Online Accounting

How clients can outsource their accounting work using Xero

In a time before cloud accounting if you wanted to outsource your accounting work sometimes the negatives outweighed the positives of giving the business owner time to concentrate on other aspects whether it be business or pleasure and also only paying for the time you need versus having the burden of hiring and paying for a full time or part time staff as well as getting the right knowledge at the right time.

But what were these negatives?

For business owners one of the most important negatives was by outsourcing you were giving away control. You handed over your bank statements, invoices and other paperwork and at some time in the future was handed management accounts or a list of queries or payments to make. This could also mean a duplication of work where the business was raising and sending invoices and then these needed to be re-entered into the accounting system.

Secondly you were always looking at out of data information, as soon as you handed over the records then the information was old or there was 2 sets of records – yours and the outsourced one so which one was correct. This didn’t help when trying to make business decisions either.

Thirdly you were relying on someone else to give you the information especially if you outsourced the complete function.

So how has this changed with cloud accounting? Well the positives are still there but now many of the negatives have been solved due to cloud accounting.

There is only one set of records that anyone with permission can access so everyone knows that they are looking at the same version and with bank feeds and add ons such as Hubdoc and Receipt Bank  this information is easy to keep up to date and current. Also if there are adjustments to make, they can be done once in one system and not repeated in many.

Information is accessible 24/7 on a variety of devices with Xero, for example, having a few apps to assist with on the go work such as raising sales invoices, reconciling bank statements and submitting expenses.

Cloud accounting software has made collaborative working easier especially as many businesses like to retain the sales ledger side of finance as their have the relationship with the client but happier to outsource the purchase ledger side. As you can have multiple users using the system at the same time information can be updated from different users. Sales invoices can be raised within the system and sent directly therefore not needing to be processed twice and the bank reconciliation can be split with different people reconciling different lines but also ensuring that all the bank transactions have been dealt with using bank feeds.

Case Study – Switching from desktop sage to Xero

When using sage the client had these particular problems

  • There could only be 2 people using the system at any one time and some tasks could only be performed if there was only 1 user so had to ask the others to log out.
  • 2 sets of records were being kept which was their cashflow system (manual) and the accounting system due to having part time staff with different roles. Therefore this was causing errors in the systems such as duplications or missing invoices as two systems had to be updated
  • If there was a query on an invoice or expense claim then had to hunt for the original paperwork.
  • The bank reconciliation had to be completed in one sitting or know which transactions hadn’t been entered

By switching to Xero they have been able to

  • Have multiple users in the system at any one time and not be limited to 2 and no one has to log out for certain tasks to be completed.
  • Copy of receipts and invoices are now attached to the transaction so no hunting for the original paperwork or a need to store this
  •  If there is a query on a particular bank transaction line this can be left unreconciled within Xero and once the query has an answer then be reconciled.