Paul Bulpitt, head of accounting at Xero, explains the advantages of upgrading to a cloud-based digital accounting package in preparation from HMRC’s digital tax regime
Paul, what’s so great about a cloud-based accounts package?
We did a survey of business owners to find out. One comment really stood out. A director told us, “It’s about stress. My new accounting system has made me less anxious.” Old-fashioned legacy accounts systems are laborious to provide financial snapshots that are six weeks out of date. He didn’t know where he was. With cloud accounting software a lot of the work is automated, and the information is available in real-time. Now this director could log in to his new system at any time of day, from any location, and see his financial position. He found it a great relief. This can be true for businesses of all sizes.
Can companies save time?
Absolutely. It’s so much faster. In our own analysis we found that accountants expect online services to save them at least 117.5 hours – or 15 days – per year. If you’re the sort of person who winds up doing accounting in your spare time, you’ll appreciate the hours it gives you back. But the benefits are more than just time. The biggest gain is the change to your business by having accurate live information at your fingertips. Now you can answer big commercial questions with confidence. Can you afford to expand to a new territory? Is your cash-flow strong enough to hire new staff? When you have the right numbers, you can make better business decisions.
Xero is more than an accounts package. It’s a platform for running your business in the most efficient way possible
What about putting numbers in the cloud. How does that help?
It’s a huge plus. Not only is the data automatically backed up, cloud systems change the way you work. Data is opened up to other team members. Gone are the days when the finance team kept the data on an Excel sheet on their PC. Anyone with a log in can participate in planning. The director I just mentioned also said he’d improved engagement levels with his top team, as they all had access to the finance. They could all be consulted and included. It made a huge difference to his company.
Data analytics is a growing part of business. How can advanced accounting software help?
It transforms your capabilities. With an old system you would get static numbers. Now you can drill down and get the story behind the data. You can understand how revenue is generated, break down costs over time, and see what activities are contributing to the top line. Your understanding of your enterprise soars. Second, you have dashboards displaying vital metrics such as cash flow and revenue. Xero reports make this easy. And you can export the data easily into reporting products like Futrli or Fluidly. If you have a retail business, you can match revenue with footfall. If you are an online business, you can introduce Google Analytics.
Why are some businesses reticent to move to a cloud accounting system?
I wouldn’t say they are “reticent”. During our research we asked why companies still use old-fashioned legacy systems. The most common response was that they didn’t know anything better was out there. If you’ve spent the last ten years building your business, you are unlikely to be up-to-date with accounting software. You’ve got better things to focus on, like growing your business. It’s a lack of time and knowledge that keeps people trapped using a legacy system.
Is it hard to migrate to Xero?
My advice is that it will go smoothly, so long as you plan carefully. But the feedback we get from CFOs is that it’s as easy as it could be. Xero offers a free data conversion service from existing platforms and accounting packages. So getting the data across is straightforward. Then there is training and configuration. Xero’s support is second to none. And there is an awful lot of education online, including videos and webinars. There is ten years of accumulated support. I have yet to find a question not yet answered online. Furthermore, Xero can co-exist with your old system, if you want. You make the transition slowly, over the year. There’s no sudden switch from one to the other.
Accountants expect online services to save them at least 117.5 hours – or 15 days – per year
What is the Xero App Marketplace?
Xero offers users the ability to download and use more than 700 business apps which all integrate with our platform. It’s like with an iPhone. The product comes alive when you download apps, and no two users have exactly the same needs. It’s the same with Xero. You can automate expenses with Receipt Bank, collect direct debits from customers with GoCardless, or run your online business with Shopify. The apps dovetail brilliantly with Xero, making it incredibly easy to run and grow your business.
Why should businesses choose Xero over rivals?
Born in the cloud, Xero is a beautiful, easy-to-use platform for small businesses and their advisors. The company has over 1.6 million subscribers in over 180 countries, with more than 355,000 of those in the UK. Our mission is to rewire the global economy, connecting millions of businesses to their advisors, banks and each other. We are a global platform, so we can help you grow overseas. Frankly, there aren’t many rivals who can offer that. Our system is the most intuitive. The App Marketplace sets Xero apart, helping companies automate and streamline many business functions. If you run a farm, there are dedicated tools to help you. Electronic point of sale systems integrate easily. Xero is more than an accounts package. It’s a platform for running your business in the most efficient way possible. Switching to a new accounts system to prepare for HMRC’s digital tax regime is just the catalyst to something so much bigger and more exciting.