Effective financial management is crucial for the success of a small business or startup. As an entrepreneur, you are likely aware of this fact. To be better equipped to handle the unpredictable nature of running a business, it’s important to manage your finances wisely. One valuable tool that can aid in this process is cloud accounting software.
In this article, we will explore the advantages of utilizing cloud accounting software for your business and highlight Xero as one of the top options available currently.
Could you explain what the Xero Accounting Software is?
Xero is a cloud-based accounting software tailored to meet the specific requirements of small businesses. It was introduced in 2006 and enables businesses to promptly access their financial status. With Xero, you can oversee your entire accounting process as a business proprietor.
From fundamental bookkeeping to receiving online payments, settling bills, electronically submitting VAT returns, and even automating your accounting, Xero simplifies financial management and promotes the smooth operation of a thriving business.
What are the reasons for utilizing Xero Accounting Software?
Xero is a highly popular cloud-based software solution, owing to its user-friendly interface and versatility, and has experienced rapid growth. It offers a wide range of features and integrations, making it suitable for various business types and sectors.
According to numerous reviews on Capterra, 96% of users had a positive experience with Xero’s user interface, and 95% praised its ease of use, resulting in being named a “Top Performer” in 2021. Xero’s accounting software is designed to enhance the performance of small businesses and assist in their growth.
Their online accounting platform offers a comprehensive business foundation, connecting businesses with their banks, payment services, accountants, and over 700 third-party applications. Xero can also be tailored to meet the specific requirements of your business.
What are the benefits of utilizing Xero for online accounting?
Employing Xero for your small business is a wise decision, as the software can be customized to meet your specific requirements. The ensuing are seven crucial advantages that your business can enjoy by using Xero.
1. Get Payment Faster
Late payments present a significant issue in the UK, with roughly 30% of invoices not being paid within the agreed-upon terms, and 1 in 5 insolvencies being linked to late payments. To prevent cash flow difficulties, it is necessary to implement a sound strategy for managing accounts receivable.
- Digital payments.
Fortunately, Xero can assist you in receiving payments up to twice as fast by linking you to online payment platforms such as Stripe, GoCardless, and other similar services. You can incorporate a “pay now” button into your online invoices and forward the PDFs via email, even tracking when the invoice was opened to streamline the payment tracking process.
By making bill payment simple and convenient, customers are more likely to settle their dues. Incorporating online bill-paying enables clients to click a button and swiftly clear their invoices.
- Automatic Payment Notifications
Lastly, you have the option to automate the follow-up of unpaid invoices by utilizing one of the numerous Xero add-ons, such as Chaser. This useful application enables you to customize your payment reminders and schedule them for optimal times, creating the impression that you are personally sending them.
2. Time Optimization
- Online Document Storage
One major advantage of using Xero is that it is a completely cloud-based software that allows you to store all your documents online, eliminating the need for paper records. This feature alone can save you countless hours of time that would otherwise be spent sorting through boxes and folders of bills, bank statements, invoices, and receipts.
- Automatically retrieve data
Furthermore, by utilizing their Hubdoc application, one can automatically extract data from invoices and receipts. All that is required is to take a photo using your phone or upload a document, and Hubdoc will transform it into usable data. Additionally, it can create a draft transaction by performing the data entry on your behalf.
- Up-to-date reports
Finally, it offers robust reporting functionalities that enable you to obtain a comprehensive summary of your company’s financials. For instance, you can effortlessly generate reports to track accounts payable and cash flow. This feature is extremely useful for entrepreneurs who require quick access to this information.
3. The ability to access from any location and at any time.
Xero is an online accounting software that can be accessed using a computer or mobile phone with internet access, from any location and at any time.
Initially, traditional accounting software had to be installed on your computer, limiting its usage to that computer only, and requiring additional fees to access it from other devices.
If you currently rely on spreadsheets to maintain records, you’re aware that without using collaborative online features or cloud storage, your data will only be accessible from the computer where the file was created. This can constrain accessibility and expose your data to both security and loss risks.
- An application that runs on a mobile device.
The Xero accounting software can be accessed through a mobile app that is compatible with both Android and iOS platforms. Upon subscribing to Xero, users are granted complimentary access to the mobile application, allowing for convenient use of the software without the need for a laptop. This means that individuals can perform accounting tasks from their mobile phone, even while on-the-go, such as when sitting in a car. The accessibility provided by the Xero mobile app makes it incredibly convenient to use.
4. Security of Data
Xero, being a top player in its industry, maintains the highest level of cloud security standards and employs several layers of protection to safeguard your financial and personal data. One such measure includes encrypting all information with bank-grade encryption protocols. Additionally, your data is stored in secure data centers that are continuously monitored every day of the year. Xero implements multiple cloud security measures, and even provides a comprehensive report on the subject.
5. There is no requirement for updates, upgrades, or backups.
- Updates in Real-Time
Cloud-based bookkeeping software offers a significant advantage in that it eliminates the need for manual updates. Keeping software up-to-date has traditionally been a stressful task for business owners, often resulting in delays and a call to IT support only when something goes wrong. However, with online accounting software, updates occur automatically in the background on the company’s servers. Furthermore, a dedicated IT support team ensures the financial platform runs seamlessly at all times without any manual intervention required.
6. Enhance Business Productivity
Cloud accounting has another significant advantage, which is the enhanced business efficiency that most business owners can enjoy. This is primarily attributable to the productivity-boosting features mentioned earlier, but there are other benefits as well.
Envision receiving notifications when there is a sudden fluctuation in your financial position, such as a decrease in cash flow or a sudden surge in expense claims. You can also automate scheduling and payment of suppliers, track mileage on-the-go, and bill projects directly as they progress. All of these features and more are available with Xero.
7. Availability of Financial Information
Xero goes beyond being a mere online accounting software; it can function as the financial core of your entire business, providing you with real-time financial information no matter where you are. If your work involves frequent travel or necessitates regular access to your accounting data, Xero is the ideal solution for you.
The software comes equipped with standard reports such as profit and loss, balance sheet, and VAT reports. Moreover, its functionality can be expanded by integrating it with other online tools such as Fathom or Spotlight. These add-ons allow you to create automated, customized reports that are visually appealing and contain the right KPIs for your business.
- Forecasting with great power.
Xero provides robust forecasting capabilities that allow you to create budgets, forecasts, and plan various business scenarios, even if you lack an accounting background. This feature enables you to easily assess the effects of positive or negative events on your firm’s profitability. For instance, you could use Xero to project a best-case/worst-case scenario for the impact of a successful marketing campaign or temporary closure due to COVID restrictions.
