Our CEO and Founder, Kieran Phelan was Northern Ireland’s first Xero-certified advisor and has used the software for over 11 years across the company’s client base. However, whilst technology can certainly help us automate and streamline processes it isn’t as simple as ‘a click of a button’. In this blog, Kieran explains why using Xero yourself in your business might not be as straightforward as the TV adverts would have us believe…
Xero has been part and parcel of what we have done for clients for the past 11 years. We are very familiar with the opportunities, minefields and potential pitfalls that can arise when using an automated accounting system. Xero is a fantastic piece of software but it’s the bookkeeping side of things which Xero facilitates that is perhaps not as simple as what the TV ads would have us believe. Can it provide all the financial information you require at your fingertips? Absolutely. Can it help create better processes and automation? Definitely. However, if you are using Xero to manage all your financial systems as the operator or controller of the software you must have some basic knowledge and insight into what the platform does, and how it works to make sure you are getting it right for your business.
We recently hosted a Facebook Live where we discussed best practice when it comes using Xero and how to integrate it seamlessly into your business whilst flagging some common issues. In this blog we’ll explore the daily, weekly and monthly processes you should be doing via Xero. Read on for some top tips to ensure you are getting the most when it comes to Xero.
Finding bookkeeping motivation
Firstly, ask yourself who are you are doing your bookkeeping for? Is it a tick-box exercise for the government, or for yourself? Often with bookkeeping we fall into a trap of boxing it off as a yearly activity or something we ‘have’ to do rather than seeing the benefits from getting to grips with it. By shifting your mindset to one where you are focusing on using your bookkeeping to propel your business forward and giving yourself a greater understanding of your figures, you can use the process to your advantage.
Building consistency into working with Xero
It is essential to build habits that will help support your financial planning. There are some key figures that you should be tracking in your business, either on a daily, weekly or month basis, and this can all be done via Xero. I believe there are four key areas to look at, and have broken them down below:
Start effective bookkeeping with cloud accounting
- Customers and Sales
Customer and sales are the lifeblood of any business. Given the importance of this area it should be tracked daily. Especially if you are company that has daily transactions and uses POS or similar. However, dependent on your sector – for example if you work in professional services where clients are billed monthly daily tracking may not be necessary, but certainly for retail and hospitality a daily check-in is a must.
- Suppliers and Bills
Tracking supplier and bills is essential to monitor flow. Having a sound understanding of this is important to give a big picture view of your business and therefore should be tracked either daily, or at the very least weekly. Integrate Xero with other software to make this even easier. An application like Dext Prepare can allow you to upload your receipts and pull the information across to Xero saving you time and making everything streamlined.
- Banks Accounts and Credit Cards
Keeping an eye on bank accounts and credit cards is key to any financial planning system. Reconcile these weekly and track money ‘spent’ and ‘received’ from Xero. It is really straightforward to integrate some of the online banks with Xero, but just as important to cross check that the bank feed data sent into Xero is accurate and complete. We have a process in place for clients that does this. Technology does slip up the odd time so it’s vital to have these spot checks in place for your bookkeeping.
- Payroll and VAT
We recommend you get an expert opinion if you are trying to calculate VAT through Xero. There are a few pitfalls that can happen here, and it can easily be completed incorrectly. It is imperative to have accurate figures on a monthly basis so you aren’t hit with any surprises. Reach out to cloud accounting company (like ourselves) to support with this.
Building the big picture for your business with Xero
The process and numbers will provide the big picture that you need to help grow and monitor your business. As you can see, you do need a level of bookkeeping skills and technological know-how to ensure the data behind the numbers is accurate, complete and up to date. This is the BIG reason why we advise small business owners to let us take care of their bookkeeping needs This allows them to spend time on the things they should be focused on – customers, sales, marketing, systems and their people!
Get in touch with us today to see how we can help you with your bookkeeping!