerful framework that can revolutionize your bookkeeping process. By leveraging technology and streamlining your data collection and entry workflows, you can save time, reduce errors, and gain better visibility into your finances. Let’s explore how you can use ACE to improve your bookkeeping.
Automate: The first and most powerful way to improve your bookkeeping with ACE is to automate as much of the process as possible. This can be done using specific features within Xero such as:
- Connecting your bank account using a bank feed
- For non-VAT registered businesses, use bank rules to automatically code your transactions
- Set up invoice and email templates for creating and sending invoices to customers
- For ecommerce business, connect your online marketplace to Xero to automate your sales transactions
- For retail business, connect your EPOS and card payment system to Xero
- For VAT registered business, link your HMRC MTD account to enable filling your VAT returns direct from Xero
- Use receipt capture software (such as Dext) to automate the processing of supplier bills and expense receipts
- Set up invoice reminders to send automated emails to clients and customers for overdue invoices
- Connect and implement payment services such as Stripe and GoCardless to fully automate your payment collection process
Capture: The second way to improve your bookkeeping is by reveiwing and improving how your transactions are captured. Aim to go as paperless as possible by doing things such as:
- Using the Dext mobile app to quickly snap paper receipts into the system and onward into Xero
- For systems you can’t connect directly to Xero, use a CSV export and import step to download transactions into an excel file and upload quickly to Xero
- If you need to get time records into your accounting system, consider the likes of Xero Projects to enable staff to enter timesheets on a project-by-project basis
- Allow staff to use Xero Expenses to enter their expense claims for valid business receipts
Entry: The final way to improve your cloud bookkeeping processes is know how to enter financial transactions on to Xero whilst using existing data already on the system or held externally. This is where accuracy and attention to detail are critical so that you avoid going into autopilot mode, which can cause errors and inaccuracies. The features in Xero which can help with entry include:
- Using the artificial intelligence available in Xero to quickly create and reconcile your bank feed data without needing to set up bank rules
- Using Xero’s email-to-bills feature to get suppliers bills straight into the purchases section of the system; bear in mind this isn’t as smooth or automated as using Dext but still a valid option for micro businesses
- Use the “copy” feature within Xero to copy previous similar entries for invoices, bills and bank transactions
- Set up recurring invoices within Xero if you have clients/customers to whom you need to charge on a monthly, quarterly or annual basis
- Use CSV imports for bulk uploading sales invoices and supplier bills in certain circumstances
Using ACE can be a game-changer for your bookkeeping process. By automating, capturing, and entering financial data to Xero using the various features available, you can save time, reduce errors, and gain better visibility into your finances. Whether you are a small business owner or a freelancer, implementing ACE can help you to streamline your bookkeeping process and make more informed financial decisions.
If you would like our team at Satori Accounting to review your current processes and make recommendations on how to implement ACE in your bookkeeping using Xero and connected apps, please get in touch to book your discovery call on the link below.