Cloud accounting with Xero and its App Marketplace

Anyone who remembers shoving handfuls of business receipts into shoeboxes, or dutifully plugging them away into spreadsheets one by one, has most likely welcomed the age of cloud accounting.

We’ve spoken and written about Xero extensively, and we regularly help clients get more out of their subscriptions by exploring new features and add-on apps. Xero has unlocked myriad new possibilities in automation, efficiency and visibility over your business’ real-time financial affairs – from any device, wherever you are (provided there’s an Internet connection of course)!

Perhaps most importantly, it has brought these possibilities within the reach of even the smallest businesses – both in terms of pricing and ease-of-use. The proliferation of cloud accounting and business management software tools has enabled smaller businesses to adopt much better financial management and governance practices earlier on in their journeys.

Unsurprisingly, the use of cloud-based applications is on the rise across all industries. In its 2019-20 Characteristics of Australian Businesses report, the ABS measured cloud use by Aussie businesses and found that 55% of businesses used some form of paid cloud computing across those two years, compared to 42% in 2017-18. We can only imagine how much that number has shot up since the pandemic and the sudden shift to working-from-home on a massive scale!

Xero – the basics

If you’re one of our business clients, by now you probably use or at least know about Xero. For anyone who doesn’t, Xero is basically an automated bookkeeping and accounting platform that you can access on a monthly subscription like Netflix. Once you’ve set up your bank and payment provider feeds, you’ll see transactions being coded automatically with any unrecognised items being brought to your attention for reconciling. The system learns, so you’re not likely to get asked about a new kind of transaction twice.

You can also manage your accounts payable, invoicing, employees, payroll and super just as easily. Of course this all means financial reports, like your Balance Sheet, P&L and Aged Receivables, can be generated at any time with the click of a button. It has been a real game-changer for small businesses of all stages.

Xero – the Marketplace

The real genius of Xero is how they have allowed others to build apps for their platform, enabling you to extend its functionality and usefulness to you as your business’ needs change. Many apps are built for a range of specific industries, e.g. Agriculture, Education and Hospitality, making Xero even more powerful to the specific business you’re in. There are over 1,000 Xero Apps to choose from!

Let’s start with just three examples.

Recordkeeping

Since we started this article with shoeboxes and spreadsheets, it makes sense to consider Dext (formerly Receipt Bank) first. Dext is a massive timesaver, which greatly simplifies the process of meeting your recordkeeping obligations. When it comes to receipts, simply take a photo of a physical receipt when it’s produced. Dext will then use AI to ‘read’ all the important information automatically and upload it straight into your accounts on Xero (upon approval from you). You can also upload bills, digital receipts, invoices and bank statements from your phone, laptop or email account for the same result. 

Forecasting

Xero makes it easy to centralise all your business’ financial data, but (being a bookkeeping solution first) it fundamentally “looks backwards” at your past performance. It makes a great deal of sense for business owners and leaders to use that same data to look forwards, at various scenarios of what the future might look like for you. For powerful forecasts and budgets, we would suggest looking at Spotlight Reporting. Spotlight Reporting offers a variety of comprehensive performance reports, full three-way forecasting, customisable dashboards and advanced consolidated reports for multi-entity businesses and franchises. 

Payroll

While Xero does offer employee management and payroll functionality as standard, CloudPayroll offers additional power – especially for larger teams. CloudPayroll simplifies the process of setting up payroll and managing leave, PAYG, super, ATO lodgements (for Single Touch Payroll) and employee records. Its ‘Employee Kiosk’ makes it easy for employees to: view their payslips and work history, make changes to their personal details, view their projected leave balance for a future date, apply for leave and submit time sheets. All this functionality seamlessly integrates with Xero to maximise efficiency.

Drop us a line

Like many of our clients, we have adopted Xero and various Xero Apps in our business and seen the benefits that they are experiencing firsthand. If you’re interested in implementing Xero in your business, or exploring any of the add-on apps you may require, we would be more than happy to discuss this with you and guide you through the process. We’re not experts in all 1,000+ Xero Apps but we can definitely be of service knowing you and your business better than most!

We look forward to hearing from you.

IMPORTANT NOTICE

This blog post contains general information only and has been prepared by Allworths without reference to your objectives, financial situation or needs. Allworths cannot guarantee the accuracy, completeness or timeliness of the information contained here. By making this information available to you, we are not providing professional advice or recommendations. Before acting on any of the information contained here, you should seek professional advice.