XU Magazine - Issue 07 - Digital Edition - Preview by XU Magazine

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From market stall to Add-on marketplace FOR ALL

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Welcome Inside this to issue 07 issue... Didn’t we all have a great time at Xerocon London? The XU Magazine team were out in force for our ‘home’ conference. We had a great time meeting so many of you there!

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Issue 07 Co-Founders: David Hassall, Wesley Cornell Managing Editor: Wesley Cornell Copy Editor: Jo Hardman Account Manager: Alex Newson Multimedia: Joel Barnett Subscriptions Manager: Chris Scales International Correspondent (AU/NZ): Jeri Murphy Contributing Writers: Alexis Prenn, Tyler Zeman, Steven Renwick, Kristin Harris, Vipul Sheth, Jeri Murphy, Colin Hewitt, Spofforths Chartered Accountants, Luke Kennedy, Michael White, Peter McCarroll, Steve pipe, Steff Green, Karen Reyburn, Rachel Wattie, Grant Johnson, Lynelle Hills, Ryan O’Donnell, Blaine Bertsch, David Cahill, Nicola Anderson, Peter M. Vessenes, Bethany Walsh, Amy Harris, Chris Petersen, Matt McFedries, Konstantin Bredyuk, Hayley Bradshaw, Jordan MacAvoy, Marta Bright Editorial/News Submissions: If you have any editorial content (news, comment, tutorials etc.) that you would like us to consider for inclusion in the next edition of XU Magazine, please email us at editorial@xumagazine.com Advertising: advertising@xumagazine.com T: +44 (0)116 298 60 80 E: hello@xumagazine.com W: www.xumagazine.com ‘Xero’ is a trademark of Xero Limited (New Zealand). XU Magazine is collaboratively produced by an independent group of Xero users and is not affiliated in any way with Xero. All other trademarks are the property of their respective owners. © XU Magazine Ltd 2014-2016. All rights reserved. No part of this magazine may be used or reproduced without the written permission of the publisher. XU Magazine is published by XU Magazine Ltd (08811842), registered in England and Wales. Registered office: 12 Jordan Street, Liverpool, L1 0BP, United Kingdom. All information contained in this magazine is for information only and is, as far as we are aware, correct at the time of going to press. XU Magazine cannot accept any responsibility for errors or inaccuracies in such information. If you submit unsolicited material to us, you automatically grant XU Magazine a licence to publish your submission in whole or in part in all/any editions of the magazine, including in any physical or digital format, throughout the world. Any material you submit is sent at your risk and, although every care is taken, neither XU Magazine nor its employees, agents or subcontractors shall be liable for loss or damage. The views expressed in XU Magazine are not necessarily the views of XU Magazine Ltd, its editors or its contributors.

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06 / The money is the ratio 08 / How technology is rejecting the time limit excuse 10 / Protecting your business with credit reports

We are excited to hear the latest news from Xero: • • • • • •

717,000 total subscribers 312,000 subscribers in Australia 186,000 subscribers in New Zealand 62,000 subscribers in USA/Canada 133,000 subscribers in UK Total revenue $207.1m

13 / Managing your career in the era of automation 16 / Cover Story - From market stall to Add-on marketplace 20 / Financial reporting - Add-on comparison

In addition to this an office has been opened in Singapore to oversee growth in Asia. The rate of growth is phenomenal! It is great for Xero of course, but also great news for Xero users, to be part of an ever growing community, and for us at XU it is a growing pool of potential contributors and readers. This issue is our biggest yet, and we think it is our best – although we do always think that! We have a number of new contributors in this issue. We love our regular contributors, many of whom have supported us from our earliest days. We really appreciate the way they have shown their belief in our magazine. We like to have new people join us as well, and in this issue we have plenty of both.

20 23 / Better bookkeeping is the key to unlock financial intelligence 26 / Top tips for Xero users 28 / Marketing research tools for best practice 30 / Embracing Xero on the Emerald Isle

Jo Jo Hardman - Editor (jo@xumagazine.com)

30 58

32 / The genius of Xero: it’s all in the Bank Rec 36 / Accountants as heroes

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40 / Working from the ski slopes

84 / Right role for the right user

FEATURED

86 / Happier clients, better cash flow and the future of receivables 90 / Automated approval workflows with Xero and ApprovalMax 92 / 5 things that Xero can make business possible for business owners

94 / Interview with David Tuck, Cofounder of Chaser

97 / How to review a Xero file 44 / How the buyers of accountancy services buy

100 / The cost of poor cash flow 103 / 5 financial reports your business needs now

44 48 / 5 ways saaS solutions are revolutionising business 50 / How to get found online 7 essentials of SEO 52 / Have you got a CIS headache?

56 / For the love of taxes 58 / The new competitive edge for accountants 60 / Which key performance indicators should my clients be using? 62 / Xero as your Fin Tech foundation 67 / How risk management takes you to the next level

69 / Best practices for recognising employee expenses on an accrual basis 72 / The 3 most shocking things we have heard accountants advise when it comes to cash flow 74 / Rethinking asset management 79 / Why accountants are failing to engage with business owners 82 / Q&A with Paul Bulpitt We want to hear from you! Get in touch - email: hello@xumagazine.com

103 Follow us on Twitter: @xumagazine

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The money is in the ratio Words: Alexis Prenn, CEO, Receipt Bank. Alexis founded Receipt Bank with Michael Wood in London 5 years ago. The company has grown to have offices in London, Sydney and Washington DC. For many thousand of bookkeepers and accountants worldwide seeking to improve their productivity, profitability and client experience Receipt Bank has become an essential partner in helping them to achieve this. Alexis started his career selling rock guitar loudspeakers to music shops around North America. 11 years ago he was a founding partner in Triple Point LLP which grew rapidly to become one of the largest specialist investment businesses in London. He is a Director of Triple Point TP10 VCT plc. Previously he was a lead investor into Sinclair Pharmaceuticals which subsequently listed on the London Stock Exchange. @ReceiptBank

Bookkeeping should be a very profitable business... Currently for many people it is not. It is rather difficult to differentiate between good bookkeeping (which is worth paying more for) and bad bookkeeping (which is worthless). Cost is the primary way most people judge bookkeeping services and - as bookkeeping has historically involved lots of data entry - the price has often largely been determined by the amount of staff time required to complete the task. As this task usually took everyone roughly the same amount of time, competitive pricing could only be achieved by simply charging less, thereby reducing your profit margin.

Increased profit will be the reward for what we achieve.

Receipt Bank offers accounting and bookkeeping firms the tools to change this. The tools we have developed radically change what one bookkeeper can achieve in a day, a week, a month. These tools boost productivity by 3, 4, 5 times, by making the bookkeeping process effortless and, in many cases, 6 / Issue 07

intuitive and automated. So, if a bookkeeper is typically looking after 10-15 clients, using the tools we have designed can quickly and drastically improve this ratio to at least 1:50. What follows is how I personally would implement Receipt Bank to achieve enhanced productivity in a practice of my own. This isnâ&#x20AC;&#x2122;t the right way, merely a possible way. I would emphasis that I cannot imagine truly making the most of such a project without first fully understanding the ratios and metrics. How these numbers continue to track as the firm gets more and more efficient is crucial. They are, after all, the measurement of how successful we are. Increased profit will be the reward for what we achieve. So, where to begin? Perhaps something like this: 1.

Make sure that you have started to bill and collect your standard fees on a monthly recurring basis. The lower

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delivery costs and extra margins are going to go straight into your pocket. 2. Make sure that you are tracking the monthly bookkeeping revenue in your accounts. We need to know the total per month. 3. Make sure that you know how many clients you are providing monthly bookkeeping services to. This is often harder than it sounds. Hey presto! Now we can calculate the average revenue per client, per month. 4. Next, make sure you know how many people are involved in doing bookkeeping for these clients (whether full or part time). You will need to add up the part time components to reach the total number of “whole” people (full time equivalents or ‘FTE’). At this stage, also total the monthly cost of each bookkeeper.

or cost Now, assuming a cost per bookkeeper of £3,000 per month, we are making a profit of £5,000. A good start, but not quite good enough. If the ratio should be 3 times your direct bookkeeper cost, (1/3 for the direct cost, 1/3 for the overheads and 1/3 for the profit) the goal is in fact £9,000 revenue per bookkeeper. Our target ratio is therefore 1:23. But how do we achieve this? 1.

2. Now we know 3 useful things: The total number of clients per bookkeeper (or FTE). 2. The average revenue per bookkeeper (by dividing the total revenue by the total number of bookkeepers). 3. The average production cost per client (by dividing the total staff cost by the number of clients). This is particularly useful because, as a rule of thumb, our average revenue per client should be 3 times our direct cost.

At this stage we are really ready to get going. For me, the key productivity metric is the bookkeeper to client ratio. Moving the average revenue per client requires different pricing, not more productivity. If we double this ratio from, say 1:10 to 1:20, our firm can receive twice the revenue on the exact same cost base. Assuming an average £400 per month for client bookkeeping, with the old ratio we make £4,000 per bookkeeper. We are now generating £8,000 - with no extra effort

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who do not play the game.

Keep pushing the client number. Keep looking for process improvements. Then, push the client number some more. Points to consider: Don’t worry about timesheets. The ratios will be much quicker and easier to manage than timesheets.

The cost per client ratio is a magic number.

Consider incentivising each bookkeeper based on the revenue of the pool of clients that they manage. In essence, share the profitability. Train the bookkeeping team in the use of Receipt Bank in conjunction with an integrated cloud accounting product. Train one bookkeeper to be the ‘ninja’. The ninja is the person who can be made responsible for the most clients, and therefore begin to act as the benchmark. Transfer clients to the ninja, to max their load and demonstrate what can be achieved. If it can be done once it can be done again and again. It is much more difficult to simultaneously train 4 people to excellence than it is to train 1. Regularly transfer clients to the ninja to keep pushing the possible limits, or inertia will set in. Continue to transfer clients until the wheels begin to squeak. Ensure that all clients are submitting their invoices and receipts in a complete and timely fashion. It is also worthwhile incentivising the clients, to further encourage this. They now have access to real time information and modestly reduced costs (as a bonus, this will also encourage client referrals). An alternative worth considering is a strategy that penalises those clients

Don’t worry too much about time-consuming clients. At this stage, we are more interested in the average.

The cost per client ratio is a magic number. Multiply it by 3 to get a sensible base price for charging new clients. The ultimate goal is to make this operation so efficient that clients who ‘do their own bookkeeping’ will find your cost and service irresistible - another source of new revenues. So, now that we are more efficient, what do we do? We have newfound capacity. We are generating more and more profit. We now have free time to do, well, other things... I would urge you to think about how these resources can be used to improve your client experience. It is always important to be price competitive, but the real way forward is to use the extra time, money and margin to shape a client experience that is distinctive, and infinitely better than the alternative. One last thing... Productivity never ends. There are always areas for analysis and improvement. If we can get to 1:50, we can get to 1:100. It just means that we don’t spend 3 hours per client per month - we spend 1.5 hours.

Make your cash with Satago, your all-in-one I struggled withﬂow late-paying customers. All my cashﬂow soluuon. Spend less me chasing customers business needed was an add-on to help me get with our automated invoice reminder system. paid faster. Try invoice reminders satago.com Then I found debtor at chasing from

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Complete Cashﬂow Conﬁdence

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Words: Tyler Zeman, Product Marketing Manager, Infusionsoft A lover of products, services and technology, Tyler has a background in corporate banking and CRM operations management that led to his role as Product Marketing Manager for Infusionsoft. He believes entrepreneurs are job creators, problem solvers, innovators and the backbone of the economy. His role allows him to leverage both his expertise and creativity to work towards reducing the default future of small business owners. Tyler lives in Arizona with his wife, dog and son. He and his wife are co-founders of Konsider It Done wedding planning. He enjoys cycling, traveling and cooking during his free time. @Infusionsoft

How technology is rejecting the time-limit excuse I see too often business owners stressing for more time in the day. They are consumed with endless responsibilities to just keep their business afloat, so it’s no surprise they are working in the business, rather than on the business. However, technology today is radically changing the way entrepreneurs could and should work. The not-so-secret solution: Automation technology Running a business can sometimes feel like shoveling snow during a blizzard – as one task is completed, another dozen pile up. People have been searching for time-saving solutions for decades, if not centuries. Yet, within the past decade, there has been an explosion of technology solutions designed to make people’s lives easier. The spectrum is growing, from the simple apps on your smartphone to the more robust software platforms designed to run your business. One of the fastestgrowing solutions I see business owners turning to is automation technology. Automation has become the golden rule 8 / Issue 07

for business efficiency. Why? Because automation technology can eliminate (or greatly reduce) tedious and timeconsuming functions of the business. It’s a game changer. Take for example the accounting firm, Kahuna Accounting. The virtual bookkeeping and accounting support services team has more than 200 clients and just under 20 employees. As their business grew so did their to-do list which made maintaining Kahuna’s high standards of client service more challenging. The requests kept coming in, the team kept growing and the day-to-day tasks just piled up. Like most companies, the growth they desired was also

inadvertently hurting their business. “Our sales team had to craft and send personalized emails to multiple leads a day, make reminders to follow-up with each individual, customize engagement agreements, and coordinate calls and meetings with the accounting staff,” said Andy Peterson, director of business development at Kahuna Accounting. “It was simply too much to keep track of and there wasn’t enough time in the day to get it all done.” After months of trial and error using several free or inexpensive solutions, the team was still struggling to find the right technology for their business.

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UK Focus

Protecting your business with credit reports What would be the impact on your business if one of your customers got in to financial difficulties? Steven Renwick introduces Satago Credit - credit reports integrated with your Xero account. •

You might not realise it - but you are probably one of the biggest sources of finance for your customers.

• ‘What?’ I hear you say, ‘I haven’t loaned any money to my customers!’. Well, hopefully not, but in fact ‘Trade Credit’ - supplying goods or services to your customers and then waiting for payment - is actually a bigger source of finance to businesses than all bank lending to small businesses combined. Go check the Accounts Receivable section of your Xero account - that’s how much finance you are, in effect, providing your clients right now. What would happen if one of those customers failed right now whilst they owe you money? It probably wouldn’t be good. That’s why Satago provides credit reports (Currently UK credit reports only) integrated with your Xero account to make checking the financial health of you new and existing customers really straightforward.

Payment performance Does this company have a history of paying its suppliers on time? Legal proceedings Does the company have a track record of being taken to court for non-payment, or do they have any other pending legal issues?

Credit reports combine this crucial data to give you two important metrics - an overall ‘credit score’, where a high score means a low risk company (and vice versa) and a recommended credit limit - which is the recommended maximum amount of trade credit you should give a customer. Credit reports are a relatively cheap investment, given how important the information they give you is. However, they have had a reputation for being rather… ugly and badly designed and difficult to read. As with the rest of Satago, we have done our best to make our credit reports as easy to read, user friendly and aesthetically pleasing as possible (figure 1).

Credit reports are a relatively cheap investment.

What are credit reports? A credit report gives you one concise report of a company’s financial health, along with other important information that can help you judge whether they are a credit risk or not. The sort of information they show includes: •

Financial performance How big is this customer, and are they a growing company that can support that big order they have given you?

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The fallacy of familiarity Whilst most small businesses owners know that they need to check a credit report before taking on a new business customer, many of them fall in to the trap of failing to regularly check existing customers. It’s understandable - you’ve dealt with this customer for years, you know them personally now - why would you need to check their credit report? Well, changes

Words: Steven Renwick, Founder & CEO, Satago Steven is the Founder & CEO of Satago (satago. com), clever credit control software that helps businesses get paid faster. He started Satago after experiencing the problem of latepaying customers in his family business in the construction sector and deciding to build something to help tackle the problem. Satago automates the process of chasing customers for payment through automated statements, escalating email reminders and posted payment demand letters. Satago recently partnered with Experian to make integrated credit risk data easily accessible to Xero users. @SatagoHQ

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Figure 1

UK Focus

to financial health can come suddenly and unexpectedly to even the most familiar of businesses. Maybe there was a recent legal proceeding for non-payment, or perhaps their last filed accounts did not look too healthy. Would your customers tell you upfront if that were the case? Unlikely. Such negative events will be reflected in your customer’s credit score. You can’t be expected to just keep checking your customers’ credit scores, so we’ve made it really easy (and free!) to monitor your customers’ overall credit scores by integrating the data with your Xero account. The best place to see this is in the ‘AR Risk’ report - which shows the overall risk

profile of your outstanding invoices (figure 2). We actually show you in Satago the value of outstanding invoices you have in each risk category - so you can quickly and easily see that you have some high-risk current customers. This can be quite an eye-opening moment for many Satago users if you didn’t realise that the customers you have probably dealt with for years, might actually be quite high-risk. Credit limits for safety Credit reports include a recommended maximum Credit Limit that you should give any given customer. It is calculated based on the size of the company and its relative risk level. Basically, you know if

you get British Airways as a new customer it is safe to give them a large amount of credit - as a large, established company you know you will get paid, so you can offer them lots of credit. However, you would not want to give the same amount of credit to a small, medium-risk local company. The difficulty there is that credit limits, like credit scores - change, and you need to keep on top of this, which can be nearly impossible when you have lots of customers and the amount of credit you have given them is changing on a daily basis. Satago makes it really easy to keep on top of this by showing you the total outstanding

Figure 2

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Issue 07 / 11

UK Focus invoices you have to a customer against their credit limit. Any customer where you have exceeded the credit limit is highlighted in red, meaning that you know you should not offer them any more credit until some outstanding invoices have been paid (Figure 3).

Credit limits for growth

to know how much you can sensibly offer. So what should you do? Being forewarned about credit risk means you are forearmed to tackle problems before they arrive - but it means you need be proactive. If you see you have exceeded the credit limit of your customers you should not offer them more credit until they have paid some outstanding invoices.

Credit limits aren’t just a way of avoiding risk.

Credit limits aren’t just a way of avoiding risk though - they can actually be used as a tool for growth. Knowing how much credit you can comfortably offer a new customer might give you the edge in a competitive tender for a new project. Whereas competitors might insist on more payment upfront, offering credit to a customer can be a way to win new business. The trick is

If you are disciplined with your credit limits you can use them to get paid faster - explain to your customer that you have a strict credit policy, and you cannot give them more credit until they have paid some outstanding invoices.

And what if your Satago AR Risk report shows you that you have an overall high-risk sales ledger? Well clearly that is a business decision, and it may be the nature of your industry sector, but there are some steps you should maybe take to mitigate the risk. These include building up sufficient cash reserves to handle the event that some of your customers should fail at the same time or taking out a credit insurance policy, that will cover bad debts if you customers default or enter insolvency. With the data being so easily accessible via integration with your Xero account, there really is no excuse not to be ‘credit risk savvy’ - it’s a simple step that can avoid a lot of pain later on - and Satago makes the basics completely free, so there is no excuse not to!

Figure 3

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Managing your career in the era of automation The fastest thinker in many modern workplaces is faceless, but because it is only artificially intelligent, it needs smart people to manage it. Or does it? The rise of artificial intelligence is a positive or negative story depending on how much of your work can be automated – and what you can do with any extra time you gain. Experts on artificial intelligence generally agree that nearly half of the current jobs employing people could be fully automated. Two academics at Oxford University, Michael Osborne and Carl Frey, noted in their 2013 report ‘The Future of Employment’ that computers could replace 47% of the US workforce, commandeering roles as diverse as mail delivery, truck driving, construction work and even senior management.

It’s worth upskilling as soon as possible.

Moshe Vardi, professor of Computer Science at Rice University, TX, claims that machines could put half the world’s working population out of a job in the next 30 years and warns: “We are approaching a time when machines will be able to outperform humans at almost any task….if machines are capable of doing almost any work humans can do, what will humans do?”

Words: Kristin Harris, General Manager, Deputy. Kristin is the General Manager of Deputy. She has been with Deputy since 2008 and is part of the company’s founding team, later becoming General Manager in 2014. Deputy is a workforce management solution that simplifies rostering, time & attendance, performance management and team communication. @deputyapp

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Which jobs will be fully automated?

Any job that is routine, process-driven and rules-based will become increasingly automated in the near future. Therefore, it’s worth upskilling as soon as possible. Boston Consulting Group and Bank of America list the following jobs as most likely to be automated in the near future: • • • • • • • • • • • •

Taxi drivers Factory workers News journalists GPs Cocktail waiters Models Sports umpires Paralegals Telemarketers Fishermen Bakers Fast food cooks

What is the point of automation? So why automate at all? Here are four simple goals: 1.

The things that make a task tedious can also make it easier to automate. This is because the more repetitive, rulesbased and predictable a task, the fewer variables need to be built into a machine’s movement, routine or programming so it can perform accurately and frequently.

but little credit. Even in our daily routines, we perform feats of perception and skill that lie beyond the capacity of the sharpest computers… Computers are wonderful at following instructions, but they’re terrible at improvisation. Their talents end at the limits of their programming.”

Yet we also want to automate tasks that are mostly routine but have huge numbers of variables, precisely because they’re time consuming for us.

Being present for other humans can be incredibly important

Freeing up humans so they can focus on higher-value work is the main reason Deputy exists, though of course we also work hard to help businesses address the other three goals.

Every person who deals with customers is likely self-aware about how their attitude and attention can influence an interaction. Similarly, people who make a living being creative know how much their mood and focus can influence the appeal of their work.

A brighter future Fortunately, plenty of bright minds can foresee a positive future – provided we use more of the talents that make us human. Researchers at global business strategy firm McKinsey recently stated that fewer than 5 per cent of occupations can be entirely automated using current technology. The researchers also note that computers are incapable of intuition, sudden bursts of brilliance that deliver a creative solution or really relating to people,.

The things that make a task tedious can also make it easier to automate.

Speed up common tasks to lift productivity – get a lot more done with existing resources 2. Reduce mistakes or errors – ideally improve quality of output too 3. Improve safety for humans (including workers, customers, general public) 4. Free up humans so they can focus on higher-value work – how much more creative or customer-focused can you be when you outsource record keeping, time tracking and other simple tasks?

Tech and culture author Nicholas Carr, explained in a recent essay for the New York Times: “Pilots, physicians and other professionals routinely navigate unexpected dangers with great aplomb

Sure, there are plenty of machines that can serve you an answer, drink or meal, but they can’t charm you while doing it. Or solve a life puzzle for you. Or say something that will make your day. Automation should free up time so we can focus on higher-value work Work that has a higher value might be more complex to execute and demand different ways of thinking. So it makes sense to get smart technologies to do some of your work for you. Better yet, if you can streamline less interesting tasks, you should have more time to think creatively; to relate; to go the extra mile for your fellow human beings. And yes, more time to positively surprise your fellow human beings with brilliant ideas and experiences.

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Issue 07 / 15

Cover Story

16 / Issue 07

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Cover Story

From market stall to Add-on marketplace Words: Vipul Sheth, Founder and MD, AdvanceTrack Outsourcing Vipul is a UK based ICAEW Chartered Accountant and Chartered Tax Advisor. Vipul trained with a regional UK firm before moving to Ernst & Young and KPMG. Vipul is Founder and Managing Director of AdvanceTrack Outsourcing, a UK Headquartered Accountancy Outsourcing Company with operational centres in India, delivering services around the globe. AdvanceTrack is an ICAEW Member Firm audited by BSI in the UK for ISO9001 (Quality Management) and ISO27001:2013 (Information Security Management). advancetrack.com @advancetrack

XU Magazine talked with Vipul Sheth of AdvanceTrack Outsourcing to find out how he started out with the business and where he is aiming to go with it... When we set the business up, we had a purpose. We revisited our own ‘Why’ after attending a Panalitix event recently and Paul Dunn asked if the delegates understood ‘Why’ they do what they do. Our purpose is to transform accountant’s lives by creating the time to do what they do best. Accountants getting involved in helping clients’ businesses grow and flourish. Some people ask me why I set this business up as opposed to something else, like being a partner in a firm for example. I think of why I became a Chartered Accountant. It was due to the influence of David, a Chartered Accountant who looked after my parents’ business.

The need for a good accountant has never been greater.

My parents started out on a market stall on cold, wet and windy airfields. This included us kids standing outside freezing on the stall too.

doing work at the wrong level. This meant that not only were they not as profitable as they should be but also failing to serve their clients as they should. The business idea was to harness these talented accountants in India. Using these highly educated and hard-working staff can create the time accountants needed to do more for their clients. Finance and accounting has grown more complex over time, so the need for a good accountant has never been greater. When the business was set up in 2003 (following a year or more of planning), the initial analysis of the marketplace was that incumbent providers were largely selling wage arbitrage. The problem with this was that the shelf life of the business was based on the chosen location staying ‘cheap’. Therefore, a professional approach with good people and technology was essential. This also needed Quality and Security at the heart of it. What services do AdvanceTrack provide?

Growing up, I saw first-hand, the good advice he was able to give them and help them navigate that journey to run a growing business which became wellestablished over time. I jest, but it is true that the quality of my holidays got better because of David’s influence. A good Accountant is invaluable to any growing business.

Historically, the company has provided annual compliance services, such as preparing accounts and tax returns, freeing the accountants’ time from the mundane day-to-day compliance work. They will still be there, but as cloud increases adoption around the world, this will increasingly take centre stage. Cloud Technology

How does that translate into the values of AdvanceTrack today? We identified that accountancy firms were We want to hear from you! Get in touch - email: hello@xumagazine.com

We have explained briefly how AdvanceTrack is a compliance business.

Issue 07 / 17

Cover Story ‘Surely the introduction of technology such as cloud would result in the end of your business?’

That was the opinion of one of my former bosses. To protect the innocent, I won’t be naming and shaming. Suffice to say, my answer was that the technology would enable more work to be sent to us and not less. We believe Cloud technology is key to accountants delivering more value to their clients. Accounting software designed for cloud is very different to products designed for desktop. That isn’t just in the way they present information. Products like Xero have been designed to allow other software to integrate directly into their ecosystem. These Add-on products allow businesses to run their finances more efficiently, but also their business. There are some industry specific products and some that allow quicker data entry products too. What opportunities does that bring for accountants in the future? Accountants didn’t have access to live financial data in the past. The possibility of that happening is greater by the day. The question is though, how good are your clients at keeping their books in good order? Some are undoubtedly good, but very many perhaps not so. So how can an accountant in 2016 and beyond give the advice that the client values, with the benefit of cloud technology? Cloud Bookkeeping Accountants can provide bookkeeping services. Historically, given the cost structure of an accountancy firm, this has not been cost-effective as it was difficult with desktop software. An alternative has been to use external bookkeepers. However, these can be difficult to manage and it is not always possible to scale the service when using multiple external bookkeepers in multiple locations. In the same way in-house staff can 18 / Issue 07

process bookkeeping work using Xero, this same technology, using Add-ons like Receipt Bank, enables bookkeeping to be outsourced, freeing up in-house staff, usually at lower cost. AdvanceTrack offer a fully managed outsourced bookkeeping service, delivered using technology to manage the whole service. With up-to-date information, accountants can deliver greater value. Cloud accounting like Xero enables more tools to plug in to the financials to give a greater range of information by which the business can be run. Xero has around 500 Add-ons. Many will add value to either the process or particular niche businesses. There are so many, I could never attempt to do justice in the space here. I suggest that, by exploiting the benefits of cloud technology, there are four services we could offer as a matter of course: 1.

biggest driver for business to adopt Cloud Solutions like Xero. Clients will also value this more if it delivers genuine business benefits. But how can accountants deliver a better, more personal service to their clients and stay competitive? If we have to become mentors, advocates and professional friends, and if simply doing the book-keeping and the tax returns won’t be enough in a few years’ time, accountants must adopt a new approach. The cloud, combined with outsourcing, can help accountancy firms deliver better service and value and provide more interesting work for staff: Why use Outsourcing?

The challenges will become greater for accountants. The opportunities however have never been greater.

Strategic Business Advice More successful entrepreneurs understand they need good advice to maintain their business and financial position. 2. Business Coaching Many fast-growing enterprises don’t have the professional skills present in an accounting firm. A business mentor within a professional firm can help put the business on a firmer financial footing. 3. Corporate Finance The Top 10 global accountancy firms have entered the SME market using cloud products including Xero . The biggest benefit they see is their ability to deliver Corporate Finance services as these businesses require funding to grow. Other firms have a real opportunity to provide these services with partner-led solutions and a higher level of personal involvement than global firms provide. 4. Technology Consulting With around 500 Xero Add-ons, understanding the Add-on market will help deliver better business efficiencies to the client. This is the

Professional outsourcing helps accountants deliver more of the value-added services by relieving them of the routine work.

It frees highly-skilled local staff to deliver more of the work that clients value and expect to be delivered by their advisors. A full cloud strategy can be delivered fairly quickly if the accountancy firm works in partnership with a well-resourced outsourcer with a well-trained workforce. Our experience shows that accountancy firms adopting outsourcing with technology manage a much larger portfolio than those just in-house. This means more profitable firms with a wider range of experience to staff. Firms can therefore expand itheir client base without increasing headcount. Adopting technology and outsourcing with professional providers helps standardise the process of preparing compliance files. Successful outsourcing leads to a more systemised approach. An example of technology used to standardise working papers is Xero Workpapers.

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Cover Story

The Future Challenges for accountants The challenges will become greater for accountants. The opportunities however have never been greater. The low-cost challengers There will be some businesses, much like our own, based in a lower cost economy delivering direct to market. Surprisingly, many in this space do already go direct. AdvanceTrack’s purpose has never been to serve the SME market direct. It goes against our ethical way of doing business. Our business has grown from the accountancy market. Why would we today act against the very people who put us where we are?

My message to the profession is that the cloud has happened. It has changed the way clients manage their business finances forever. It will not go back in time. Clients’ expectations are also rising.

Your clients may be crying when you retire early. Now isn’t that a thought?

The key to the future is ensuring the relevance of your firm to your client base. Why are Quality and Security so important? Professional firms have high standards. Whilst cost-savings might be important, they don’t want the savings lost through poor quality work. As an ICAEW Member Firm, our ethos has always had quality at the centre.

Self-Service Some SME’s will use technology themselves, rather than pay a professional to look after their affairs. The challenge to the profession is in demonstrating that their role is more than compliance. Compliance is an essential tool to deliver the ongoing advice that businesses seek and need to grow and prosper. The opportunities Governments around the world are moving to digital accounting and quarterly accounting. Accountants with clients using desktop software will find it harder and more expensive to provide support to desktop clients. If they can’t pass the full cost on to the client, their profits will undoubtedly suffer. Firms adopting cloud are likely to be at a great advantage as they will be able to keep their clients compliant with local legislation, whilst delivering cost-effective profitable solutions.

In addition, we have taken steps to demonstrate that. This is reflected in the fact that we are not only one of the first outsourcers in the world, but one of the first companies in the world to hold the ISO9001:2015 Quality Certification. AdvanceTrack are now one of the only companies around the world to hold both ISO9001:2015 and ISO27001:2013(Information Security), the latest International standards for Quality Management and Information Security. In the new cloud enabled world, the ability to access financial information has no borders, so secure management of information is essential. That is one part of a complex process, and it is those outsourcing providers that can demonstrate strong protocols that firms will choose to work with.

Why? Because the moment I think I have done it, someone just like me will be waiting in the wings.

Our technology teams will continue to push forward the technology we deploy in the business to improve what we do for our clients. Cloud Technology will undoubtedly be at the heart of AdvanceTrack and time will tell who the winners are. Xero will certainly be one of the largest providers of accounting and business software to businesses globally. At the start of our journey, in 2003, we always believed we’d be a global provider to the profession. Today, the excitement in growing the team and the business is only usurped by the fact that our accountancy client firms are delivering better outcomes due to our team’s efforts. As an extension of your firm, AdvanceTrack want you wow more clients and make the lives of the professional staff in your office more enjoyable and rewarding. The chartered accountant I talked of, David; who inspired me to become a chartered accountant retired early. From memory he retired at 55. I always say that that the only time my mother cried about an accountant leaving (other than her own kids of course) is when David retired. He had seen them through the toughest challenges and he was no longer there to help them on their journey. A good accountant can transform clients’ lives.

What is the future for AdvanceTrack? I still run AdvanceTrack as a start-up.

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Your clients may be crying when you retire early. Now isn’t that a thought?

Issue 07 / 19

Add-ons Compared

Financial Reporting Are you sick of wasting time trying to work out what an Add-on does and doesn’t do compared to the next Add-on? It’s time for time-saving answers! We spend a lot of time researching Addons for our own knowledge and now we are passing it onto you. Check out this comparison of the 5 most well-known reporting Add-ons that connect to Xero to see what they can and can’t do... Fathom

ProfitSee

Spotlight

Float

CrunchBoards

Unlimited Formulas

Drill Down to Account Level Detail

Drill Down to Transaction Level Detail

Consolidate Multiple Companies

Multi-curreny consolidation

Eliminations

Customisable Dashboards

Graphs - Online View

Graphs - Print View

Progress Bars tracking Actual vs Budget

Dashboards per User

ü ü

Core Reporting Functionality

Consolidation Functionality

Dashboards

Budgeting P&L Budget Balance Sheet Budget

Import budgets via CSV/XLS

Imports budget from Xero Budget Manager

Budget vs actual reporting

P&L Forecasting

3-Way Forecasting

What If Scenarios

Actuals automatically update

Set multiple forecasts per account line

Formula builder for custom KPIs

Set and Monitor Key Financial KPIs

ü ü ü

Cash Flow Forecasting

KPI Reporting & Benchmarking

Set and Monitor Non-Financial KPIs

Benchmarking

This information was true and correct at the time of publishing. Releases happen all the time. Please contact the Add-on for the latest release information.

20 / Issue 07

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Add-ons Compared

For more information, please visit: Fathom - fathomhq.com ProfitSee - myprofitsee.com Spotlight Reporting - spotlightreporting.com Float - floatapp.com CrunchBoards - crunchboards.com

Fathom

ProfitSee

Spotlight

Float

CrunchBoards

Quick Start Templates

Create and Save Own Reports / Report Builder

White Labelling - Online View

White Labelling - Print

Divisional Reporting Tracking category analytics

Branding & Customisation

Custom domain

Export Reports as PDF

Export Reports as XLS

Email alerts

SMS alerts

Alerts & Reminders

Xero

Quickbooks Online

Detailed User Rights

Unlimited Users

ü ü

In app alerts

Accounting Integrations

MYOB

User & Permissions

iOS - iPhone and iPad

Android - Google Play

White-labelled client app

Help Centre

Email Support

Client Access View

Mobile App

Support

Phone Support

Compiled by Jeri Murphy, Co-Founder of WhichAddOn.com

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Issue 07 / 21

The Xero Reporting Add-On that provides Advisors with a free mobile app for their Clients

Smart Reporting of your Clients’ Cash Flow and KPIs

• Monitor Clients’ financial performance across 11 intuitive KPI’s • Easy to interpret dashboard shows how cash has been generated and spent • Drilldown screen for each KPI that explains any issues and identifies positive outcomes • Action list highlights opportunities to improve cash flow and reinforces Advisor engagement • SaaS subscription model provides low cost added value service to Clients • Improve cash flow and business performance in real time • White label branding and Free Client portal for Xero Advisors

myown-cfo.com 22 / Issue 07

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Better bookkeeping is the key to unlock financial intelligence

Words: Colin Hewitt, CEO & Co-Founder, Float Colin is the CEO and cofounder of Float - the award winning cashflow forecasting software for Xero built for business owners. Colin and the Float team are headquartered in Edinburgh, Scotland. Before Float Colin ran a digital agency. @FloatApp

As we approach the dawn of the self-driving car, the hoverboard and having our very own C3PO to do our ironing, why is it that getting a clear picture of our future cash flow, still for many, feels so out of reach? In her Xerocon London address earlier in the year, Dale Murray, CBE, said clearly that “understanding cashflow is everything”. So as someone who’s been deeply involved with looking at this area over the past 6 years, I’d like to dive a little deeper into the reasons that we’ve come across as to why so many businesses are still struggling to get a handle on really understanding their numbers.

Managing cash is notoriously tricky.

Managing cash is notoriously tricky, because it’s never just simply: bank balance, plus invoices minus bills. There are so many other items waiting to come We want to hear from you! Get in touch - email: hello@xumagazine.com

into or out of the bank account at any time don’t factor in that equation. Multiple bank accounts, multiple currencies, and of course budgets and sales forecasts that are often speculative. As the business grows and more people are responsible for spending these different budgets, it gets increasingly difficult to predict whether budgets will be fully spent, and whether sales targets will be hit. Not to mention whether clients will pay on time, pay at all, or pay in instalments etc. It’s a tough gig being responsible and trying to manage cash in the business at any level of detail. However, I believe that it is possible, with the right systems

Issue 07 / 23

in place, and it’s been our quest to fix this for business owners since we started Float in 2010. We thought it would take a few months to replicate a spreadsheet that updated budgets with actuals, and six years in we’re still only scratching the surface of realising our vision for the product and where we’d like it to be. That said, having been in the game for a few years there are a few things that we’ve learned that need to happen as part of the bigger picture in moving towards business having the kind of financial systems in place that are really going to help bring us the kind of cutting edge financial reporting that will become the accepted way of doing things in the future... Here is what I believe needs to change:

just how long we’d been spending on unnecessary manual bookkeeping. Now our bookkeeper and I have one place of reference to store and access all our receipts, it makes both our lives easier. Having this integrated to Xero means that in many cases monthly recurring bills are sent in automatically without needing any data entry, they just get checked and approved.

We can’t use out of date figures.

Bookkeeping needs to become automated. 2. Bank reconciliation needs to be done daily or weekly rather than monthly or (gasp) quarterly. 3. Budgets need to be set and collaborated on a rolling monthly basis. Bookkeeping becoming automated This is now table stakes for any company wanting to move towards financial intelligence. Having someone manually entering in bills and receipts to Xero, attaching the files, or worse storing them physically, is no longer needed for the majority of businesses. Having a system like Receipt Bank, Hubdoc or Datamolino really is a no-brainer if you want to grow and scale your business. Once we set this up in our company, it became apparent

Bank Reconciliation becomes daily or weekly

At Xerocon this year, I was really surprised by the number of accountants we met who were doing monthly or quarterly bank reconciliation. There are a lot of great reporting tools and add-ons in the Xero ecosystem, but with data that is 30 days out of date, most reports are just not going to give you the real-time, decision making insight you need. This seems to date back to the time when management reports took a long time and a lot of work to pull together. Now if the data is reconciled you can have an upto-date management report in a few simple clicks. Our bookkeeper reconciles our bank twice a week. We can’t use out of date figures. We need to see how our budgets are tracking, and know if there are any surprises or unexpected issues.

Budgets need to be set on a rolling monthly basis We find that in our business we’re constantly evaluating our goals, and priorities. We set budgets to allow us to hit those goals. The goals might change, and therefore the budgets need to change too. If you’re not able to access a rolling budget, with up-to-date information, cash flow planning becomes really difficult. There is no point in finding out at the end of the year that you’ve got extra cash in the pot that could have been better spent on doubling your marketing in one area, or taking on another member of staff to fulfil an important need. The tools are out there for building a great enterprise-level software stack for your business for much less than you would have had to pay even 5 years ago. But without putting the bookkeeping systems in place to make use of them now, you’ll not be able to take full advantage of the real power and knowledge that’s now within reach.

...watch out for the hoverboards when you’re crossing the road.

In short, streamline your bookkeeping, get your bank rec done weekly, use the time that creates to look at live figures that you can use to keep your forecast on track, and watch out for the hoverboards when you’re crossing the road.

It is also a great incentive to chase late payers. The only thing worse than not being paid is not knowing if you’ve been paid or not!

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Expensify has the best app out there, period. Implementing a system that removes data entry and paper saves our clients up to 50% of their time each month. Needless to say, our customers love it and so do we. Blake Oliver Director of Technology at HPC Xero Platinum Partner

Join the thousands of companies around the world that have already transformed their expense reporting process with Expensify and Xero.

Reach out to partners@expensify.com to learn more about Expensifyâ&#x20AC;&#x2122;s top-rated direct Xero integration. We want to hear from you! Get in touch - email: hello@xumagazine.com Follow us on Twitter: @xumagazine Issue 07 / 25

TOP TIPS for Xero users How to tidy your Xero account Compiled by: Spofforths Chartered Accountants (spofforths.co.uk)

This is the perfect time to tidy your Xero account and get everything in order. In this issue there are a few ideas to help you clean-up your accounts, including merging contacts, sending statements, utilising Xero files, dealing with unallocated credit notes and managing bank rules...

Contacts

Have you got a long list of contacts stacking up? Maybe some have been duplicated or are no longer used? It is possible to merge contacts together, combining their transactions and retaining just one contact name. To do this, from the Contacts menu, click All Contacts > select one or more contacts you want to merge into another contact > click Options, then select Merge > in the Merge Contacts box, select a contact (this is the contact that will be retained after the merge) > choose Merge. It is also possible to archive old contacts that are no longer relevant. To do this: go to Contacts > select the contacts you want to archive > click Options, then select Archive > choose Archive. If you start doing business with an archived contact again, you can easily restore the contact from the Archive section under All contacts.

Credit notes

Have you got credit notes that have not yet been allocated to an invoice or bill? These would show up in brackets on either the Aged Receivables or Aged Payables reports, and where possible should be allocated against the relevant invoice or reconciled against a bank statement line if they are cash refunds. To allocate against an invoice: open the credit note > choose Credit Note Options, click Allocate Credit > enter the credit amount against the correct invoice > click Allocate Credit.

26 / Issue 07

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Outstanding invoices

Keep on top of who owes you money. We looked at the Aged Receivables report in our November issue, but now is a great time to review outstanding invoices and send out statements to chase these up. Xero will generate a statement for you showing either the activity over a certain period or just the outstanding invoices. This can then be emailed directly from Xero to the customer or a PDF can be printed. This can be found for a specific contact by clicking into their name within Contacts > choosing Options > Send statements > choose the type of statement and the date(s).

you will need to decide whether they are likely to be paid or not. If not, you should raise a credit note to clear the balance.

Xero files

Are you using Xero files? At your year end e.g. March, a good way to ensure your accountants have access to all necessary documents is to upload them to Xero files. This could include things like dividend paperwork or any purchase invoices for fixed assets that aren’t already uploaded.

This can also be done for multiple contacts by going to Accounts>Sales and choosing Send Statements. If there are any really old outstanding invoices,

Xero files are also a great way to declutter your office. Upload and store any documents you need for easy access anywhere and to save on space by recycling the paper copies. HMRC and other tax authorities accept electronic copies as being equivalent to paper copies.

Outstanding items

It would also be helpful to run a bank reconciliation report from the ‘Manage Account’ drop down menu and check for any old outstanding items such as cheques that haven’t cleared. These should be chased up and either reissued or cancelled.

Got a top tip?

Bank rules

Are you using bank rules? It’s a good time to set up or review any bank rules for when you reconcile your bank accounts. These are really helpful and will save you a lot of time. Bank rules should be set up for reoccurring bank items such as bank interest or direct

debits where a bill is not entered. It is important that the criteria are set up accordingly so the correct transactions are identified. To create bank rules, in the reconcile tab of the bank account select Create rule > enter all relevant information > click Save.

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We want to hear about your top tips and time-saving tricks in Xero. We’ll publish the best ones! Email the Editor at: jo@xumagazine.com

Issue 07 / 27

Marketing research tools for practices “But I failed statistics at school!” When someone mentions ‘marketing research’, my immediate thoughts conjure a scientist in a lab coat drinking Coca Cola whilst reflecting on the new colour of the cans... A little far fetched, but not all that far from the myriad of stereotypes surrounding the area of modern marketing. Fortunately, rather than conducting your own research at the expense of a scientist in a lab, there is a vast amount of free and low-cost market data available to businesses if you know where to look. Whether you are starting or growing a business, marketing research is a valuable tool that keeps you up to date with market trends and allows you to maintain a competitive edge. Market research - the collection and analysis of statistics and customer data - is used to understand the customer buying cycle, enabling businesses to understand potential customers and their needs as well as what competitors are doing, identify innovations and target product and service offerings accordingly. There have been a number of different research tools validated over the years in order to cover the essence of marketing; 5Cs (Customer, Company, Context, Collaborators, Competitors); STP (Segmentation, Targeting, Positioning); 4Ps (Product, Price, Place, Promotion). Popular research techniques that are used across the listed area of Marketing include: 1.

Cluster analysis - used for displaying data in a graphical format to highlight groups marked on a 2 dimensional axis - particularly useful in Segmentation. 2. Focus groups - facilitates concept testing for advertising and the 28 / Issue 07

release of new products. 3. Perceptual mapping - much like the cluster analysis, this enables you to visualise the data you have created for competitive analysis. It is used to evaluate customers’ perceptions of brands within the market. 4. Scanner data - if you are a grocery store, your transactions are mostly completed via the scanner. This provides instant feedback on product performance. 5. Surveys - best designed for assessment on customer satisfaction, such a tool is an advantage in gauging how a customer values a product against the price assigned.

Words: Luke Kennedy, Ocius Digital For Luke, nothing beats relaxing in the sunshine after a hard days work. Keen interests include playing sport, keeping active and expanding knowledge. At Ocius Digital (a Xero preferred cloud integrator working worldwide from Australia), Luke has transformed his knowledge of technology and systems from the scientific industry into the IT business and services industry. @OciusDigital

In the small business world, it’s not all about just tracking existing events, but projecting what ‘could’ eventuate. For instance, wouldn’t it be great if an organisation knew what their customer was thinking, and what they are likely to want or need in the future?

When the word ‘free’ begins a sentence, people initiate two common responses...

Bring on the internet The Internet has presented businesses with a wealth of additional data gathering resources to conduct and source relevant market research. Many businesses deploy web-based tools to let customers make purchases, check purchase records, track shipments and access information about products and product applications. Over time, these customer interactions create an extensive database in which customer profiles and transactions can be analysed.

This is where the online world of information gathering really starts to come into fruition.

Market research tools to be used When the word ‘free’ begins a sentence, people initiate two common responses: ‘That’s for me; I’m all about free’ or ‘What is this actually going to cost me? Nothing is free!’ With that in mind, here are some free online tools available that can come in handy when gathering the information as part of your marketing research. Each online market research tool also offers a suite of priced applications depending on

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

disabled individually.

your requirements.

Google Trends and Google Alerts: Knowing the majority of people who occupy the internet use Google as a search engine, Google trends have captured the data and formatted it into a comprehensive graphical display to make it easier to understand. Estimation of market demand and possible competition can be drawn from this data. In addition, Google Alerts can be configured to notify you when a ‘buzzword’ you are tracking hits the web. 2. LinkedIn: It’s like looking at a giant human resource data base containing a record of members work history, skill set, aspiration and more importantly company hiring/ firing trends. This will aid a current company’s ability to analyse direct competitor growth trends, supplier connections and leadership changes. 3. SimilarWeb: SimilarWeb provides services in market Intelligence, web analytics, data mining and business intelligence. It uses big data technologies to collect, measure, analyse and provide user engagement statistics for websites and mobile apps. The ability to search for a multitude of websites (including your own), enables a company to gauge the comparison of net traffic between yourself and competitors. This data is ideal for benchmarking. 4. Google Analytics: A web analytics service that tracks and reports website traffic, specifying the exact areas of interest and the associated duration, Google Analytics is now the most widely used web analytics service on the Internet. Google Analytics is offered in two additional versions: a subscription based Google Analytics Premium targeted at enterprise users and Google Analytics for Mobile Apps, an SDK that allows gathering usage data from iOs and Android Apps. 5. ShareMetric: ShareMetric is a browser extension that loads social media share counts, link metrics and organic search visibility metrics for the current browser URL. The total sum of share counts for all of the social networks (listed below) are loaded into the icon badge, as well as a drop down menu that displays a full list of metrics. They can be enabled or

Social networks included: • • • • • • • • •

•

Facebook likes, shares, and comments Google +1 count LinkedIn shares Reddit votes StumbleUpon stumbles Pinterest shares Moz Open Site Explorer Link Metrics ahrefs Link Metrics (requires paid subscription to their app) SEMRush organic search visibility (requires paid subscription to their app) Twitter shares (currently deprecated not guaranteed to work)

Now you have the tools

Evidence marketing is an advantageous attribute for your business provided you have access to the concrete data you need to make informed, strategic decisions. The tools at hand let you capture that data at little to no cost from the external environment. There are even more solutions for a low-cost subscription or payment that allow anyone to conduct quality, targeted market research and analysis. Market research is crucial to position a product, service or company product. But rather than invest in a market research department or a scientist in a lab, a little resourcefulness goes a long way towards greater marketing effectiveness. And you don’t have to major in Statistics to make sense of the data.

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Issue 07 / 29

Embracing Xero on the Emerald Isle Words: Michael White, White Accounting

Michael White tells XU Magazine how he started and grew his business in Ireland... My Story I grew up in a small country village in Co. Cork, Ireland. Like most kids, my father was my idol. My father was an accountant, who ran a small practice supporting local sole-traders and small businesses. I idolised him, and I dreamed one day of being like him, having my own business, being my own boss.

With age I grew inquisitive, and a desire to experience new ways of thinking. My journey took me to PwC Dublin, and across to Sydney, Australia. I spent 5 years progressing my career in senior commercial finance roles with Diageo and Foxtel (and a failed attempt to progress a tan at the beach!). Here I discovered what

I loved most about accounting â&#x20AC;&#x201C; the ability to use numbers to deliver actionable insights, partner with non finance people, and together drive business performance. Australia inspires In Sydney, I discovered Xero - It was like a dream! Knowing the pain points so well,

Gripping view of the cliffs of Moher in Ireland

As I grew older, I realised quickly that preparing a set of accounts, was not

as simple as it could be. The anguish endured from a bank reconciliation was not due to reconcilable items, but the frustration of knowing there must be an easier way!

In Sydney, I discovered Xero - It was like a dream!

30 / Issue 07

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

I knew the value of the solution. It excited me. I learnt how Xero had helped change the small business landscape in New Zealand and Australia. It excited me even more! Returning to Ireland in December, setting up a business was the only way to go. Xero inspired the confidence that small business accounting can now be what it should be. It can be scalable, be real time, and support business owners to achieve their plans.

GET 3 MONTHS FREE! Visit winkreports.com/xumag enter code XUWink

UK re-enforces The UK adoption of Xero has also been encouraging. Business trends which start there usually follow suit in Ireland. At Xerocon London this year. I had the opportunity to meet the top Xero certified advisors UK and Ireland. More inspiration gained. This year Xero has overtaken Sage in the UK to rightly become the accounting solution of choice. Change adoption in Ireland Three key areas will hopefully evolve for Irish accountants to truly embrace a cloud accounting future. Embracing the power of real time data – In Australia, small businesses can get a line of credit within minutes. A business connects it’s online bank accounts, and Xero to an online provider for a quick assessment. Business loans made easy. The market is so advanced that in New Zealand 10,000 Xero customers’ data was recently aggregated to deliver some incredible small business insights. In Ireland bank feeds are still a hurdle. Kinks need to be ironed out, and the banking system infrastructure is a challenge,

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Report on anything

Embracing a digital tax future - Xero is a global solution, and Ireland is just a speck on the radar. Our tax system has evolved over centuries, and right now it’s not very user friendly. There are too many bespoke elements with specifics and exceptions. For a small business when you compare the tax websites www.ros.ie, and www.ato.gov.au, it becomes quite apparent how much simpler and easier it is down under. Embracing a new way of thinking - Ireland is a small Island, rich in history, surrounded by seas. This is what makes us unique, it’s still a place where everyone knows everyone, or you always find a common connection. With all of these positives sometimes comes a negative or two. As a whole we are quite conservative, and maybe a little less open to change in the industry than other markets. Embracing Xero is a tradeoff between giving up old ways, and sacrificing what works for a new way The time is right though for Ireland to embrace Xero. Our economy is always improving and Ireland is a global hub for innovation and technology. If we are to put our clients first, and think about what is best for them in the long term, it’s Xero - all day long for me. Thanks for the inspiration Mr Drury!

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Issue 07 / 31

The ‘Genius’ of Xero: it’s all in the Bank Rec The Bank Reconcile screen is one of my favourite places in Xero... It was, and still is, what makes Xero a clear leader over the other cloudbased accounting systems (in my mind, at least). Xero were one of the first to not only create a truly cloud-based accounting platform, but substantially changed the way that business owners interacted with their bank statements – forever! By bringing the data to the business owner and allowing that data to create transactions, Xero has not only changed the software-bank-owner relationship, it has fundamentally changed the way that a business owner or bookkeeper reconciles the bank account. I (and many of my clients) actually get a buzz out of logging into Xero in the morning and reconciling the dozen or so new transactions that came in overnight. Knowing that my bank reconciliation is balanced, and that my accounting system reflects real-time balances and that my automated receivables follow-up is going to be accurate makes me feel good (I know – small things, but it works for me!). In the ‘old days’ you would reconcile your bank account each month (or week) based on the physical bank statement. You might log into your online banking to see what has happened in the last few days, and you may even have downloaded the bank data to import into your accounting system’s reconciliation process, but you were still essentially reliant on the statement to ensure that everything was working (I still have nightmares of trying to complete the bank reconciliation of some accounts in MYOB trying to fix errors, dropping transactions, and chasing down missing lines). The worst of it was that if you were out of balance, or needed more information on a few statement lines you had to put the whole thing on hold

Words: Peter McCarroll Peter was awarded Xero’s ‘Most Valuable Professional’ award for his contribution to Xero’s online Community Forum. Peter is a Chartered Accountant in both New Zealand and Canada and provides Xero-based accounting and bookkeeping services to clients in New Zealand, USA and Canada as well as providing live support to Xero users around the globe. He is also the founder of uCollect. biz – a Xero add-on that helps initiate pre-authorised account collection. You’ll find him regularly answering questions in the Xero Community @TheX_eroGuru

until you had sorted out those issues, and could not move on to the next statement (a pain if you were reconciling weekly). The BIG difference with Xero is that you are not actually reconciling at the statement level – you are reconciling at the transaction level. This gives you so much more flexibility. For example: if you need to get more information on an item that came through on the bank statement, but the person you need to talk to is on holiday for two weeks, you can just leave that line and move on. You don’t need to stop working while you wait on one item before moving on to the next block – it simply stays on the reconciliation screen until you are able to resolve it. This is where the ‘discuss’ feature (unfortunately named, as it is more of a ‘notes’ feature) comes in really handy. Being able to make notes on what you have done so far means less re-work when you come back to it later (figure 1). It also facilitates

information sharing between users such as the accountant and the business owner which leads to faster (and cheaper) resolution. You can still run a traditional reconciliation report like you can on most other systems. But in Xero you can run this report for any date – it does not have to be as at a date that you reconciled a statement. This can be really helpful when you are trying to work out on which date the account went out of balance – you really can narrow it down to a single date! If used properly it puts an end to unnecessary data entry and reconciliations. But there is always a catch – if used properly! So while Xero goes give an effective perpetual bank reconciliation, it is always subject to the data you have given it. In Issue 06 I covered ‘Fixing Bank Reconciliation ‘Out of Balance’ problems in Xero.’ Making sure

Figure 1

32 / Issue 07

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that your Xero statement data balances with your actual bank statement is an essential first step – if this doesn’t work you could spend hours trying to get Xero to balance and have no luck. So a monthly review of your reconciliation report is still essential – it just doesn’t need to hold you back! Reactive Bank Reconciliation The Xero bank reconciliation process is a ‘reactive’ one. It starts with the incoming data and requires that the user reacts to it. This is fundamental to the way that Xero works – and works best!

Trying to use Xero with no form of incoming bank statement data will usually result in a frustrated experience, and not the one that Xero designed for you.

bank President or CIO how about putting in a convincing word with them and asking them to reach out to the Bank Feeds team (bankfeeds@xero.com)?

You will have either a direct bank feed or a Yodlee feed – never both. You can manually import statement transactions even if you have a direct or Yodlee feed. Care should always be taken to ensure that you don’t duplicate transactions. Direct feeds are most common in New Zealand and Australia, but are now becoming more prevalent in other parts of the world. Direct feeds almost always update daily (and are automatic). Yodlee fees also update daily, but if your bank uses external multi-factor authentication or there are difficulties with your password then you need to manually refresh the feed. Be careful to change the bank login credentials in Xero if you change them in your internet banking as I have locked my internet banking multiple times due to Yodlee trying old passwords! At the time of writing Xero had released 30 direct feeds in the previous 12 months.

I see even the most experienced of users making mistakes. Here are the most common:

Basic Reconciliation Features Matching against the wrong transaction When you process an incoming bank statement line you are going to either (1) match it against an existing transaction using the Match tab or Find & Match function, (2) create a transaction (and match it automatically) by using the Create or Transfer tabs, or (3) create a transaction (and match it automatically) using a Bank Rule. I’m not going to go into all the aspects of creating and matching transactions here other than by way of a few basic tips & reminders (the Help system has pages on all of these): •

While you certainly can use Xero without statement data I generally do not recommend it. Xero is far less efficient without statement data and other systems may prove to be more efficient in this case.

Mistakes

•

You can apply one statement line to more than one transaction using the ‘Find & Match’ function – use the search tool to find what you want You can add more than one coding line when creating a Spend/Receive Money by clicking on the ‘Add Details’ link You can apply the statement line as part payment of a Bill or Invoice by using the ‘Find & Match’ function, selecting the invoice/bill in question and then clicking ‘Split’ (this does not apply to Transfers, Spend Money or Receive Money transactions – these must be used as is) You can offset Spend Money and Bill Payment transactions against deposits (and Receive Money and Invoice Receipts against withdrawals) by checking the ‘Show Received Items’ box in the search area If you have multi-currency enabled Xero will only show items in the search area in the account currency, but you can show more by unchecking the ‘Show XXX items only’ box. Xero’s matching recommendation is rudimentary (just matching on amount) – always double check before clicking OK Xero does not use the Contact’s default tax rate when using the Create section – it always reverts to the account default tax rate, even if that doesn’t apply to this contact (yes, very annoying)

Just because Xero recommended it doesn’t mean that it is right! Xero’s matching algorithm is very limited. If you have more than one transaction with the same amount as the bank statement line transaction then it is very easy to just click OK on the first thing that pops up without thinking. The same is true for accepting the recommended details on the Create tab (figure 2). Prevention really is the best cure here as it is not obvious that there is a problem until you find another transaction that doesn’t match and you are struggling to work out why. Before clicking the OK button you should check the basics: Is the contact name correct? Is the date reasonable? Are there other possible matches noted? If you find yourself on the other end having already made the mistake find the transaction in the Account Transactions tab that the statement line was matched against and then choose Unreconcile or Remove & Redo (more on the difference next time). Creating a new Spend/Receive Money instead of matching an existing transaction This is very common, especially when junior staff are processing a bank statement and the amount doesn’t match any single transaction in Xero (often because it is for a batch of transactions). The line of least resistance is usually to simply code it to Sales (for a deposit) or Purchases (for a payment) rather than actually asking why it is not matching against the underlying transactions.

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Direct feeds are generally more stable, automatic and secure than Yodlee feeds as the data is coming direct from the bank (usually daily), but banks in most parts of the world are very reluctant to grant access to this data to third parties (they have an outdated notion that they ‘own’ the data and only they can be trusted to keep it secure). So if you know your local

•

To correct this find the transactions that were created in the Account Transactions tab and use the Remove and Redo function. Deleting a statement line

Unfortunately it is too easy to delete a statement line and there is no way to prevent people from doing it. I’ve seen clients say “Oh – I’ve already dealt with that somewhere – I wonder why it is still there?” then they

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simply ‘get rid of the problem’ by clicking on the small red X. It now appears that they have solved it because the statement line no longer shows up on the reconcile tab. But all they have done is push the problem to the Bank Reconciliation. The account is now out of balance by that amount.

Transfer Confusion This is a real problem when you have automatic transfers of the same amount moving regularly between accounts – and is exacerbated when you don’t reconcile very often. Xero quickly gets confused when there are multiple transactions with the same amount and as they often all look the same it is easy to mis-match them. This is not usually a problem unless they have been mismatched over a longer period of time or over a month-end cut-off. The symptom here is usually that there are unreconciled transfer transactions in the Account Transactions tab. Other common reasons for transfer confusion include entering the wrong contra-bank account and creating a spend/receive money transaction instead of a transfer. The best way to recover here is to clean the slate and start again: Remove and Redo all the related transactions – ensuring that there are no more unreconciled account transactions in any account (when you Remove & Redo a transfer in one account it will also remove the other leg from the other account). Then create and match transfers again. I recommend starting from the lower volume accounts first as these are usually easier to get right. When you move into the higher volume accounts more of the transactions should be available to match – just do so carefully.

account If you have a deposit from a customer that you have already marked as paid on the invoice the invoice will no longer show up in the Find and Match search – you will be looking for the Payment record instead. But if you inadvertently recorded the payment against the Savings account and the deposit was made to the Check account, then Find & Match won’t find it (it will only show Payments, Spend/ Receive Money and Transfers from its own account). The only way to correct this is to find the payment in the other account and Remove and Redo it. Now the Invoice (same process for Bills) is shown as unpaid and you can match the deposit against it.

Tips for managing your bank reconciliation 1.

Not addressing stale unreconciled items

It is possible to be unreconciled even if there are no entries in the reconcile screen. If you run a Reconciliation Report or look in the Transactions tab you may see items listed as Unreconciled. These are items that have been entered into Xero but not yet matched against bank statement lines. The most common reason is a check sent but not yet cashed. However, in many cases these items represent processing errors that need to be investigated and resolved. We’ll cover more on this in the next issue.

Reconcile often. Try to keep your Reconcile tab empty. If you let the number of unreconciled transactions grow too high it will generally result in massive procrastination (you mentally put it into the ‘too hard’ basket and avoid it even more). Double-check the recommended transaction BEFORE you hit the ‘OK’ button. Know when you should be Matching vs. Creating. Reconcile the smaller accounts first. Go overboard with Bank Rules, and use Cash Coding to accept them all in bulk. Pay attention to Unreconciled items in the Transactions tab – these could be errors hiding in plain sight!

There are lots of elements of the Bank Reconciliation screen. My goal in this article was to give you a basic knowledge of the underlying elements and some of the most common user errors I see. In the next issue I will explore the Bank Reconciliation Report and the common causes for reconciling items.

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Issue 07 / 35

Accountants as heroes A new book called ‘The World’s Most Inspiring Accountants’ is raising a lot of eyebrows. And it’s easy to see why... It features the inspiring case studies of 57 accounting practices from across the world who are generating outstanding results for themselves, their clients and the wider world. Case studies that show how other accountants can easily do the same. The hero premise Written by a research team led by Steve Pipe, the book’s core premise is that ‘Practicing accountants across the world are making an impact that is quite simply extraordinary in its range and scale. Indeed, the research here suggests that, apart from the medical profession, there is probably no other group making such a big difference to the lives of so many people. And certainly not to their businesses.’

About the author: Steve Pipe FCA is the founder of AVN, a 200 strong association of proactive practices, and the free improveyourpractice.co.uk programme. In 2012 he was named ‘The world’s most highly rated advisor to accountants’ for having more recommendations (now over 480) on LinkedIn than any other adviser. Those recommendations also made him the most highly rated accountant in the world.

The hero evidence The 57 case study firms come from every continent of the world, and are representative of the vast majority of the global profession in terms of size, structure, client and location. For example, 71% have one or two partners or teams of less than 10 people, they serve the same type of small and medium sized businesses that most accountants serve, they are run by accountants with all types of backgrounds, and even include recent start-ups. •

And despite only looking at 57 of their clients, the book shows how they have helped to generate ALL of the following economic success: • •

• • • •

•

19 businesses saved from extinction 4 new businesses launched – one of which grew to over £3 million in 24 months 562 jobs created or saved Sales increases of 33%, 169% and, in one case, £1.5 million Profit increases of 142%, 273% and, in at least one case, over £500,000 Transforming cashflow – in one case turning £300,000 of borrowing into £600,000 positive cash balances

36 / Issue 07

He can be contacted via www.stevepipe.com

Lifting clients out of ‘special measures’ and back into mainstream banking And much more we don’t have space to list here

But the impact isn’t just economic. At a personal level their impact has also included:

• • • • • • •

•

Improving work-life balance – in one case an entrepreneur’s workload was slashed from 80 to just 10 hours a week Helping clients own their dream homes – including one overlooking the sea on a beautiful Greek island

•

Preventing other clients from losing their homes Restoring family harmony Securing their financial futures Restoring clients’ self-esteem Generating the funds to pay for expensive medical treatment Turning their clients’ business and personal dreams into reality Giving them a new sense of purpose and worth And in several cases, also turning them into millionaires

The hero services The really good news is that the vast

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A hero using Xero

majority of the difference accountants are able to make appears to come from their core skills and core services – i.e. the things that every accountancy practice in the world should be capable of doing. And the core services that create the greatest impact include: •

•

• •

•

• •

•

Accounting systems – to deliver up-to-date, reliable and accurate information at all times Robust internal controls – to minimise the risks of things going wrong Bookkeeping support – to ensure the integrity of the underlying accounting data Training – so that bookkeeping and accounts systems are used properly Management accounts - so the business leaders receive the information they need Decision support – so that information is properly understood and used to make better decisions that lead to better results Virtual Finance Director – to give them proactive high-level input when they need it Acting as a sounding board for ideas, issues and challenges – to give them an independent second opinion Board/Management meeting attendance and support – to keep them focused, efficient and effective Business plan creation – to help clients move forward in carefully thought through ways Integrated profit and loss, cashflow and balance sheet forecasting – to ensure that their plans stack up financially Recommending books, software, third party experts etc. – to expose them to the very best ideas, tools and support Proactive tax planning – to capitalise on legitimate tax reduction opportunities Defensive tax planning – to challenge excessive claims made by the tax authorities Cashflow management – to ensure they don’t run out of cash Debtor (receivables) collection – to prevent bad and slow paying debts derailing the business Raising finance – to fund growth, investment and other plans Cost and profitability analysis – to support better product, sales and marketing decisions Buying and selling businesses – to

Inspire CA is a two partner, 11 person firm in Newstead, Australia. Their client, MyCladders, is a Brisbane based metal roofing and metal cladding company, founded in 2004 by Kendrick Myers. The situation at the start Inspire CA’s founder, Ben Walker, explains, ‘They came to us looking for some help growing their business. At the time they were effectively a labour hire business. They were only contracting to one customer, and were only supplying hours of labour (no materials). The hours and workload were dictated by the contractor (i.e. middleman) and so business growth was limited and out of their control.’ How their Xero hero helped Kendrick already knew that the answer was to get a licence so that he could contract directly with builders in the retail market, without needing a middleman. But he hadn’t done it because he felt he needed more accountability and confidence to move ahead. In a video on Inspire CA’s website he says, “I wanted more, but didn’t have any confidence. Inspire has given our whole business the tools and the confidence to go out there and get things done. They’ve said you need to get this, then this, and then this done. Once you get that done, you can move to another step. And thanks to them we have now done all of that, and two steps more!” As for accountability, explains Ben, “We set them up with a suite of integrated Xero-based cloud accounting and management systems. So they now have a much better

insight into the key numbers, and much more control over the entire business. It also gives them far more team engagement, and greatly improved efficiency, as their team can simply login to do their timesheets, apply for leave and holidays, and even report sickness. And it allows us to work closely alongside them to monitor everything in real time, and continually suggest ways to make things better.” The difference it made Since they started working with their new accountants, MyCladders: • Has grown from $670,000 to $1.6 million in sales • Are now quoting for $300,000$500,000 of work each week, and has also • Created 20 new jobs – with the original team of two now growing to 5 full time and 17 part time employees How it made them feel According to Ben, the best aspect of all this success was summed up when Kendrick said, “We support 5 families through 5 full time jobs. And they all have children. So for us to be able to support those families, gives us more drive and a lot of happiness. Because that’s what we’re here for: not just to grow ourselves, but to grow others around us too.” As for Ben himself, “As well as a great client, I have also gained a great friend in Kendrick who shares my passion for making a difference. So much so, in fact, that I asked him to be a groomsman at my wedding recently. And I’m really proud to say that he was there by my side on my big day.”

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help clients achieve their strategic plans Exit/Succession planning – so they can get out when they want, and on the terms they want

inspiring firms featured in the book. So, clearly, cloud technology is playing a huge part in all of the above. Indeed, the book argues that cloud accounting has ‘become so widespread, important and transformationally powerful that it must surely now be regarded as a Core service by

xumagazine.com/subscribe The hero technology

Interestingly, Xero is used by 25% of the

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Issue 07 / 37

any accountant who wants their practice to have a future.’

And it adds ‘The point is that what we accountants see as fairly ordinary advice and support can often make an EXTRAORDINARY difference to the businesses, lives and happiness of our clients. The profession has so much more power to do good than it gives itself credit for. That power is at our fingertips. And thanks to new technology, such as cloud accounting and everything that goes with it, our power to make a difference is getting greater and greater by the day.’

Your hero rewards The researchers also found that accountants who make a difference in these kind of ways are rewarded extraordinarily well, financially and emotionally.

...what we accountants see as fairly ordinary advice and support can often make an EXTRAORDINARY difference...

One of the accountants in the book, Xero user Mike Ogilvie of OBC The Accountants, put it this way “We make a difference by giving [clients] ‘the right information - to make the right decisions – at the right time’. And in return we can charge [them] higher fees, making it a win-win all round.”

reinforced that by saying: “We now spend three times what we used to with our accountants and it’s worth every penny!” And the emotional rewards for accountants are also profound, with one of them are adding “If I’m honest, I was getting a bit stale. But now I really look forward to coming to work. It’s so fulfilling knowing that we are part of something that is making a real difference.”

Indeed, a client featured in the book

The must have book of

2016

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Issue 07 / 39

Working from the ski slopes At WorkflowMax, we love that our software enables businesses to get their projects done no matter where in the world they are...

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With winter approaching here in New Zealand, it’s that time of year when you start thinking about hitting the slopes. I’m definitely feeling the urge to, in my husbands words, “strap planks of wood to my feet and hurl myself off a mountain.” My husband, being more sensible, is keen to sit by a fire in the chalet and read some good books.

Words: Steff Green, WorkflowMax Steff is a content writer at WorkflowMax, the Xero-owned project management app enabling you to run your entire service-based business from the cloud. WorkflowMax takes care of quotes, timesheets, job management, invoicing, leads, and everything in between. Sign up for a FREE trial today: workflowmax.com @WorkflowMax

But how will you get your fix of skiing and fire-sitting with all the work that has to get done? Well, one option is to set yourself up to work remotely from the slopes. That way, you can fit your skiing in around your meetings and enjoy the season without the office falling apart. With WorkflowMax and Xero, this is totally achievable. Here are our top ten tips and tools for working remotely from the ski slopes. 1. Rent a Space If you’re going to be working from a ski town, you’re going to need some accommodation. You could try using www.airbnb.com to find what you need. On Airbnb, locals rent out their spare rooms, spaces and homes to travellers. You can choose anything from a room in someone’s house to a fully-furnished apartment. You can chat with the owner and ask questions about internet availability and parking spaces before you book. If you’re trying to save on accommodation, look for rentals outside the main ski towns. You’ll usually get a bigger place, and you can sublet any additional space to ski bunnies -- there’s always someone looking for a place to stay.

3. Arm Yourself with Apps Apps are awesome, and if you’re able to get mobile access, they will provide you with an endless array of useful tools. For work, you can’t go past some of the awesome WorkflowMax partners - I love using Google Drive and Dropbox to share and save files while I’m out of the office. And with neat apps like Stopwatch, you can track time while you’re offline. The app will automatically upload your time to WorkflowMax when you next get an internet connection. 4. Hump Around Some Water Water, water, everywhere and not a drop to drink. Snow may be frozen water, but eating a handful of snow won’t keep you hydrated while you’re out on the slopes. (Funfact - It takes more energy to melt the snow in your mouth than it gives you). I like to take a CamelBak - this is a waterskin backpack with a straw that is affixed just by your mouth. Wherever you are on the slopes, you can simply turn your head slightly and take a drink. 5. Sort Out Your Ski Time Keep in mind that many ski resorts shut their lifts around 4PM, so you’re going to need to get tricksy if you want to get work and skiing in the same day. If possible, ski during the day and work early morning and evenings. Or look for a resort that allows night skiing. Your other option is one day/week working, one on the slopes, alternating throughout the season.

2. Dongle 6. Keep Your Feet Warm The most important factor affecting your ability to work remotely from the ski slopes is going to be your access to the internet. You’re going to need to be able to communicate with your office and send work back and forth. Many ski chalets will offer free wifi, but it might not be the same level of service you get from your local city Starbucks. Plan on getting as much offline work as possible done. Dongles, such as can be had from Vodafone, can be plugged straight into a computer and gives the user instant internet access.

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I don’t know about you, but the first part of me to get cold is always my feet. And if my feet are cold, I get grumpy and uncomfortable, and that’s no fun when you’re on the slopes. So whenever I go away for a ski vacation, I pack my suitcase to bursting with socks, socks and more socks. You can never have too many socks. Check out the impressive collection of awesome socks and hosiery on www. theasockalypse.com - from dinosaurs to dragonflies, you’re pretty much guaranteed to find a pair to your taste.

>> Issue 07 / 41

7. Warm Your Noggin

Your brain isn’t going to do your best work if it’s freezing cold, so keep it warm with a cosy hat. Now, cosy hats are many things (warm, awesome, fun, did I mention warm?) but they are never, ever fashionable. So when choosing your warm ski hat, don’t even worry about looking for something attractive. Just choose the silliest, warmest, most funky hat you can find. Features to look for: • Ear flaps • Balaclava style - great for keeping your whole face warm. • Bobbles • Bright colours • Animal ears and/or tails

catching up with accounts or working on that end-of-year report while sitting by the fire at a ski lodge, sipping a hot chocolate. (Unless that chocolate also contains some whisky). In case the lodge’s selection is woefully sub-par, pack your own hot chocolate mix for an endless supply of warming goodness. My favorite brands are Dagoba Authentic Hot Chocolate (organic and Fair Trade certified) and Vosges La Parisienne Couture Cocoa, containing real vanilla bean.

blissful. 10. Your Cloud Software Suite Of course, all these tips and gadgets will only help you get your work done if you’re able to do work remotely from the ski slopes in the first place. How do you get that functionality? It’s simple - by moving your business to cloud-based software systems. Whether you need to do your accounts, collaborate on files, or manage jobs and projects, there’s a cloud solution out there to suit your business … and your lifestyle.

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Check out some of the awesome hats at Absolute Snow, or the wonderful array of animal headwear at WE Hats.

9. Hand & Toe Warmers OK, sometimes you’re at the bottom of a slope and there’s a line for the lift and your buzz is wearing off and you’re cold and you’re wet and you need something to pick you up, RIGHT NOW. Hand Warmers are going to save the day. These little packages of wonder slip into your pocket. When you need a warm jolt, pop the button. This creates a chemical reaction that releases warmth. Slip the package into your glove or shoe. Ahhh,

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8. Indulge with Hot Cocoa

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How the buyers of accountancy services buy Marketing for accountants can feel very confusing. You stand at a crossroads looking in multiple directions, wondering which route to take. Perhaps you stay at the crossroads hoping someone – perhaps another accountant will pass by to show you the right way to go... It’s no longer merely a matter of getting more referrals (although most accountants still rely on that for a large portion of their new business). The answer is not to look at which marketing solution will solve your problems – social media, paid ads, a new website, SEO, telesales. You need to turn your gaze from everyone else and focus it squarely on the mind of your buyer. When you know how your buyers buy, it absolutely simplifies your marketing. Here’s how your buyers buy.

solve in-house, and they need you. Second, you have to be visible in this expertise. If your prospective buyer is going to find you, they need to know that you exist. It does no good if you are the most qualified accountant with the most impressive track record in the issue with which your buyer requires help, but they’ve never heard of you. When you’re a visible expert, you are very good at what you do, and the prospective buyer can easily see this. Which leads us to the next point. 2. Your buyer finds and researches you online

1. They’re looking for a visible expert First, they absolutely want an expert. Your buyer has a problem they need solved, or a wrong to be made right, and you are the one who can help them (potentially). Because of this need for expertise, trust is paramount. They want to be assured that you know what you’re doing, that you’ve seen this before and are well qualified to handle the situation, that you are reliable and trustworthy and will not let them down. This is something they cannot 44 / Issue 07

It’s no surprise to discover that your buyer searches for you online: but it may be a surprise to discover that even those who are referred to you are still checking you out online.

Words: Karen Reyburn, The Profitable Firm Karen is a creativeminded individual who specialises in online marketing for accountancy firms. A former accountant (and a Certified Public Accountant in the States), Karen set up The Profitable Firm to work exclusively with modern, digitallyminded accountants who want to use online marketing to their best advantage. She and her team use remote and virtual working to help accountancy firms all over the globe. @ProfitableFirm

When you know how your buyers buy, it absolutely simplifies your marketing...

83.8%* of your buyers go to your website first. (*source: Hinge Research Institute , Visible ExpertSM Research Study: Accounting & Financial Services

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Edition 2015) The speed at which this can be done means that a potential buyer can Google your firm, review your website, flick through social media and the engagement you have (or don’t have) with others – all in a fraction of the time it would take them to contact a reference that you yourself have provided. Your buyer wants to be assured of your trustworthiness: but it’s also critical that they have everything at their disposal to make this decision themselves. The availability of online information about your firm (or lack thereof ) is a critical element in their search for an accountant. If you’re not visible, or there is no social media trail, or your website is old and outdated, you could be losing business – even from those who have been personally referred to you.

•

actually on an accountancy firm website, it’s so good. Offer secondary calls to action. For those who aren’t ready to buy instantly, provide a means for them to stay in touch in small ways – a helpful download, registration for an event, an interactive questionnaire. Show a social connection. Use all the social media means at your disposal so that prospective buyers can find out that you’re human, and engage with you. Provide appealing content. Your website copy, blog posts, resources – all of it needs to be reflective of your style and tone of voice, and unique to you. Let them feel they are engaging with you or someone on your team on a personal level before they ever pick up the phone.

Your very visibility and online footprint enable the discerning buyer to be confident in what they’re paying – and it improves your profitability. Whether you’re already an expert, but just aren’t visible yet, or you are very visible but need to showcase your expertise in a more specific way, rest assured that once these are taken care of, the right buyer is ready and willing to pay you handsomely. Remember too that although your marketing is designed to bring you the right sort of buyer, it is also designed to send away the wrong sort. If the potential buyer is not looking for a true expert but simply wants their accounts done as cheaply as possible, your marketing can be crafted to save you hours of wasted proposal time. Being willing to say “We’re probably not the best placed to help you” can actually increase your profits – and even your leads. You’ve just proved trustworthiness, again.

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Therefore it’s critical that your website, which is your marketing hub, both impresses them and answers many of the questions they have before they’ve even met you. To impress your buyer: •

3. Your buyer is willing to pay more for high quality expertise

The encouraging news for you the expert is that once the right buyer finds you, does a little research, and engages with you personally, they are ready to pay much higher fees because they value that expertise.

4. Your buyer comes when they are ready

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Use high quality design. Cause them to wonder for a moment if they are

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This is possibly the most important point of all. The best marketing is delivered on a drip feed, with relevant and useful content that is crafted

Issue 07 / 45

towards your buyer’s needs.

This drip feed means that you’re never in a rush. There is no sales pressure. You never have to push the buyer to make a decision. You simply keep being yourself – and doing so in a visible way, so that the buyer keeps receiving reminders of you. At the right time for them, they’ll get in touch with you.

•

• It does mean you never have to presume that ‘no news is bad news’. In marketing accountancy services, no news is always presumed to be good news until you hear otherwise. Even if they tell you they’ve chosen another accountant, what’s to stop you from wishing them well and continuing to send helpful, relevant information (that their new accountant may not provide)? The lead to sale cycle for buyers of accountancy services may be fairly long – and you can take advantage of that. To reach this kind of buyer...

•

buyer will choose to buy from you.

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In a few words, here’s how you can reach this kind of buyer: •

•

possible, and more than you think you need to. It proves expertise and is never pushy. Blog. It provides fresh content for your website, helps with search engine optimisation, and showcases your expertise. Use your hub. Bring every marketing action back round to your website, and vice versa. Take speaking engagements. This is the single most powerful way to build trust, expertise, and humanity all at one time. Follow up. Keep following up forever, until they tell you to stop. Send helpful information and just keep being visible. Just try something. Remember my rallying cry, ‘Not perfect but done!’ Marketing does not have rules, like accounting. Make it good, showcase your expertise, and get it out there.

Give things away. As much as

46 / Issue 07

The buyer of accountancy firm services is now more educated, more prepared, and more discerning than ever before. Meet them where they are, and deliver what they need, and the right kind of

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Sales tax changes. Donâ&#x20AC;&#x2122;t risk it. Automate it.

Visit the Avalara booth at Xerocon SF 2016 for your chance to win an hour consultation and strategy session with Danetha Doe! SAN FRANCISCO 2016

Avalara will hold a raffle and draw THREE winning names at the show. Be sure to visit our booth for more details! Danetha Doe, celebrity accountant and former NFL cheerleader, will be sharing insider tips on how to grow a six and seven-figure business from your laptop.

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Issue 07 / 47

5 ways SaaS solutions are revolutionising business Imagine a business world where everything is mobile, global businesses and chains are linked up, data gives deeper insights than ever before and Software-as-a-Service systems do all the grunt work... Words: Rachel Wattie, Cin7 Rachel is content marketer and copywriter at Auckland-based company Cin7, which provides cloud inventory software, and integrations enabled by third party logistics interface and electronic data interchange. It also offers point-of-sale software. Rachel has four years’ experience as a journalist at New Zealand Press Association, Fairfax NZ and The Health Media. She has a Postgraduate Diploma in Journalism from Massey University, Wellington. @Cin7online

Picture that all happening with the simple click of a button. Cin7 copywriter Rachel Wattie talks to three industry experts about what’s in store for future Software-as-a-Service accounting and inventory solutions. 1. Death of traditional accountants and bookkeepers With Software-as-a-Service (SaaS) systems doing more than ever before, the traditional roles of accountants and bookkeepers will no longer exist, says Australian consultancy business AccountsConnect owner Diana Siddall. Xero and its add-on inventory partners are bringing out more and more features, enabling customers to pay online and users to work from their mobile, says Diana, a Sydney-based CPA accountant and registered BAS agent. Bookkeepers are not doing so much data entry anymore; the systems are providing all of that. Instead, bookkeepers are evolving into data managers and trainers, supporting accountants and clients in a different way, she says. Diana, who helps businesses set up Xero and inventory add-on solutions, and ensures processes and accounts are accurate and timely, says: “We are the intermediary or the interpreter for the client to make sure they are getting what they want out of those software packages and using it to the best of what the software can provide.” 2. Promoting uninterrupted trade with trade finances Global giants like Fonterra and Wal-Mart

48 / Issue 07

Above: Diana Siddall, owner of Australian consultancy business AccountsConnect

are pushing out payment terms, making cashflow more of a burden for suppliers than ever before. Fonterra, New Zealand’s largest retailer, was last month in the media spotlight over new payment terms, which could see some of its suppliers waiting 90 days for payment (One News, 17 March 2016). American retailer Wal-Mart’s suppliers were also up in arms last year over its terms, stating payment dates would depend on when the product sold from Wal-Mart’s shelves (Spend Matters, 16 September 2015). Auckland-based SaaS company Cin7’s founder and chief technology officer Danny Ing says that cashflow is one of the biggest issues for suppliers, But inventory solutions offering more integrations will

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reduce some of this burden. Cin7 offers cloud inventory software and integrations enabled by third party logistics interface or electronic data interchange. “It’s going to be increasingly important that inventory systems have better understanding of [suppliers’] working relationship with financial institutions, and overall better understanding of our customers’ working requirements,” Danny says. He says that integration between suppliers’ inventory software and financial institutions would enable trade finances. (Where financial institutions loan money to suppliers, and are later repaid by retailers.) These enable suppliers to continue trading even if retailers are delaying stock payments. Some financial institutions will loan the supplier 97 per cent of the total price so when the retailer repays the loan in full, the financial institution takes a 3 per cent slice of the profit. The key thing is everybody wins. 3. Vendor management for better stock turn Danny also predicts inventory software will offer data integrations so retailers can share their stock data with their suppliers. This enables vendor management, which involves the suppliers, or vendors, downloading retailers’ inventory levels. The onus could then be on the vendor to ensure the retailer has the correct stock levels. “Integration and better automation can help customers reduce their stock holdings and also improve their sales by making sure [they] have more of the stock that sells and hold less of the stock that doesn’t sell.” (Danny Ing)

Above: Auckland-based SaaS company Cin7’s founder and chief technology officer Danny Ing

distributors that have been using SaaS solutions for many years have provided proof of concept for larger entities.

features because it means ‘smart people’ no longer have to do repetitive jobs such as administration.

He says that there’s a much greater confidence level that SaaS solutions now will meet the requirements of these larger businesses, and SaaS solutions offer businesses scalability and mobility.

He says it means that the same salary could be spent elsewhere, and you could turn them into a marketing person, sales or account management person or you can train them into more of a business growth role.

No matter how big the companies are, SaaS products allow them to run their operations off an iPhone or laptop.

Diana agrees, adding SaaS systems allow businesses to do more without recruiting extra staff. She says that the time saving can enable businesses to focus on growing their business or promoting a healthier work-life balance in their own lives.

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4. A wave of businesses shifting to SaaS

Businesses have more confidence in SaaS products than ever before.

“That will become more and more the way we do business in the future, rather than being tied to propriety hardware,” Tony says. “It adds a great deal of flexibility for a business owner.” 5. Saving time with instantaneous data

Tony Harcourt is the CEO of Australian consultancy business Rype Group. He offers consultancy for businesses switching to Xero and its add-on solutions, and assists with change management. He says that smaller retailers and micro-

Once the integrations are in place, the next step is to automate the processing of data itself.

Danny visits a lot of customers, and enjoys talking to them about what’s possible and meeting their needs.

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“It’s exciting to be in a market where times are changing and we can be part of that change,” he says.

Automation is one of Tony’s favourite SaaS

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Issue 07 / 49

How to get found online 7 essentials of SEO At Xerocon London we talked to many accountants and bookkeepers about their websites and one of the most popular discussion topics was how to get found in Google, also known as search engine optimisation or SEO... We examined many websites while at Xerocon and we found that sites often did not contain the essential elements for ranking well. While SEO is a very complex topic we’ve found that our clients who focus on doing the basics well can achieve good rankings. In this article we’ll share insights on the essential SEO elements to focus on and show how Xero Partner Phil Davies of Spot-On Accountancy has achieved excellent search rankings by doing the basics well. For the eagle eyed readers you may have seen Phil’s logo featured on cover of XU Magazine’s issue 3 representing the thousands of people in the Xero community.

Introducing Phil Davies After 20 years of accounting in both public practice and industry roles Phil set up his own accounting practice in Port Talbot in Wales. Phil really enjoys the freedom of cloud accounting with Xero so he can look after his growing family while running his practice. Phil created his own website with Rocketspark after Xerocon London 2015 and followed the guidance we provided to do the essential SEO elements. If you do a search for ‘Accountant Port Talbot’ or even ‘Xero Accountant Swansea’ you can see that Phil is ranking in the first few results.

Words: Grant Johnson, RocketSpark Grant is a co-founder of Rocketspark, a beautifully simple website builder that enables non-technical business owners to make their own website. Prior to founding Rocketspark Grant worked in marketing roles but his first job was as an accountant. Grant mentors at Resco. @Rocketspark

For most accountants and bookkeepers word of mouth referral is always going to be the key source of your new business so perhaps even more importantly for Phil he’s ranking in top spot in www.google. co.uk for terms such as ‘Phil Davies Accountant’, ‘Spot On Accountancy’ and ‘Spot On Accounting’. Phil reports that his efforts have paid off, “people have specifically come to me after looking for a Xero Accountant as I have had several new clients who chose me because of my Xero affiliation”. He also says that “there are others who have just looked for an accountant in my area - it has definitely led to a steady stream of new business coming to me”.

Above: Phil Davies of Spot-On Accountancy 50 / Issue 07

Potential call out quote alongside Phil’s photo: “I was pretty much a start-up myself when the website went live and it has allowed me to quickly gain parity with my local competitors due to the ease at which I was able to build the website and place the SEO alongside it”

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What is the secret to ranking well? Google checks a lot of things—over 200 factors!—to determine the ranking of your website. The good news is that you don’t necessarily have to do all of these things to rank well in Google. Think of SEO as like earning Brownie points with Google so they bump you to the front of the queue. Google want to present the best results to their search engine users and they want to be sure that your website is what people are looking for. 1.

Knowing if you’ve got the right technical foundation can be difficult for non-developers but it’s worth quizzing your developer or web platform provider on what they do to ensure your site has every chance of ranking well. One of the simple checks you can do yourself is to see if your site is mobile friendly. 2. Choose the right phrases to rank for Underlying the complexity of SEO is the simple fact that the more relevant your site is to the search needs of the searcher, the more likely you are to feature higher up in search engine results. It’s important to understand your customers and the words and phrases that they are likely to be using when searching for the product or service that you offer.

Figure 1

A solid technical foundation SEO can be a lot of work but if your web platform has the right technical foundations you have a big head start. Your web platform is a bit like a chef starting to prepare a gourmet meal by having a set of sharp knives, it’s crucial that your website is prepared for a good ranking well before you start to add the ingredients such as fresh content, inbound links and title tags.

keywords on every page, optimise for a range of variations across each page of your site. For example, Phil’s home page is focussed on being an accountant in Port Talbot while his Xero page is clearly about his Xero expertise. 4. Complete your SEO metadata Metadata sounds a bit techie but on most modern web platforms this is very easy to implement. The title and description tags are the main components of your SEO metadata and are typically the words that appear in search results. The title should be focussed on the search phrases people are looking for while the description does the role of selling what you do and inviting further action. See figure 1.

Ensure content on the page has keywords in it From time to time we have clients contact us about why their website doesn’t rank well but on closer inspection we see that their site contains very few instances of the phrases they want to rank for, including their business name. Use the target keywords throughout the content of your page but avoid keyword stuffing as Google can tell if the content is not actually real. Ensure that your headings on your site contain keywords as Google appears to place higher emphasis on what the headings say.

6. Set up ‘Google My Business’ Whenever somebody searches online, Google

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When you visit Phil’s site you can clearly see that he’s focussed on his local area as a Xero accountant. Rather than aiming his SEO efforts on broad phrases such as ‘Accountant’ Phil has focussed on specific phrases around his location in Port Talbot and his Xero specialisation.

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3. Target a different keyword theme on each page Rather than chasing the same

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Issue 07 / 51

figures out where that person is located at that precise moment and provides local results.

clients but also show Google that you are an expert on a particular topic. Keep going

Setting up ‘Google My Business’ also enables your business to be listed on Google Maps when people are searching for something via Google Maps. 7.

you write may not start to show their full benefit with improved rankings until 6 months later so start now and don’t give up.

In our modern digital world so much is on demand and instant so it’s important to understand that SEO results take time and effort. Updates you make and content

Write great content in a blog Once you’ve laid down the foundations for good SEO, blogging is the most effective activity we see amongst our clients for improving their search rankings. Sites that rank well typically need plenty of text content, especially to be able to pick up the long tail searches.

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Focus on high quality content that genuinely helps your clients. Google have very clever algorithms, which are very good at detecting the quality of your contact. A good place to start is to make a list of the top 10 questions your clients ask you. Having the answers in a blog will save you time in preparing answers for

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UK Focus

Have you got a CIS headache? Words: Lynelle Hills, simPRO Software Lynelle is UK Managing Director of simPRO Software, a leading global software company that develops business management cloud solutions for the trade and service industries. simPRO Software’s office and mobile products are designed to optimise business workflow to refine process, improve productivity and increase profitability. New CISrelated features have recently been launched to assist contractors and subcontractors with CIS compliance, including the ability to apply CIS deduction rates to invoices, track payments and generate HMRC reports. @simprosoftware

Symptoms include confusion, difficulty sleeping and fear of fines... provided – subcontractor verification numbers, deduction rates, and deductions – must be accurate, and failure to provide accurate information can result in the higher rate deduction being applied, or worse – fines.

Some contractors choose to outsource CIS administration to specialist third parties, which is understandable if they have multiple subcontractors working for them. However, the third party specialist still needs to be provided with accurate data from the contractor to ensure compliance.

Contractors Subcontractors

Any trade business that uses subcontractors in the United Kingdom is faced with the headache that is the Construction Industry Scheme (CIS). In short, this is where deductions are taken by HM Revenue and Customs (HMRC) as advanced payments towards the subcontractor’s income tax and National Insurance payments. Lynelle Hills, UK Managing Director at simPRO Software, explains the process and what is being done to relieve symptoms. Providing HMRC with the necessary data relating to CIS every month can be complicated for everyone involved: contractors, subcontractors, and even accountants and bookkeepers. All data

Contractors who use subcontractors are obliged to deduct money from subcontractors’ payments to pass to the HMRC. Contractors are consequently faced with administrative burden; they have to make sure they are: •

• •

checking the tax status and deduction rate of each subcontractor working for them deducting the correct rate of tax from the labour portion of each invoice reporting and paying the correct amounts to both the subcontractor and the HMRC within the given monthly timeframes.

Any administrative errors can result in fines as well as a subcontractor not having the correct amount of tax reported or paid.

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The subcontractor faces not only an administrative burden but a cash flow implication as well. First, subcontractors must register for the CIS scheme. CIS is then deducted, normally at 20% of their labour portion of their invoice. Consequently, their income tax may be over or underpaid by the end of the financial year. Either way, this can cause significant cash flow implications. If either the contractor or the subcontractor makes any error, then the burden of proof could reside with the subcontractor or their accountant to claim their tax credits.

>> Issue 07 / 53

Accountants and bookkeepers

For accountants and those advising contractors and subcontractors, justifying the costs involved in preparing HMRC reports can be difficult. The challenges can lie with establishing whether clients are contractors or subcontractors, and also whether the individuals are employees or selfemployed, as CIS is an additional requirement of self-employment accounting and tax returns. With the help of job management software that can produce accurate CIS reports, accountants can quickly understand when overpayments have occurred, and can obtain the necessary refunds from HMRC. It can also ensure there aren’t any fines incurred for missing the vital deadlines.

Is there a cure? HMRC made changes to the CIS reporting system in April 2016. This included ensuring contractors lodge their reports regarding subcontractor payments online or through their software instead of paper returns.

be viewed as a positive step towards reducing administrative burdens on businesses, non-compliance could see a subcontractor losing gross status and being fined.

The real key to easing the headache of managing CIS is incorporating it into your everyday workflows and job management...

HMRC are also encouraging subcontractors to obtain gross payment status, which reduces their deductions to 0% and allows them to pay all their tax and National Insurance at the end of the tax year. While this may

The real key to easing the headache of managing CIS is

incorporating it into your everyday workflows and job management, where both contractors and subcontractors can check to see the status of payments at any

time. Job management software with CISrelated features can allow for the everyday management of subcontractors – their work orders, schedules and invoices – to generate CIS reports, as well as other job costing and project management reports. For the subcontractor, every invoice sent to the contractor should capture the labour and material component in clarity and detail, as well as the amount of CIS to be deducted. This can then be checked against payment summary reports and any discrepancies dealt with before HMRC reporting deadlines.

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In the long term, HMRC is working on its digital services which should help ease the CIS headache further.

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“

Make your cash Satago, all-in-one Accessing shortflow termwith finance to your bridge cashflow gaps cashflow soluuon. Spend less me chasing customers can be difficult as a small business. I needed a way to with our automated invoice reminder system. access the money locked up in my unpaid invoices. Try invoice reminders satago.com Then I found invoiceat finance from

54 / Issue 07

“

Complete Cashﬂow Conﬁdence

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Issue 07 / 55

US Focus

For the love of... taxes How to stay smart about sales tax compliance... exposure while ensuring compliance. That’s where you come in.

Have you ever met anyone who likes taxes? Neither have we. But what’s frustrating for business owners can actually be exciting for accounting professionals. And while sales tax compliance can seem dauntingly complex, there are automation tools available to simplify and streamline compliance.

Evaluate Materiality

To seize on a surprisingly compelling opportunity for your accounting practice, or to learn more about how to become a hero in reducing your company’s sales tax compliance burden, you first need to understand some fundamentals: Sales tax management is a constant component of selling goods; in fact, businesses act as ‘agents’ of the state and - depending on the product or service - must calculate and collect sales tax, and then report and file the tax to state and local authorities. While tax compliance has never been easy for business, the Internet economy has made things much more complex. Think about it: online buying has introduced radical changes in the way we shop. If businesses can sell anything virtually anywhere to any buyers, then how do the tax authorities determine who is ‘doing business’ in their state (or region)? The answer to that question has been interpreted many different ways, since determining ‘nexus’ (geographic presence) depends largely on a state’s or region’s legislated preferences. Every state is slightly different, and those differences keep changing and growing, as states rely more heavily on sales tax revenues to fuel their budgets.

At my company, we speak daily with accounting professionals and small business owners. One of their most common questions is, ‘When does my business need to start collecting sales tax?’ The letter of the law is clear - if you are selling goods in a state in which you have established nexus, then you must collect, file, and remit the appropriate amount of sales tax on every taxable transaction. But like many laws, the issue of materiality isn’t always straightforward. The most common advice we hear from accountants is that a client should address sales tax when the risk of noncompliance outweighs the cost of compliance. This tradeoff will be unique for every business, but most accountants urge their clients to address it proactively. Why? Businesses are responsible for every tax dollar they fail to collect. If businesses ignore their sales tax compliance obligation, it can lead to later, larger payments not only sales tax revenue owed, but also potential interest and late payment penalties. These fees can add up fast, which is why failing to comply with the law is risky business indeed.

Words: Ryan O’Donnell, Avalara As a Director of Marketing at Avalara, Ryan satisfies his penchant for solving complex problems by working with small business owners to solve sales tax challenges. @avalara

...failing to comply with the law is risky business indeed...

Nexus Tax compliance is a thankless job for companies, to say the least, but it’s the law and businesses are required to achieve compliance based on established laws. As your clients’ (or your company’s) revenues grow, it becomes ever more important to make sure companies comprehend and manage their sales tax 56 / Issue 07

Once you’ve thought about the tax compliance costs for your client (or your own business) and the potential risk of non-compliance, it’s time to figure out where the business must register to start collecting sales tax. To do so, you need to understand nexus. Nexus is the condition whereby a

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US Focus significant physical connection with a state requires the business to collect, file, and remit sales tax for that state. Many readers already know this term and understand a few of the most common ways in which it can be triggered: • • •

Office in a state Warehouse in a state Employees in a state

The rise of ecommerce (especially Amazon) has spurred important developments in the world of sales tax nexus. Ecommerce Nexus Most online shoppers are familiar with the benefits of Amazon Prime. For sellers, eligibility for Amazon Prime means signing up for the Fulfillment by Amazon (FBA) program, and placing merchandise in Amazon inventory warehouses across the US (convenient for sellers and customers alike). But participation in the Amazon FBA program also impacts sellers from a sales tax compliance perspective, because it triggers nexus wherever a seller’s inventory is stored. The other modern nexus trigger is affiliate nexus. Many companies create affiliate programs to help market their products: the affiliate receives a percentage payment of sales to any customer they refer to the site. While affiliate partners may not be company employees, they are working for the company in a pseudoemployee fashion – hence the trigger of affiliate nexus. Remote Employees Cloud-based services such as Slack, Google Docs, and GoToMeeting, coupled with embedded cameras on most modern laptops, have made it remarkably simple for companies to support a distributed workforce. Shared assets, meetings, and even real-time collaboration is possible for business around the world. Terrific, right? Well the rise of a remote workforce also has a direct impact on how a business may need to manage its sales tax compliance.

Digital Goods

affiliate marketer living in the state.

As media continues its unstoppable trek toward digital form, the sales of items such as games, music, books, and software raise complicated issues of taxability. Some states rely on general tax laws to manage taxation of digital goods, while others have enacted news laws specifically addressing these categories. Still others simply do not levy a sales tax.

Any one of these instances alone may not trigger nexus. However, as a group, they tell a story that provides tax authorities with the evidence they need to demonstrate the company is connected with the state. In other words (you guessed it): nexus.

The guiding hand of a seasoned tax professional is important to avoid complicated and sometimes expensive tax oversights...

Adding Value

The details surrounding taxation of digital goods are much too complex to cover in this article. However, businesses selling these items need sound guidance to fully understand the tax implications of their commerce activities.

All of the topics described above make modern sales tax management much more complicated than it was even a decade ago. As an accounting professional, this complexity presents an opportunity for you to be a value-added service beyond the manual work of preparing and filing ongoing tax returns.

Important questions include: Which states have in place digital goods taxation laws? Does the manner in which the product is delivered impact taxability? What about custom goods vs. off-the-shelf goods? Is cloud-based software ever ‘delivered’ (and therefore triggering a nexus issue)?

Understanding how state and local tax authorities are more aggressively monitoring ecommerce businesses by expanding the definition of nexus will allow you to help clients get ahead of the curve and build their business with sales tax compliance in mind.

The guiding hand of a seasoned tax professional is important to avoid complicated and sometimes expensive tax oversights. For accountants in the business, it’s important to get answers that apply to your company and your industry.

By leveraging technology, accounting professionals can extract themselves from time-consuming work typically associated with preparing and filing sales tax returns. Solutions such as Avalara TrustFile enable transaction data to be imported and tax returns prepared and filed in minutes, rather than hours or days. By integrating these solutions into one’s practice (or into the company), accounting professionals will have more time to provide consultation and general tax guidance, which is the biggest win of all.

Combination of Events that Trigger Nexus Another widely held belief we hear about frequently is that nexus is triggered by a single event (such as any of the aforementioned). However, determining nexus can happen via an ongoing trend just as easily as it can by a single big event.

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Most state tax authorities consider instate employees to be a nexus-triggering event. As such, businesses should think critically about the remote employees they have on staff and how they are managing sales tax collection and filing in their states.

A business may not have an office, a warehouse, inventory, or an employee in a state. However, its employees may have visited the state on multiple occasions, leveraged services in the state for the delivery or installation of goods, and have some form of a relationship with an

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Words: Blaine Bertsch, Dryrun Blaine is the Founder of Dryrun, a scenariobased cash flow tool and Xero add-on. With over 15 years as an entrepreneur and a decade as an agency owner in the creative industry, Blaine’s spent nearly all of his professional life on the front lines of small business. He’s earned both Bachelor of Design and Master of Design degrees from the University of Alberta. @mydryrun

The new competitive advantage for accountants Adapt and thrive... Over the next few years the number of small business adopting cloud computing will double. It’s changing the business world and it’s bringing significant changes to the accounting world. Now more than ever, small business owners are gaining control of their business data and connecting previously separate business systems. This access to information means that small business owners can better understand their core issues, but putting together a personalized system can be complex. Their problems are businessfirst, technology second, so whom do they turn to? The most common response: their accountant.

areas that stretch beyond finance. An accountant’s understanding of business models, cash flow and business growth can be augmented with an understanding of the web apps and tools that can bring systems together for small business owners. To best serve your clients as an advisor you need to diagnose what ails them and prescribe a package that serves their unique set of needs. Xero sits at the centre of this package. Prescribing a System that Fits

Accountants are in a unique and enviable position to offer their clients an evergrowing range of business advice and services. But new competitors threaten this opportunity and accountants need novel ways to adapt and grow their practice. The key to growth comes from serving customers as a trusted advisor in

From a service company that needs a better end-to-end solution for time-

58 / Issue 07

Four Steps to Advising Clients 1. Understand the Challenges Their Unique Business Faces Getting a thorough understanding of business process will often take more than a quick conversation. You may need to dig a little deeper to uncover the issues that affect them the most. The key problems might not be the first they mention. The big problems may be buried further down.

The Xero Add-on store is a great place to start...

It can be tempting to offer a clean and simple set of tools in your service packages, but I would caution against prescribing ahead of time. Different business models and industries require different solutions. Even businesses within the same industry struggle with challenges that are unique to their growth stage and business model.

Small Businesses Most Trusted Advisors

tracking, invoicing and reporting, through to a general contractor that juggles large projects, irregular cash flows and foreign exchange costs, each business faces it’s own set of challenges. It comes down to understanding your client’s needs and helping to put together the right processes and set of tools in place.

In early discussions, avoid discussing or promoting a technical solution too soon. It’s critical to understand the business problems and process issues from end to end before prescribing a solution.

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system should all connect together from end to end.

2. Know the tools Not much flows through a business without some money attached. Xero is the hub of tracking this data and additional tools should connect within this hub. The Xero add-on store is a great place to start. Get familiar with the tools and keep up to date. Usually there’s a free trial so testing a product can take place before making client recommendations.

A truly valuable service for an overworked business owner. 4. Maintain a Regular Advisory Schedule It’s critical to stay in touch on a regular basis with your clients. Providing more than annual accounting services, is an important step in becoming a valuable, trusted advisor. Opportunities to discuss financial issues and provide business advice can be augmented with discussions to enhance existing systems further.

Recommending tools often isn’t enough...

3. Help them get set up Recommending tools often isn’t enough. Connecting these add-ons to the core accounting system can be a bit of a challenge for clients that are generally not Xero experts.

Your Competitive Advantage Your true competitive advantage lies in taking the extra steps to understand your clients business, tied with understanding the best practices to solve their business problems. Being a Xero expert is the perfect place to start. This leading edge cloud-tool sets the foundation for business. Understanding how to extend the eco system to build out custom solutions that are a perfect fit for your clients, gives you a true competitive edge in the industry. Extending your role as an advisor is a win-win. Your client’s business receives a major boost in overall health, efficiency and productivity. While your business offers more service, increased communication with clients and a reputation as a critical resource.

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As the hub of the system, Xero is likely the most sophisticated and complex tool in the set while the add-ons are often niche tools that serve a single purpose. That means that the finance and Xero expert is in the best position to understand how the

Even though business owners are busy, a quick check-in from a trusted advisor is welcomed. It’s reassuring to know that there’s an expert on their side, helping them to grow a healthy business.

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Issue 07 / 59

Which Key Performance Indicators should my clients be using? S.M.A.R.T. vs D.U.M.B. In the latest in an occasional series addressing the ways in which Advisors can influence their clients’ understanding of their own businesses, Dave Cahill co-founder of the My Own CFO app outlines how structuring the Xero business Dashboard appropriately will help to improve business performance... cliché we’re more familiar with today? Research hasn’t revealed when the term ‘Key performance Indicator’ was first used but roll forward almost 500 years and the concept of the ‘KPI’ is very well established across many walks of life. The crowdsourced repository of KPI’s, kpilibrary.com, lists 6,535 individual measures with the latest to arrive on the scene being the ‘Klout Score’ which measures the ‘influence’ of an individual person. It may not surprise readers to hear that President Obama has a Klout Score of 99 but, depressingly, for the writer at least, Justin Bieber is close behind at 92!

Words: Dave Cahill Pictured: Wes Vermaas and Dave Cahill, co-founders of My Own CFO @myown_cfo

Question: Which management guru was it that said: ‘What gets measured gets done’?

Each measure should be: Peter Drucker? Tom Peters? Well, neither, actually. It’s 1539 and the Austrian mathematician and astronomer, Georg Rheticus (who first devised trigonometry tables), is credited to have said: “If you can measure it, you can manage it.” Which later became the

60 / Issue 07

The accepted wisdom in deciding which KPI’s to use for a business regardless of which walk of life you reside in, is to use the S.M.A.R.T. method (and to stay well clear of D.U.M.B. indicators!).

• • • • •

Specific Measurable Attainable Relevant Timebound

KPI’s to be avoided at all costs would meet the following criteria and would be:

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...if you can measure it, you can manage it.. .

• • • •

Disappointingly vague Unbelievably biased Meaningless Beyond implementation

Xero presents the Advisor with a wealth of riches when it comes to business KPI’s automatically calculated and delivered in tabular or graphical form. When developing the Dashboard, the Xero Developers had to decide on a library of KPI’s that could apply to any size or structure of business, across a diverse range of industries and in any country in the World – no mean feat! There are two main sources of KPI presentation in Xero – the Dashboard itself and the Executive Summary Report (figures 1 & 2). Both tools are highly customisable, rich with tables and charts and can be drilled into to expose the causes or reasons for variances.

Figures 1 & 2

the user to the materiality of variances and to where improvements can be made. The Trend is Your Friend Ultimately, KPI’s present most value to business managers when seen over a period of time to form a KPI trend. Whilst most common KPI’s are ‘lag indicators’ showing how the business has performed in the past (figure 5), when brought together over a time period relevant to the specific business – for example, weekly or monthly for retail businesses or annually for seasonal businesses, such as tourism – then the real value of the data emerges as a predictor of likely future performance.

2. ‘Operating Expenses as a % of Revenue’ - as revenue grows this ratio should decline due the presence of fixed costs such a rent costs. 3. ‘Cash Conversion Days’ - measures the number of days between paying your suppliers for inventory to receiving payment from your customers, the lower the better! 4. ‘Debtor Days’ - is the ratio used to work out how many days on average it takes a business to get paid for what it sells.

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The Dashboard is editable with powerful charts and graphics.

The Performance Reports menu (figure 3) offers insights into several important areas of business performance and it’s here where we can instantly access visuals of KPI trends across multiple time periods and ratios.

My Own CFO - Key Performance Indicators

In the My Own CFO application, 8 KPI ratios were chosen to inform users about their business performance in real-time:

5. ‘Creditor Days’ – is a ratio measuring how long on average a business takes to pay its suppliers for goods and services. 6. ‘Inventory Days’ - measures the average number of days goods remain in inventory before being sold. 7. ‘Current Ratio’ - is an indication of the ability of a business to meet shortterm debt obligations; the higher the ratio above 1.0, the more liquidity the company has.

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On screen or in PDF format, the Xero Performance Reports (figure 4) present Board level data sets in easily to interpret formats with at-a-glance visuals to guide

‘Gross Profit %’ - this is where cash generation really begins, ‘anybody can give product away’ but high margins create strong businesses.

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Issue 07 / 61

8. ‘Debt Ratio’ - is a measure of the total debt of a business to its total assets. A ratio less than 1.0 means that a business has more assets than debt, while a ratio of more than 1.0 means the business has borrowed more than the book value of its assets, normally a cause for concern.

The answer as to whether a KPI will help to improve the performance of the business should become clear after the first 3 to 6 months that it is being measured. Some will fall by the wayside and others will be added.

through the maze of what will add value and what won’t.

The important thing is that KPI’s are used … and that’s where the Xero Advisor comes into their own, assisting clients

The question that all entrepreneurs want answered... The test of whether a chosen Key Performance Indicator will help a business manager lies in whether it can add anything to the search for continuous improvement, particularly in cash management and balance sheet strength.

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“

62 / Issue 07

“

Complete Cashﬂow Conﬁdence

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Xero as your FinTech foundation How Xero Add-ons help to expand your accounting services...

Words: Nicola Anderson, GoCardless Nicola is the VP of Marketing at GoCardless, the UK’s leading Direct Debit solution. GoCardless integrates with Xero to bring small businesses and their accountants a fast, hassle-free way to automate customer’s payments and improve cash flow. @GoCardless

If you’re a Xero Partner, you already know all the efficiency benefits of moving your practice over to cloud accounting. Have you ever stopped to think how much more Xero could do to expand your practice? With ‘FinTech’ cloud solutions becoming more and more popular, Nicola Anderson from GoCardless explains how Xero’s open API, and the ever-growing community of Xero Add-ons, open up a whole new world of services to you and your clients.

technology) solutions – over 400, at the last count. And they’re delivering ever-more sophisticated ways of using technology to solve a wide variety of business problems.

Tech-savvy start-ups and ambitious small businesses already know the benefits of running their companies in the cloud. There’s a huge choice of cost-effective, easy-to-use finance and business tools out there. They provide business owners with the control and overview of their company’s finances that, ten years ago, would have been the preserve of corporate organisations with large finance teams.

Xero as your solid financial foundation

There’s a growing community of Xero Add-ons providing FinTech (financial We want to hear from you! Get in touch - email: hello@xumagazine.com

FinTech is here. Your clients are using it. And they will expect their advisers to do the same. So is your practice ready to join the FinTech revolution?

If you’re a Xero practice, you will already be fully aware of the benefits of running your clients’ accounts via an online browser-based solution, with you and the client no longer being tied to a desktop machine. But if you’re only using Xero to run accounts in the cloud then you’re barely scratching the surface of what the cloud and FinTech can bring to your business clients and the more

Issue 07 / 63

in-depth services your practice could be offering to clients. •

Xero has the potential to become the core foundation for your FinTech solutions. It gives you a flexible, secure way to manage your clients’ accounting needs, while also giving you a solid financial hub for your other business solutions to integrate with. In a nutshell, Xero offers the potential for expansion. Combining Xero with your own selection of an ever-growing list of FinTech solutions will give your practice more clout.

•

The power of FinTech and Xero Add-ons What really revolutionises the way your practice works are third-party FinTech solutions – software that gives a whole new way to streamline clients’ (and your own) business processes.

automatically turned into data and pulled through into Xero. At least an hour a week of data entry time can be saved in this way. Less time wasted and you have all the key transactions and numbers you need to keep the client’s accounts up to date and produce management reports with real-time, current numbers. Over £1,000 is lost in claimable expenses per year by the average small business. By making it easier and quicker to claim expenses, Receipt Bank can help clients to recoup those losses and claim against those expenses that are exempt from tax. Control your outstanding payments and improve cash flow

Xero offers Helping clients the potential for to manage expansion. Combining their late payments Xero with your own and outstanding selection of FinTech debts can be a challenge. solutions will give The slower your practice more their customers are to pay, the clout... worse their cash

Whether it’s speeding up the timeconsuming business of bookkeeping, or helping clients automate their debtor tracking, there’s a whole community of FinTech solutions and Xero Add-ons out there that you can use to tailor your practice systems. And by maximising your use of these FinTech tools you can completely transform the variety of services you offer to small business clients.

flow forecast will look over time. •

•

Save data-entry time and become more efficient

Chaser and Satago are cloud solutions that allow you to speed up payment times by automating your clients’ credit control. They integrate with Xero and will automatically email customers when an online invoice becomes overdue. Using credit control solutions, like Chaser and Satago, sees clients get paid up to 23 days faster. And that has a significant positive impact on their cash-flow situation. On top of the reduction in debtor days, far less time needs to be spent on credit control, with a time saving equivalent to 3.5 working weeks each year. So the client wastes less time chasing payments and you have a more reliable view of their cash flow situation. And if clients need a deeper view of cash flow, there’s always the Float app to drill down into their cash pipeline. Float is a forecasting tool that allows you to predict your cash

•

flow accurately and plan ahead for seasonal dips and any lean months lying ahead. Satago includes integrated credit risk data from Experian on every company in the UK. So your clients can prioritise not just their oldest debts, but also the highest-risk customers, as well as automatically keeping an eye on customers’ credit limit.

Improving clients’ payment options Another way to help clients improve their cash flow forecasts is to make it easier for their customers to pay them on time. Direct Debit is one way to speed up payment times and remove a lot of the hassle of tedious admin, aged debtor reports and onerous banking systems. •

•

GoCardless is a modern Direct Debit solution that integrates seamlessly with Xero via the Directli Xero Addon. Your client’s customers sign an e-mandate to take payments directly from their bank account. And the client can then set up payments on either a monthly, daily or ad-hoc basis. By using GoCardless and no longer chasing those late payments, clients can save on average around £2,000 and three weeks of debtor chasing time each year. It’s simple for your client’s customers to set up GoCardless. And they no longer have to worry about remembering invoice payment dates – the money will be taken automatically on a date they’ve agreed with your client. And all the same benefits apply for your own practice – setting up clients on monthly packages and taking the fees using GoCardless is a highly cost-effective and efficient way to increase the firm’s own cash pipeline.

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Think how much time you and your business clients spend on data entry and dealing with paperwork involved in bookkeeping and expenses. It’s a tedious and time-consuming business that eats into your client’s day and takes up a large chunk of your staff resources.

•

Receipt Bank removes this wasted time. Using the Receipt Bank app, clients scan in their receipts, invoices, remittances and expenses and the numbers will be

64 / Issue 07

Better business intelligence and performance reporting

What small business clients want from their accountant has changed. Your clients want a pro-active, tech-savvy business adviser that can give them the right numbers, has a clear eye on their finances and can help them avoid any pitfalls and challenges as they come up.

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Investing in the new breed of business intelligence and reporting solutions is one way to offer this deeper insight and

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

either. Spotlight Reporting works with Google Analytics information to provide clear reporting on client’s web traffic, social media activity or eCommerce visits. And CrunchBoards allows you to run boards that include additional operational data like customer numbers and average spend/head etc. Focus on your clients’ customer numbers and drill down into the customer segments that provide the best sales, or the industries where they have the best niche market.

move your practice into more productive business advisory services. •

•

CrunchBoards and Spotlight Reporting both lead the way in cloudbased forecasting, performance and business reporting. They integrate directly with Xero and use this goldmine of client data to produce beautifully detailed, and visually interesting, dashboards of your clients’ business information. Crunchboards syncs automatically with the client’s Xero accounts to give real-time reports, or ‘boards’, that show exactly how your client’s business is performing. Boards can be set up with any targets and any KPIs to help your clients monitor how well they’re delivering over time. Spotlight Reporting also makes it easy to set up regular monthly reporting, with clear targets and metrics to help clients measure their performance. And by expanding your own view of clients’ numbers, you’re expertly placed to start providing the proactive comment, suggested solutions and longer-term strategic advice that business owners now look for from their adviser. You’re not limited to financial data

A more efficient way to run your practice Moving your clients’ systems to the cloud brings a whole lot more value to their business. So why not start using FinTech to start improving the efficiency of your own practice business systems as well? What works for clients works just us well for your own firm.

•

fees, invoices and payments with your whole cloud system. There are also plenty of time and project management tools, like Workflow Max, to help you keep on top of your utilisation, track your deliverables and keep on top of those client interactions.

A bespoke system that delivers bespoke services Combining Xero with the huge range of Add-ons and FinTech solutions gives your practice a real edge. You have the ability to create a totally bespoke business system that’s tailored precisely to the business needs of your clients – and the needs of your practice. FinTech can even help you change the kinds of service you provide to your clients. Add the Xero Add-on solutions that work best for your clients and start tailoring your advisory services to the particular opportunities and challenges they face as companies.

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•

Practice Ignition moves your practice management and client interactions to the cloud and integrates everything you do with Xero. Send out engagement letters as electronic documents, manage your projects and engagements and integrate your

So embrace the tech, evolve your services and find out how FinTech can revolutionise the way you use Xero with your small business clients.

Smart, Accurate, Automated Accounting AutoEntry automates data entry by accurately capturing, analysing and posting all of your invoices and receipts into Xero

Integrates with . . .

+more An OCREX product - Trusted supplier to over 1,800 accounting ﬁrms. We want to hear from you! Get in touch - email: hello@xumagazine.com

.com

Issue 07 / 65

Words: Peter M. Vessenes, ProfitSee With over 30 years experience in the financial industry, Peter is the CEO and founder of ProfitSee, a financial software service for financial professionals, CPAs, and ProAdvisors. ProfitSee is an all-inone financial analysis and budgeting software from seasoned financial experts. ProfitSee helps business owners and financial advisors alike gain powerful insights to manage cash flow, grow profitability and increase valuation. @MyProfitSee

How risk management takes you to the next level Sticking to your guns is a time-honoured tradition... After all, staying with what has worked in the past is thought of as the safe way to build the future. But in 1962 President John F. Kennedy said, â&#x20AC;&#x153;Change is the law of life. And those who look only to the past or the present are certain to miss the future1,â&#x20AC;? and that is still very true for businesses today. Few people like change, but it is critical to proactively embrace new opportunities in strategic ways to minimize risk. The Big 4, other large accounting firms, and consulting companies help work through these opportunities in multinational corporations. Traditionally, the SME marketplace has not had access to this type of help for a number of reasons, the largest of which is the high 66 / Issue 07

price tag. Today, the landscape of accountancy is changing, and it is changing quickly. At the past few Xerocon conferences we have seen a significant shift in how accountants and bookkeepers are approaching their business clients. Using cloud based accounting systems has increased efficiency in their practices, and given advisors more time to implement simple proactive services, such as automated reporting. Lately we have noticed that many firms are starting to go far beyond these simple added value pieces and have taken a significant step in providing fiscal management services similar to what has been provided to large companies.

Some of the Big 4 firms have announced that they are starting to provide retainerbased services to small businesses. The Institute of Chartered Accountants of England and Wales (ICAEW) has added a new software accreditation category for Financial Forecasting and Budgeting tools. More and more we have heard from accountants and bookkeepers that they want to provide proactive services to their SME clients to stay competitive. These changes have been happening over the past eight years. But like a boulder rolling down hill, it started off slowly and has finally reached an incredible speed. This shift is no longer something accountants and bookkeepers can ignore. But now there are many tools that can

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

help simplify the process of changing for new opportunities.

•

Move beyond historical analysis and reporting to help clients create their future

•

Creating the future of a company is always about managing the risk. The saying it takes money to make money was never more true than in companies that have some measure of maturity; generally, those in business for at least five years. What is it that big organizations understand about risk management? Is the process something that your firm could learn? Taking your practice to the next level requires that you do!

•

A structured approach to projects, inspirations, new ideas, and changes in the market is important to healthy growth for a company. Having a solid plan is the best way to minimize risk while ensuring success. Change is a constant reality in business. The ability to adapt to change in a cost effective and profitable manner is the difference between being a gambler or being profitable. We’ve had over 30 years of experience in helping companies mitigate risk and make successful changes. In our experience, all companies, from SMEs to Fortune 100s, all follow the same steps for success… 1. Know Your Goals Write down the desired goals and objectives of your project. Unless you are capable of clearly defining the end goal, you have no hope for success. This is the most important, and most overlooked, step in launching a new project. 2. Find Your Principal Assumption All projects, inspirations, ideas, and changes affecting the business begin with a principal, or fundamental, assumption. For example, expanding your market territories begins with a fundamental assumption that there is business to be gained in the new market territory.

• •

competitors. We will be able to take market share away from competitors. The cost of sales and marketing into the new area will be offset by the profits within a reasonable period of time. Our sales staff can handle the additional load of selling into the new market. We have access to lists or names of potential customers. Customers in the new market will engage us in large enough tasks or dollar volumes to justify building them as regular customers.

The list could and should continue to grow as you continue to break down the Principal Assumption. Every small step in your project is important. 4. Check the Cost of Validating Each Assumption Validating an assumption is the key to minimizing risk. Every component is an assumption, and by that, each assumption must be validated. Wrong assumptions create unnecessary costs. Knowing what it will take to validate each assumption is a huge step towards mitigating financial risk. If this sounds a bit complicated that’s because it is, (that’s why we built the “What-if ” Scenarios tool in ProfitSee…)

•

HR impact: What is the effect on current employees? This includes those directly or indirectly affected by the project, as well as those not directly affected, but who have power or influence in other areas of the company. Write down your findings. Talent pool: What are the exact job descriptions of any new or additional positions created by the opportunity? Are there people available within the company that can meet the job requirements? What is the availability and cost of new hires? What is the time of training and integration of new hires into the company? How is the calendar affected by the addition or job changes of employees? Market Assumptions: What are the current and past conditions of the market? How might the market be affected by what is currently taking place in those markets, government regulations, customers? Write it down. • Assumptions about competitors: What is known about your competitors? What is not known? What are their competitive advantages? What are their liabilities? What are your competitive advantages and liabilities? How do you work all this insight to your advantage? What is the cost of gaining market share through competitive advantage? Write it down.

Move beyond historical analysis and reporting to help clients create their future...

5. Review Your Forecast Evaluate the projection, modify variables, and look at the potential short-term and long-term benefits, liabilities, and effects. Now you can involve your client and the key personnel that are involved with the project. Test the assumptions, values, and results. These calculations will allow you to determine the points at which the project should be dropped rather than risk additional capital.

7. Establish Your Timeline Calendar the entire project in a step-bystep basis. Check your project calendar against your financial forecast, making certain that the two agree. Correct any discrepancies.

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3. Break Down the Principal Assumption A Principal Assumption is always made up of many smaller assumptions. In our example, assuming that there is business to be gained in the new market is made up of several pieces. •

6. Plan the Process and Operations New opportunities not only come with risks that can be evaluated financially, but they can also pose operational and workflow issues that jeopardize success. The following issues should be evaluated in process and operations:

8. Look for Show Stoppers A Show Stopper is a component in which if you cannot validate your assumption, the project is dead. In our example, one of the Show Stoppers is if the cost of sales and marketing into the new area will be offset by the profits within a reasonable period of time. If this is not validated to be true, there is no point pursuing the expansion into a

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If the business is to be gained, it is not being effectively served by our

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10. Budget Your Risk Capital Confirm that you have budgeted the risk capital to validate all components. This is the beginning amount of your Risk Capital. The actual implementation of your plan combined with the cost of validating components is the Total Capital Risk.

12. Run a Controlled Test If possible, before pouring the full budgeted Risk Capital into the plan, test it in a smaller form. In our example, you may assign only 1 salesperson for 1 month in a small section of the new market to test the plan rather than launching the five salespeople the plan calls for.

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9. Find any Red Flags Red Flags are any components where not being able to completely validate your assumption may not mean the project is dead, but may require a different set of strategies to overcome. In our example, one of the Red Flags is if the business is to be gained, it is not being effectively served by our competitors. Perhaps the market is being effectively served by competitors, but a different strategy will still allow us to capture market share. Identify each potential Red Flag. Validate these secondary to the Show Stoppers.

11. Create an Execution Plan Using the information gathered in the previous steps, document a business plan. The plan should be detailed enough to plainly explain the objectives, calendar, risks, rewards, and costs of the project to anyone who reads it. Distribute and review the plan with all involved.

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new market. Clearly label each potential Show Stopper. You must validate these first.

13. Execute The Plan Now you are at a point at which the plan should fulfill itself as anticipated. Managing Risk in the future growth of a company is the real key to helping your clients grow. The Big 4 know this is part of the emerging services. Now is the time to make it part of yours!

Kennedy, John F. â&#x20AC;&#x153;Remarks in the Assembly Hall at the Paulskirche in Frankfurt, 25 June 1963.â&#x20AC;? Remarks in the Assembly Hall at the Paulskirche in Frankfurt, 25 June 1963. Germany, Frankfurt. John F. Kennedy Presidential Library and Museum. Web. 14 Mar. 2016. (www.jfklibrary. org/Asset-Viewer/Archives/JFKWHA-199.aspx)

ankit@mmcconvert.com @mmcconvert

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Words: Bethany Walsh, Abacus Bethany heads up marketing for Abacus, an NYC startup focused on reinventing the way businesses manage expenses. She has spent the past 10 years as part of the small business and startup community, helping businesses utilize technology to grow and optimize their operations and technology stack. With a focus on all things cloud, Bethany loves watching businesses change industries and solve problems through adoption and innovation. @abacus

Best practices for recognising employee expenses on an accrual basis Every company has to make a choice between using cash and accrual method for their bookkeeping. Sometimes this choice is made for us, dependent on IRS rules, but overall there are a few pros and cons to consider when making the decision... The simplistic difference between the two is that cash method recognizes revenue when it receives payment and expenses when payment is made. Accrual accounting matches revenue and expenses regardless of when payment is made or received. Cash method gives you a more clear picture of your cash position, however, accrual shows the flow of income versus debt. Most businesses end up using both methods so that they can have a better understanding of what the numbers truly mean - knowing how healthy cash flow is, as well as understanding spend versus revenue. Itâ&#x20AC;&#x2122;s important to note that once your business has more than $5 million per year in sales or carries more than $1 million per year in inventory,

the IRS requires that you use the accrual method as your primary accounting method.

business expenses in order to keep your records in Xero consistent for better reporting or in case of an audit.

For any business, tracking expenses is non-negotiable. A large part of business expenses are tied up in employee purchases, whether a reimbursable expense or a corporate card transaction. More often than not, employee purchases are recorded on a cash basis, regardless of the accounting method used, because of restrictions put on the finance team, whether by way of time or context. Meaning that the expense is allocated to the month an expense report is submitted and payment or reimbursement is made. However, they should be recorded in the same method that you record your other

This article will discuss the challenges finance teams face when recording employee expenses when they use the accrual method and the best practices for overcoming those challenges.

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Challenges & Best Practices The biggest, overall challenge in recording expenses in accrual method revolves around the â&#x20AC;&#x2DC;expense reportâ&#x20AC;&#x2122; - a foundational element of the traditional expense management workflow. It was originally meant as a way for employees to simplify how they

Issue 07 / 69

reported their expenses and to lessen the number of checks written to reimburse them. However, it put additional burdens on the finance team as a consequence, most notably in how expenses are recorded and tracked. They were left facing a very manual process or to record expenses in a way more similar to cash method.

Challenge: Record Dating Whether you use spreadsheets or software to track employee purchases made on behalf of the company, you’re most likely using an expense report in your workflow. This element of the process

For any business, tracking expenses is nonnegotiable... presents the largest challenge that finance teams face, especially those who are using the accrual method. When expenses are submitted in the form of an expense report, they are being attributed to a date that is neither the date the expenses were incurred or the date payment was made. Expense reports add in a third, and rather arbitrary date that is merely the date the employee chose to send in their receipts.

payment with the individual expense becomes more challenging because they may spread across months. While this isn’t a necessity if everything balances out, it’s a best practice to associate the payment with the expense to ensure that payment has been made.

It’s a best practice to associate the payment with the expense...

Best Practice: Each expense should be recorded against the date it was incurred or the last open month.

Best Practice: Associate the payment or reimbursement with each applicable expense for future reference.

expenses into Xero by merchant. This will help provide transparency for budgeting and trends. Best Practice: Each expense record should be filed against the merchant and not against the employee submitting the expense. Challenge: Policy Compliance Another struggle the expense report presents is that it encourages employees to hang on to their receipts, which is often a lengthy period. When using accrual, it’s important to get all expenses into Xero before the month is closed. If you know an expense is coming, you can adjust for it ahead of time, it’s the ones you don’t know are lingering that cause trouble.

Subscribe for free to read the full magazine Challenge: Vendor Transparency

Challenge: Associating Payment

An expense report creates a cage around expenses that finance teams need to manually break apart in order to be able to associate expenses to the correct time period, which leads to the second issue, payment. Typically, a lump sum payment is made to the employee to cover the total amount owed according to the expense report. If the expenses are broken out of the report, reconciling the lump sum

When expenses are kept bundled together and recorded as an expense report, not only can the dates of expenses get lost, but transparency into the vendor or merchant becomes grey as well. Merchants are listed within the line item of the expense report and the whole report is usually filed under the employee who submitted it. However, when you break out the expense line items into separate records, you can file the

Best Practice: Use incentives like faster reimbursements to encourage employees to not hang onto receipts. The Difference with Accrual

Employee expenses are a treasure trove of information that most businesses have yet to tap into. They can provide information on customer acquisition costs, return on investment, and insights for how to optimize spend. By tracking expenses in accrual method in Xero, you can directly

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relate all of your spend to your revenue to learn exactly what your sales team is spending per client or how much was spent across accounts payable and expenses for an event versus what you got back in new bookings. Ultimately, the more detailed your record keeping is the more information you have at your disposal. However, you have to be able to properly access that information in order to make use of it. So keeping it locked up as line items of an expense report, prevent you from diving any deeper than top level. By using the accrual method, you are breaking your data out of it’s confines so that you can use it in a more meaningful way. How to ‘Go Accrual’

DEPARTMENT

CFO

CEO

Employee expenses are a treasure trove of information...

The process for tracking employee expenses has long been taken ‘as is.’ The sentiment is that it is a painful process that can’t be made better and will end with either a sacrifice of data quality or time spent manually recording the data properly. More often than not, it’s the quality that is on the chopping block. Expense reports present an outdated solution to improving the expense management workflow, which ultimately puts restrictions on keeping accurate records and reporting in Xero. But now that we know the reality, that the expense report is at the root of the problem, we can figure out a better way to solve it. With the options available today, it is easy and cost effective to implement an expense reporting solution. However, remember that most still rely on expense reports. While evaluating solutions, make sure that the system you select can track expenses independently of expense reports and be sure to ask about syncing in accrual method.

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Words: Amy Harris, CrunchBoards Amy is co-founder of award-winning Xero add-on CrunchBoards. The business now has customers in 90 countries and its come a long way since it launched with a splash on the front cover. CrunchBoards all in-one forecasting and reporting platform shows businesses the future. Amy works with businesses and accountants all over the world to bring a cashflow forecast to life and make it the centre of the business plan and daily operations. @CrunchBoards

The 3 most shocking things we’ve heard accountants advise when it comes to cash flow Helping business owners to understand their true cash flow - predicting and understanding future income and outgoings as well as the overall impact on the balance sheet - is a fundamental part of your role as a business adviser... Which is why we’ve been flabbergasted by some of the dubious advice we’ve heard less enlightened accountants doling out to clients. For many start-ups and owner-managed businesses, their view of cash is based almost entirely on their bank balance – and that’s an ill-advised approach to take. Money in the bank = the current funds available in the business bank account. It’s the money the business has been paid, that hasn’t yet been spent on purchases, wages, costs and overheads etc. Cash flow = the pipeline of potential money that will come into the business within a given time period. So, for most 72 / Issue 07

clients, their cash flow will be a monthly overview of the payments they can expect to receive (income), minus the costs and overheads they know they will have to pay out (outgoings). Here are three examples that underline the need for firms to update their approach to cash flow conversations: 1.

‘The budget is primarily about your outgoing cash’ Considering a budget – i.e. what the client has planned to spend – without understanding the income that will pay for this, will be problematic at best (and foolhardy at worst).

To have a rounded and insightful overview of the health of a business, it’s critical to consider both the income and the outgoings. After all, if the latter is greater than the former the client’s business is likely to go bankrupt in a very short period of time. 2. ‘You can measure cash flow using the P&L’ Regularly reviewing the business’s profit and loss (P&L) account is definitely advisable. But there’s a fatal flaw if this is how your client measures cash flow. As you know, the P&L is a historic

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document. It tells your client about income (profit) and outgoings (loss) that are in the past. These are transactions that have already taken place and, as such, there’s no action the business can take to change these outcomes. By having a proper view of the business’s cash-flow pipeline, and using the right forecasting tools to project their accounting data forward in time, the forward-thinking accountant can help clients avoid the cost-related pitfalls and seize the profit-related opportunities. 3. ‘Cash flow is most important when looking to raise finance’ When a business is looking to grow, or make a big purchase, there may well be a need to raise finance and increase the liquidity of the company

health check for the company at any time during the course of its ongoing business journey. How cloud solutions make sense of cash flow As a business adviser, being able to assist clients with their understanding of available cash vs predictable costs is a foundational part of your working relationship. And these cash flow conversations will be far more forensic in their detail when your firm has access to a cloud solution that can provide the right level of granularity. CrunchBoards flips cash flow on its head. It’s not something you do once for a client which they use for funding and then never refer to again.

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But that’s certainly not the only time when cash flow becomes important. Positive cash-flow forecasts will certainly aid the liquidity of the business, but good cash flow is a vital

All these assumptions form the foundation of their business plan and it’s a brilliant way to monitor performance. You can create Boards to visualise that plan which will auto-update from the accounts package. Use this as a tool to run monthly meetings and really drive value into your conversations and their bottom line.

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Words: Chris Petersen, CEO, Asset.Guru After many years of software experience, Chris launched Asset.Guru in 2014 to disrupt the billion-dollar Asset Management industry. Petersen is a believer that small and medium businesses can leverage technology to innovate much faster than the titans of the industry â&#x20AC;&#x201C; that speed becomes a unique value proposition against much larger established players. @Asset_Guru

Rethinking asset management How to overcome complexity and add real business value All too often asset management is seen as a pesky administrative task that adds little benefit to an organisationâ&#x20AC;&#x2122;s day-to-day operations. Yet, performed correctly, it can improve operational efficiency, reduce costs and even boost the bottom line... Fixed Asset management can be a bit like flossing your teeth. Everyone knows itâ&#x20AC;&#x2122;s important, but few give it the attention it deserves. While large companies have access to sophisticated tools to assist with the task, small and mid-sized organisations often rely on manual, paper-based methods to get the job done. As a result, many are creating unnecessary administrative overheads and often have no clear picture of exactly what they have in place. Indeed, industry research has found that, when a company reaches $2 million in annual revenues, it is likely to have around $50,000 in lost or ghost assets. In many cases the asset management challenge is being brought to a head by 74 / Issue 07

the rising complexity of modern business operations. Increasing use of technology, new channels to market and multiple supply chains mean the number of assets within an organisation continues to rise. Many are realising the methods used in the past can no longer get the job done. Achieving better asset management Surprisingly, many organisations do not have a clear picture of all the assets they own. There might be equipment scattered across multiple sites, portable devices assigned to employees, and items that have been lost or misplaced over time. The first step in improving this situation is to conduct a full audit of all items the organisation owns. This process can be

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streamlined by using a software tool or application that can log each item and its location. Once a central asset register is in place, accurate values can be assigned to all items. These could be the purchase price for new items or depreciated amounts for older equipment. Ongoing depreciation of all assets can then be handled automatically by the software, removing the administrative burden and ensuring maximum tax advantages are achieved.

firms, as well as those in the not-for-profit or charity sectors.

attendants to check and add details about assets in real time.

By integrating an asset management tool with Xero, data can be automatically delivered to core financial systems, further streamlining administrative processes. Asset management can shift from being an onerous task to something that adds real business value. The first step is to move off that spread sheet and into the cloud. obligations. Accurate reporting of the status of assets and their value is particularly important for listed firms, as well as those in the not-for-profit or charity sectors.

Asset management can shift from being an onerous task to something that adds real business value...

Using a centralised tool to manage assets also helps an organisation meet its audit and compliance obligations. Accurate reporting of the status of assets and their value is particularly important for listed

This can readily be achieved by using a cloudbased asset management tool. Access to the asset register can then be made available to all staff using internetconnected devices. This allows everyone from field workers and warehouse personnel to sales teams and shop

Business and finance working together With an effective asset management tool and processes in place, responsibility for the task can be extended beyond the finance department. Because it is often easier for staff working in front-line positions to spot changes in asset status, giving them the ability to record this information can add real value. This can readily be achieved by using a cloud-based asset management tool. Access to the asset register can then be made available to all staff using internetconnected devices. This allows everyone from field workers and warehouse personnel to sales teams and shop attendants to check and add details about assets in real time. By integrating an asset management tool with Xero, data can be automatically delivered to core financial systems, further streamlining administrative processes. Asset management can shift from being an onerous task to something that adds real business value. The first step is to move off that spread sheet and into the cloud.

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“

Make your lost cashmoney ﬂow with Satago, your all-in-one I recently when a customer went into cashﬂow soluuon. Spend less me chasing customers administraaon. It dawned on me that I'd never really with our automated invoice reminder system. known who I was doing business with. Try invoice reminders at satago.com Then I found credit reports from

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“

Complete Cashﬂow Conﬁdence

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What is #XeroUserHour? #XeroUserHour is your chance to shout-out over Twitter what youâ&#x20AC;&#x2122;re doing with Xero. Perhaps youâ&#x20AC;&#x2122;ve got a new Xero-related service, launching a new Xero Add-on, want to share a top-tip with other Xero users... this is your chance!

Use the hashtag:

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How does it work? It’s easy...

During the ‘hour’ (this will be a regular event taking place at the same time each week - the first will be announced shortly), compose a new tweet in the normal way but include the hashtag #XeroUserHour

Here at XU Magazine we’ll be watching closely for any tweets that include the hashtag #XeroUserHour.

We’ll then retweet your tweet on @xerousers

Follow what’s happening during the ‘hour’ at

twitter.com/xerousers

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Why accountants are failing to engage with business owners At XeroCon London 2016, entrepreneur Dale Murray CBE told her audience: “Good accounting advice starts with understanding our language.” Words: Colin Hewitt, CEO & Co-Founder, Float Colin is the CEO and cofounder of Float - the award winning cashflow forecasting software for Xero built for business owners. Colin and the Float team are headquartered in Edinburgh, Scotland. Before Float Colin ran a digital agency. @FloatApp

This got me to thinking about when I ran my own business and would meet my accountant. I remember my eyes glazing over in these meetings. Not because I didn’t respect him; I just didn’t understand half the things he said. And because of this my accountant felt expensive and I struggled to see value. I now realise this is because he didn’t engage with me on my own terms. As Xero and its ecosystem bring increasing automation to accounting, it’s only going to become harder for accountants to demonstrate value. And so I could echo Dale’s call-to-arms by saying those accountants who want to stay relevant should avoid using finance jargon with their clients. And I’d add that accountants should also have a laserfocus on their clients’ goals. What Do Clients Care About? Bottom line: business owners care about identifying and solving problems, not

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tools and detailed techniques. Most business owners do not care about what exactly an accountant does or how they do it. They care about the outcome. So when accountants work to surface and solve client problems in plain English, they become extremely successful at engaging with businesses. This means that presenting a balance sheet is not going to grab a client’s attention. But asking about their hopes for the future will. That may sound woolly, and I’m not saying management accounts aren’t important, but you have to understand that business owners are not finance experts. This stuff takes effort to understand. And we’ve got a thousand different things to think about all the time. That’s why if you want clients to engage with your services you have to give context and relevance before you start talking numbers.

Issue 07 / 79

Hours

How to Talk Business...

It’s not difficult. In fact I can guarantee that the objectives of business owners come down to two very simple concepts: 1) They want to take money out of the business and/or 2) They want to invest in their business. Will filing my tax return contribute to either of those goals in meaningful ways? Will reviewing summarised accounting data once a quarter move me an inch closer to success? Maybe. I’m not saying these things aren’t important. But I am saying that it is not obvious to most business owners why these things might be relevant. But you know what is relevant? Affordability.

I’ll let you in on a little secret: most clients think the only way they can get cash is through sales. But you and I know different. I want you to imagine two different conversations: Talking Accounting with a Prospect Client: I need someone to do my accounts. You: Of course. We can do your tax returns and your payroll. We can also provide you with regular management accounts. Client: OK. I’m currently collecting prices. How much will that be? Talking Business with a Prospect:Client: I need someone to do my accounts. You: Of course. We can absolutely do that for you. But before we talk about that, we find it helpful to understand our clients and their goals. What are you currently trying to achieve with your business? Client: Well...in an ideal world I’d like to take $100,000 a year out of the company so I can put my kids through school. You: Can you afford to do that? Client: If we can get our sales up 50% I think it’s possible. You: Is that going to be easy? Client: No, but we’ll certainly try. You: We’ve worked with a lot of businesses like yours and we’ve seen that increasing sales is just one way for someone like you to take money off the table. Would you like me to tell you about some other things you could do that would help you put your kids through

school without having to increase your sales by 50%? That change of perspective is the difference between price and value. Xero have been very good at pushing a valuepricing model, but it bears repeating: the difference between cost and value is the difference between a squeezed profit margin and a high profit margin. So to all those finance experts out there who love to talk technical… your industry is changing and you have a choice before you: if you continue to speak ‘accounting’ to your clients you will forever be viewed as a cost centre. But if you want to be seen as a trusted, valuable addition to a client’s team, all you need to do is start to speak the language of business.

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‘You say you want to take money out of the business... Can you afford to do that?’ ‘You say you want to invest in your business... Can you afford to do that?’

I guarantee you there’s no faster way to capture a client’s attention than to talk about cash. Just ask them about their dreams. And ask them if they can foresee a time when they have the cash to fulfil them.

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How Business Talk Will Lead to Billable

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Q&A with Paul Bulpitt

Xero UKâ&#x20AC;&#x2122;s Head of Accounting & Co-Founder at the Wow Company

82 / Issue 07

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At Xerocon London 2016, we recorded a series of interviews. We decided that this one would be great in print...

XU:

Hi Paul, as the Head of Accounting for Xero in the UK, Can you tell me what your role involves?

PB:

Lots. Gary invited me in to this role, to really help Xero in the UK with their strategies - specifically with the accounting partner channel and small businesses. On a day to day basis, I’m running a fast growing accounting firm, working with small businesses every day, so I have a degree of insight that I can bring into Xero in terms of opinions on product, marketing and other such things.

XU:

How long did it take the Wow Company to go from having not heard of Xero to using Xero exclusively?

PB:

Good question! I suppose in totality it took about two years, but the bulk of it was done overnight. I think the most important decision was that we were going to go all in on Xero and saying ‘if you want to be a Wow client, you have to use Xero.’ We didn’t rip other products, other desktop software out of their business straight away, because this sort of stuff has an impact; there was definitely a point though where any new client we took on had to be on Xero, had to be on our platform, had to match our way of doing things.

...for every single client and business, there’s someone with a dream or an aspiration....

You mentioned your fast growing accounting firm, The Wow Company, which is a Xero Platinum Partner and exclusively uses Xero. The Wow Company was around before Xero took off in the UK though, so how did you first hear about Xero?

PB:

XU:

That’s a really fascinating story! In 2009, we had a client at Wow who’d moved to Australia and he’d heard of this kiwi software product. On one of his trips back, we were in a bar with some friends and he said “Listen, you have to do this! It’s the Future!” I’d love to claim some degree of genius myself, but we’re extremely lucky that this guy recommended Xero to us. We’ve never really looked back. Previously, (pre-Xero if you like) there were Spreadsheets, there was Desktop Software and it was actually very difficult to offer the level of service that we wanted to. With Xero, it was really an overnight transformation. It transformed our business overnight. That was 2009 and I think since then every year we’ve pretty much had double digit growth. For the last four years we’ve had compact growth of about 30% a year (which is a lot) and that’s all off the back of Xero.

XU:

Was it mainly word of mouth that helped switch people over to cloud software?

PB:

Not so much, I think the level of service we were able to offer to clients was so compelling that clients were falling over themselves to do it. You know, there’s also a lot of this that’s client driven. People have an expectation to do things online, people are used to doing things online and are used to using online applications. It was actually very easy and the biggest challenge was from members of the firm. There’s a big expectation nowadays that life should be a lot easier and Xero delivers that.

XU:

We’ve already partially covered this, but what difference did using Xero make to your customers? Can you remember any impressive quotes?

PB:

Initially, (we’re talking around 2010 at this point) when Xero had probably significantly less than 10,000 subscribers in the UK and there wasn’t the brand awareness, the

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most telling quote would be people who thought that we’d developed Xero, or that we were the name behind Xero. Really, the difference was how we transformed relationships. When clients were having a tough time, we were able to get in there a lot sooner and see what was going on. It wasn’t a surprise that cropped up after the year-end. We focus a lot on clients that are growing fast and actually going in a couple of times a year just isn’t good enough. Being able to look at their accounts proactively, to go in on a month by month basis, see how things are going and spot things for them - there was just no way that we could realistically or practically have done that with desktop software. I have to say, it transformed the lives of the people who work at Wow and of the business owners we work with.

XU:

With the Wow company having so many clients, how do you give each client the best level of service and the most time you can?

PB:

It’s quite easy to get caught up in your own way of doing

things. Fundamentally, for every single client and business, there’s someone with a dream or an aspiration. There’s a real person running a real business with real hopes and real desires; It’s actually connecting with that real person and remembering that the hero in all this isn’t the software, it’s not the accountant. The hero is the lady or the guy who’s out there, who’s started something, who’s taken that entrepreneurial risk. If you can connect with that and remember that behind this all is real people and real businesses, then actually it’s just a case of delivering what you need to deliver to serve them in the best way possible.

XU:

How would you describe a modern, service based, Xero using cloud accountant in one word?

PB:

I think the key word is ‘connected’. If you think about what we were talking about earlier about the network effect, I think the main difference is that connection with the real person, who’s running business. The connection through

Issue 07 / 83

this vibrant ecosystem - it’s not difficult. There’s a lot of technology available, which does the job for you.

XU:

I think one of the main problems that accountants who aren’t using Xero exclusively at the minute are having, is to convince clients that they don’t want to lose to switch to Xero. Can you give any advice to people on how to convince small businesses to switch over?

PB:

Be really clear with yourself on your service offering and then make the client really clear on the service offering. Be really clear on the type of clients that you really want. We have converted hundreds of businesses to Xero and genuinely, hand on heart, not one has complained or kicked back. Where we’ve been really clear on the service, we have the confidence ourselves, which I think, is a really important thing, but

There’s a big expectation nowadays that life should be a lot easier and Xero delivers that...

then to explain the service we can offer who wouldn’t want it? I guess it’s that attitude of ‘who wouldn’t want it?’ rather than ‘what if they don’t like it?’. What we’re seeing at Xero an awful lot now is accountants being driven to Xero by their clients, either because they’re losing clients by not using it or because clients are saying ‘look, I need you to support us on Xero.’ and slowly, slowly it’s coming through.

Right role for the right user

Words: Jeri Murphy, WhichAddon.com @whichaddon

When you start using Xero for the bigger ‘small to medium businesses’, Xero user roles and their permission levels leave much to be desired... Example User 1: Staff Member Adding Their Own Expense Claims Staff members can upload their own expense claims into Xero, so your accounts staff don’t have to do it. These users need to have ‘Invoice Only’ user roles to be able to add expense claims, but not have access to bank accounts, reports and other key financial information.

‘Invoice Only’ users with the ‘Draft Only’ setting or ‘Sales Only’ setting can add and view their own expense claims, but they can’t view or edit others. ‘Invoice Only’ users that have access to ‘Approve and Pay’ or ‘Purchases Only’ can view, edit and delete others expense claims, so be aware of this when you have staff at this access

level. Tip 1: Reviewing What Users Do There is a ‘History & Notes’ at the bottom of most transactions, check out the bottom of an invoice, bill, expense claim and you will see the ‘History & Notes’

84 / Issue 07

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Figure 1

Invoice Only users with the Draft Only setting have access to ‘Draft Sales and Purchases’. You can’t have a user that has access to expense claims without having access to ‘Draft Sales or Purchases’. Don’t create ‘Draft Sales Invoices’ or ‘Bills’ unless you want staff with expense claims to have access to these.

Action Required

Roles

If you have an Adviser user role, you can run a ‘History & Notes Activity Report’ by going to ‘Adviser’ > ‘History & Notes Activity’. You can filter this report on screen by ‘Date’, ‘Item’ or ‘Transaction Type’ and/or ‘User’.

Add Invoice and Submit for Approval

Invoice Only + Draft Only

View other sales invoices by other reps

Invoice Only + Approve & Pay

Not able to view other reps sales invoices

Invoice Only + Draft Only

Email invoices to customer for payment

Invoice Only + Approve & Pay or Sales Only

Record deposit or payment made on invoice

Invoice Only + Approve & Pay

Issue online quote via email to customer

Invoice Only + Approve & Pay or Sales Only

Example User 2: Sales Representative using Quotes If your business has sales representatives out on the road making sales, it’s likely that you will want those sales representatives to enter in their own sales invoices. You may want them to issue invoices directly to the client, or just submit those invoices for approval by the accounts team. Here are some examples of the actions required with the suitable roles (figure 2).

basic reports and complete many of the functions of the day-to-day accounting or bookkeeping professional, it is best to have these users set up as ‘Standard’ with ‘Cash Coding’ and ‘All Reports’.

Example User 4:

The key things that a bookkeeper or accounting staff member won’t be able to do is:

1. Purchases and Bills   2. Bank Account details for suppliers   3. Aged Payables Report

• •

An Accounts Payable Manager should have access to each of these areas in Xero in order to enter purchase orders and bills, add files, update supplier contact and bank details, record payments against bills, create batch payment files and review the bills that need to be paid. If you want an AP Manager to have access to do all of the above, they will need to be allocated the user role ‘Standard with All Reports’ and ‘Contact Bank Account Admin’. This will also give them access to all bank account information and other key financial information you may not want them privy to. A more suitable user role for an AP Manager is ‘Invoice Only’ + Purchases Only’ with ‘Contact Bank Account Admin’. The only thing this user won’t be able to do is run an ‘Aged Payables Report’.

Accounts Payable Manager.  There are three key areas an accounts payable manager should have access to:

Tip 2: Managing Users Only the Subscriber to the Xero file, or a user with ‘Manage Users’ access can add, edit or delete users. If you want to see what access you and others have, go to ‘Settings’ > ‘General Settings’ > ‘Users’ (figure 3). Example User 3: Accounting or Bookkeeping Staff Access If you are a Xero Advisor, you may have some staff that you want to assist with the Xero file without having complete access to the entire Xero file, such as ‘Financial Settings’, ‘Lock Dates’ and ‘Annual Accounts’.

• •

Change or remove lock dates   Enter or edit transactions in a locked period   Run Annual Accounts   Find & Recode.  The staff member will still be able to add ‘Manual Journals’ even without access to the ‘Adviser’ tab, by going to ‘Reports’ > ‘All Reports’ > ‘Journal Report’ > ‘Add Manual Journal’.

Tip 3: Deleting users.  To delete a user permanently, go to ‘Settings’ > ‘General Settings’ > ‘Users’ > select the user and select ‘Delete’.

If you have staff members that you need to be able to complete data entry, run

Figure 3

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Issue 07 / 85

Figure 2

section (figure 1).

Happier clients, better cash flow and the future of receivables

Words: Matt McFedries, Debtor Daddy

“I have noticed that the people who are late are often so much jollier than the people who have to wait for them”

Matt McFedries is Co-Founder of Debtor Daddy, the first Xero Add-on for automated Debtor Tracking. He lives in Christchurch, New Zealand with his wife and two children. Matt gets up in the morning to create software that gives humans more time to do what they love.

- E. V. Lucas

@debtordaddy

Most accounts receivable professionals would agree with that statement. Every late payment has a cost to business. So much time can be wasted chasing down payments, sending reminders, listening to explanations and excuses, and, perhaps most costly of all, watching client relationships crumble. Not to mention, it’s a right pain in the ARse (that’s a little joke for all you accounts receivable professionals out there). The best accounts receivable professionals have a finely tuned skill set that combines financial nous and sales knowhow. What we’re talking about here is the unique ability to bring home the bacon whilst ensuring the customer relationship remains intact (future bacon). These kinds of accounts receivable professionals are a rarity and that skill set is made complete due to their time in the trenches and gut instincts. They understand debtors, know how to speak to them and can potentially save a company millions. The credit control industry will tell you that it’s unprofessional for business owners or sales people to follow up on late payments, stating that there should be a clear separation between sales and accounts receivable. But, of course, tell that to the owner of an SMB and see how helpful that is when they are both sales and accounts receivable, and ultimately the ground zero manager of finances. 86 / Issue 07

And there it is, strangely, late payments are considered a financial issue for businesses, when in fact, they are often an indicator of deeper problems. Whether they are product, operational or customer service related, the best accounts receivable professionals understand the cause and effect relationships of late payments. But what about SMBs? Where are they to get the insights to effectively manage their finances? The answer is data. They need data on the cause and effects of both prompt and late payments. What makes a prompt payer? Before you run wild looking for what causes those late payments, it pays to delve into the positive and assess what creates a prompt payment. We surveyed over 150 people from small to medium sized businesses to find out more about

what makes them pay late and pay on time. Our survey highlighted two key points you should always keep in mind, especially if your customers are small businesses: 1.

It’s often the business owner themselves that pay the bills – that’s right, busy old Joe Bloggs 2. Most businesses prefer to receive invoices, statements and reminders electronically via email – paper be damned! We then asked our survey respondents to rate the factors that were most important when it comes to paying their bills on time. The top three were: 1.

Feeling satisfied with the product / service 2. Receiving the invoice electronically 3. Receiving the invoice promptly

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effort to always get it right. It’s no wonder the 115 million small businesses on the planet struggle to get to grips with this critical function. Customer-centric credit control As you can see, a few of those reasons for late payments involve you, the issuer of the invoice.

So, there you go, Joe Bloggs wants to be satisfied with the products and services you’ve provided, and wants his invoices delivered promptly and electronically. That’s not a big ask, is it? Ignore Joe at your own peril. Things like credit card payment options prompt payment discounts and sending reminders before the due date were also listed as factors that might increase your chances of getting paid on time. I think accounts receivable professionals need to remember Joe Bloggs from the SMB isn’t an entire department, he’s, well, he’s just Joe Bloggs. Try to think of all the different ways you can make Joe’s life easier to pay you on time. Writer and philosopher, Leo Tolstoy, said “Happy families are all alike; Every unhappy family is unhappy in its own way.” Perhaps we’ll see the same principle at work with late payers.

due on the right day of the month and there has to be money available to pay it. The failure of just one of these steps can lead to a late payment. Thus, there are more reasons for a person to be a late payer than a prompt payer. Let’s have a look at the top seven reasons SMBs pay their bills late:

Could it be that we’re part of the problem? Say it ain’t so. It may require a shift in thinking as the burden is on the product and service providers to do everything in our power to enable prompt payment. We should leave no stone unturned to reduce friction and make our clients happy – and speed up the flow of payments into bank accounts while we’re at it. Remember, if your payment terms and processes are disorganised or misaligned with your customer’s payment process then you’ll be sending needless reminders, harassing good customers, eroding good will and cluttering inboxes. Your credit control practices should be designed to serve your customer and make it easier for them to do business with you. They should also be designed to reduce credit risk and maximize your cash flow, however, striking a balance between these objectives is not easy. The great news is you already have access to a few of those solutions with Debtor Daddy. Sending personalised invoice reminders has never been so easy. By taking a more customer-centric approach to managing receivables we can be smarter, reduce the late payment and not wave the stick. Of course, a lot of people will wring their hands, saying it’s simply not possible for a small business owner to design, implement and operate in this way. Or is it?

...the burden is on the product and service providers to do everything in our power to enable prompt payment...

1. 2.

Lack of cash – I couldn’t afford to pay (44%) The invoice due date was not aligned with the day I usually pay my bills (36%) Lack of time – I was too busy (34%) The invoice had no payment instructions (32%) The invoice was sent to the wrong person or email address (26%) The invoice items or amount were incorrect (25%) I lost the invoice (19%)

Subscribe for free to read the full magazine 3. 4.

What makes a late payer?

So, what makes someone pay their bills late then? I’m sure you have your theories depending on how jolly you are.

6. 7.

The future of receivables management Immersive 3D interactive receivables software anybody? I can imagine the accounts receivable professionals now, stumbling around the office in their black Oculus Rift goggles. No, but seriously, the most exciting

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To be a prompt payer there are a quite a few things that need to line up, e.g. good products and services, invoice received promptly and electronically, invoice is

As you can see, managing receivables is complex with a myriad of places it can go pear shaped and it takes a concerted

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Issue 07 / 87

innovations in the world today are usually the result of someone lamenting annoyance or pain about an everyday task and embarking on a quest to make it better. Couple this quest with emerging technologies like VR, AI and drones and you’ll get more than a modest improvement – it’ll be exponential and our lives will never be the same. Think of Elon Musk, perhaps the greatest technopreneur of our age. Dissatisfied with the status quo of electric cars, solar power and even space travel he’s elevated our expectations of what’s possible and created a new norm for how we use energy. So what’s this got to do with receivables? Well, here’s the question we asked ourselves at Debtor Daddy. If we were seeking to solve the ageold problem of late payment in 2016 and weren’t afraid to challenge conventional thinking or apply new technology, what would it look like? Here’s what we came up with.

It pretty much sounds like having a team of collections or customer service experts at your disposal to optimise cash flow whilst building stronger customer relationships and increasing repeat purchase. Hmmm. Problem. It’s only large enterprises that can afford to operate at this scale. How can we make this a reality for smaller business? Let me show you how.

The perfect receivables solution

Thanks to recent advances in data science and machine learning it’s now possible to leverage data benefits for small business. This is the next frontier for our, the account receivable, industry. It’s going to be possible to make smarter decisions when it comes to managing receivables by drawing from thousands (if not millions) of data points, which is ten times better than your best guess on the day or a generic automated response.

Robots and receivables At Debtor Daddy we’ve collected masses of data, providing deep insight about purchase and payment behaviour of all the hard working Joe Bloggs’ out there. And you have too – whether you realise it or not – in your invoicing, job tracking and accounting systems. What if you could use that data to your advantage when it comes to improving your customer experience and getting paid on time?

You have to get a lot of things right...

Let’s quickly summarise why managing receivables can be tricky: 1. You have to get a lot of things right 2. Every customer is different and there is no one size fits all 3. The current tools are deficient and there’s still a world of pain. We must find a better way

If you think this is too far-fetched, think again, because this is already happening in your Google Inbox , and has been happening in your search engine results and Amazon book searches for years. Closer to home, you can also see it in the recently released Xero Assurance Dashboard alerting you to transactions or occurrences that need attention. It’s the perfect example of ‘machines’ doing the heavy lifting and making humans more awesome. As you can see, the future of accounts receivable is looking bright and well developed technology is going to bring wholesale improvements to the industry and to Joe Bloggs. If you’re interested in learning more, visit debtordaddy.com/xu

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Now let’s imagine what a ‘perfect’ receivables management solution might look like: 1.

their credit risk, and their preferred communication method. You’ll also tune the wording of a single interaction (phone or email) to optimise the likelihood of payment, retention and even referral. But it won’t stop there, what about being proactive and actually predicting late payment before it happens and then preempting it with the right intervention at the perfect time? That will be called great customer service and will not be considered overzealous follow up.

It would treat every customer as unique – not a one size fits all 2. It would evolve and learn, improving over time 3. It would achieve exponentially better results, with much less time, effort and cost

With the kind of solutions we’re looking at developing, it will soon be possible to tailor your response to late payment on a per customer basis but without the team of people that would traditionally be required. Thanks to data science and machine learning, you’ll be able to factor an entire payment history of a customer, their industry, their likely future spend,

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Automated approval workflows with Xero and ApprovalMax Simplicity is Key As head of finance for a growing business, David Wieseneck works hard to keep things simple. When he joined Letgo as VP of Finance, he was tasked with getting the company’s finances in order and searched for a simple accounting system to provide the core functionality. For any reader of XU Magazine, his decision to implement Xero should come as no surprise. “Xero was a natural decision based on the simple yet robust feature set and the mobility that comes with a cloud solution.” David believes simplicity is the key element to fostering a satisfying work environment. He explained that when things are pared down to their most basic parts there are less questions and fewer opportunities for error, “It was my initiative to build a transparent process for our managers when it came to approvals. They have an important job to focus on, and we don’t have time for training them on accounting software. If it is not simple, they just won’t use it.” Complicated and Lengthy Approval Processes

...we needed a proper process outside of our inbox, without losing the mobility...

However, David quickly discovered the approval process for bills had become far too time consuming and laborious. As the company’s operations grew so did the number of payment transactions. David and his team had been using Xero for all Bill approvals, but he felt some essential features were missing: email notifications after an approval has been granted, multi-step approvals, and the possibility to reject a Bill. He also wanted the option of adding 90 / Issue 07

comments or questions to bills. “The process was essentially emailing PDFs back and forth among various managers and the finance team every day to get the proper approvals. We were swimming in email. Everyone agreed, we needed a proper process outside of our inbox, without losing the mobility.” David thought there had to be a more elegant solution to solve this problem. The Need for Granular Approval Workflows

As soon as David recognized his team’s painpoint, he started looking for a tool that would streamline the approval process. David recalls, “It was important for us that we not leave the existing Xero ecosystem, meaning we had to find a solution that would integrate seamlessly with our Xero accounting software. The Xero ecosystem

Words: Konstantin Bredyuk, ApprovalMax As an experienced BPM expert, Konstantin has a strong focus on design and development of Business Applications which support Human Workflows. He is Co-founder and CEO at ApprovalMax, known for simple and easy to configure approval workflows in finance. Prior to ApprovalMax Konstantin served more than four years as Director of Product Management and Senior Product Manager at Comindware, taking care of vision, roadmap, product design and messaging. He held positions as Product Manager at NetCracker and Consultant in ESRI CIS. Konstantin holds a masters degree in Software Engineering and Economics. @ApprovalMax

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has a lot of partners, but none of the add-ons for Xero I researched met my expectations or alleviated my painpoint.” His experience was that the current Add-on partners were solving some of the problems, but had limitations when it came to using different currencies or varying tax rates. The partners offered various workarounds, but not a seamless experience. “At the end of the day, these workarounds would have swapped one way of wasting time for another. Not the result I had hoped for.” The finance team even considered commissioning a developer to build a custom solution that would match their approval process but the cost was prohibited. David’s frustration was relieved when he discovered the ApprovalMax website and the Xero integration. ApprovalMax fulfilled all of his requirements and offered a simpler and quicker way to handle Bill approvals. David was impressed by the full feature set, including the multistep approvals based on a configurable approval matrix, email notifications for all approvers, iOS and Android apps for approving on the go, the option to reject a bill, a commenting feature, and a clear presentation for all participants. David was convinced after a quick demo, ”I set the whole integration and setup the workflow in about 30 minutes. Within the hour, we had our managers clear the full list of bills Pending Approval. We were all sold.” Multi-step Approval Processes within the Xero Ecosystem

ApprovalMax offers multistep approval workflows for standard items in Xero, such as bills, invoices, and purchase orders. Once a Bill is created in Xero, ApprovalMax emails a notification to the approving managers as set up by the administrator. They can authorize payment by clicking on a button in that email, through the web application, or on the ApprovalMax app. Once all approvals are in place, the Bill is marked as ‘Authorized’ in Xero, and its processing can continue from there. David Wieseneck is convinced: “We took a process that lived in email replies and forwards and moved it to a digital process in ApprovalMax. The automation of the routing process reduces the processing time for the whole team.” If a process differs from the standard procedure -- e.g., because the amount is higher than the approver’s authority and needs clearance first -- the request will be passed on to the next authority level swiftly and according to the set rules. Predefined escalation levels ensure the correct handling and routing of all bills in process. Another advantage for David:

He can easily keep track of how many Bill requests are waiting for approval and in which current status each one is. The integrated commenting feature in ApprovalMax enables all participants to easily discuss bills waiting for approval and questions are quickly answered directly. David’s colleagues’ feedback is positive throughout; the team particularly likes the option of viewing the attached PDF whenever needed.

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“All in all, ApprovalMax has cut my weekly time effort for approval processes from four hours to about 10 minutes – valuable time that I can now spend on adding value to our company,” says David. Plus, there is no need to hire more people for the letgo accounts payable team. Instead, the company can focus on growing their actual business. “I can rest assured that any money going out has been authorized for payment properly. This is simplicity at its best!”

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5 things that Xero can make possible for business owners ...especially when you’re off work How can Xero help business owners to keep running their business, especially when they’re off on holiday? Whilst off work looking after her 3 young kids during the school holidays, Hayley Bradshaw talks about what she managed to achieve from her phone... It’s recently been the school holidays at our house, and I spent the majority of the period at home looking after our 3 kids. Now, they’re the sweetest in the world most of the time, but having a few minutes to myself is difficult to say the least! Amid the chaos that engulfs our house, as a busy mum/MD/marketer/ leader, etc., I still needed to work, mainly from the phone whilst at the park or other play area, and I still needed a grip on all of the business finances. I decided this is by far the toughest challenge for Xero yet! – Can Xero really make any of my life as a business owner easy, especially when faced with the school holidays, with only a few minutes available each day to keep a grip on what’s happening, and to even do some work myself?

I had a few receipts in my purse from costs made using the debit card, so from the Xero app, utilising the expertise of the kids to hold up the receipts in the air, expertly took pictures on the phone and created a transaction for the cost, where I then reconcile to the bank.

The automatic bank feed meant I could reconcile on the go...

So, here are 5 things I successfully did during my days at home, from my phone, all whilst being Mum all day to my 3 little sweethearts: I updated the purchase ledger I received some invoices from our suppliers into my email inbox. Not many, but consisted of professional courses, internet and Google apps, so needed dealing with quickly. I simply forwarded 92 / Issue 07

them to my Xero files inbox (email address available top right side of the Xero files inbox screen), so when back at the desktop I can attach the documents to the transaction in Xero. No paper to deal with whatsoever, woo!

I balanced the bank

Words: Hayley Bradshaw, Progression Accountancy Hayley Bradshaw is Group MD of Progression Accountancy. As well as being a 100% Xero Gold Partner and Xero raving fans, Progression also provides business planning, forecasting and budgeting support, as well as financial planning for the business and the business owners. Got a particular business system requirement, need a more robust business system or need detailed Xero training? Progression will sort all of this! @_Progression_UK

The automatic bank feed meant I could login to the Xero app and reconcile on the go for all the businesses, so everything was kept up to date. If you’ve not yet experienced how easy reconciling your bank is using Xero (especially the app) then you need to asap! I needed to check how much the monthly PAYE payment was, so within the payroll tab in Xero, I opened this up and checked, then opened up my banking app and paid it. A few other expenses needed paying, so a quick check in Xero and I can send payments.

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The business kept on chasing customers for money All the team are able to send sales invoices to their clients each month, because that process is easy to do using Xero, and they also email them. Clients who we do regular work for are set up as repeating bills, so the invoices go out automatically and we don’t need to intervene as much. Whilst off work, the business is still sending sales invoices out. Automatic invoice reminders set up in Xero allows the business to automatically contact customers that owe money, meaning very little human time needs to be spent at the outset. A ‘must’ for any business to use, and I could also see the payments coming in.

I can’t stress enough how important it is to have access to financial data through the cloud (i.e. logging in to your account from your Internet browser) using my phone. I was able to check in from the park easily, also whilst the kids are watching Dennis the Menace and Gnasher on CBBC (Children’s television) after a wash down.

Conclusion? They were my top 5 during an extremely hectic period, there were probably many more. After much deliberation, I conclude that Xero has well and truly passed the test!

The dashboard view when you first login to Xero is great. I haven’t got the time to go searching for bank balances, sales invoices awaiting payment for, purchase invoices that we have yet to pay. Having that data in front of me on login, on an easy to understand graph, means it takes moments to get a glance of the current position – which is absolute key when I’ve got 1 minute to check that out, as the ice-cream van has just turned up and the kids want one!

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It takes a matter of minutes to create and email invoices to our clients, and we have a ‘pay now’ button so clients can pay by card. In terms of speedy response on this, we completed some work recently at client’s premises at 5, called in for a coffee on the way back whilst using the phone to send the sales invoice at 6, and we got paid at 6.10!

The business kept on going

It’s a great comfort for me, especially when I’m not at work to chat with my team, to login from my phone and see the guys raising their invoices to our clients, and I can see payments coming in. We can all access Xero at the same time, unlike some desktop software that you need to logout of before someone else can login.

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I had the dashboard view

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Interview with David Tuck, Co-founder of Chaser: 2016 Xero Add-on of the year

Words: Jeri Murphy, WhichAddon.com Jeri Murphy is the co-founder of WhichAddon.com and regularly interviews founders, experts and influential people in the Xero ecosystem with one purpose: to educate Xero advisors and business users on how to find the right Add-on and successfully implement these systems that generate business success through operational efficiency. Jeri is a qualified accountant and has been training to an expert level on Xero and numerous Add-ons for over 6 years. @whichaddon

Interviewing David Tuck was such an amazing experience. David embodies all that I love about the Xero ecosystem passion, transparency, innovation and sharing success. David shared with me how he came up with the idea for Chaser, how he and his team was able to grow Chaser so successfully globally in such a short period of time. I’d love to thank David again for his genuine sharing to help others learn from his amazing journey... 94 / Issue 07

I remember receiving Issue 2 of XU Magazine. A smiling face with a bright orange t-shirt beaming from the pages. If you haven’t had the pleasure of knowing about Chaser yet, Chaser is a Xero Add-on that tackles the pain of late payment by automating the process of credit control to get cash into your bank account. Chaser does this through a series of features that create a personalised experience for the receiver (being chased for late payment) so they feel like you (the person owed money) are personally chasing them - politely. Chaser’s motto is ‘Polite Persistence Pays’. I think this sums up Chaser perfectly. I interviewed David for over an hour, which is about 24 pages of script, so here I will

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pull out the highlights to share with you. If you want to watch the whole interview, you can do so over at WhichAddOn. com. Simply Google ‘chaser interview whichaddon’ and you will find the full interview.

JM:

Start-ups are messy...

Hi David. Thank you so much for joining me today. I am really keen to have a chat with you about everything ‘Chaser’ but especially about your recent win as the Add-on of the year at Xero con UK. So, Welcome!

DT: JM:

it between you coming up with the idea until it actually existed? How did you go from, ‘Oh! I am going to start an Addon’ and then here we are a few years later. What happened? How does that work?

Thank you very much for having me Jeri.

Alright, Let’s have a bit about what Chaser does as an Add-on and really where it came from? Walk through the journey of where you came from, all the way to that great achievement of Xero Add-on of the Year.

DT:

We launched on 19th August 2014. My background is in accounts and as a CFO so I trained in practice and headed up the finance team for a succession of small and medium businesses. I had the good fortune to start working with Xero in one of those jobs and that was my first move into technology as a business, so I got to learn a bit about software and the idea of what is now Chaser was born from there.

JM:

Tell me about the name Chaser, obviously it is perfect for an Add-on that is chasing things - in this case money - but how did you come up with the name Chaser?

DT:

Chasing has always been central to us because of the widespread recognition of the term ‘Chasing’. However finance and accounting illiterate you are - to get your invoices paid, chasing is the activity that you need to carry out. It’s really inclusive and recognizable in that regards. We were very lucky that Chaser Co-founder, Mark Woodbridge (Xero’s Developer of the Year in 2015) recognized that the domain, chaser.io, was available and secured it for us.

DT:

With the benefit of hindsight it all looks really well considered and well orchestrated but it was anything but. I think the idea fully formed around this time about 3 years ago. Actually I left the job I had previously too early. I was a bit hasty to get started. I was very fortunate that I ended up doing interim CFO work for a friend’s software company so that was great to fund early development. I really underestimated how hard it would be to find the right person to start working with. I think I looked at it in a sort of Immaculate Conception sense - that everything is going to fall into place all at once. That’s not true at all. Start-ups are messy. I just started working, breaking it down - get from one stage to the next. From resigning, it took me good a 4 to 5 months to get really off the ground and find the right person to start working with. In the end that was with Mark, as a contractor working alongside his then full time job. The initial stage was all about getting from one stage to the next, getting feedback and moving forwards. In the end things worked very well.

DT:

I think the biggest challenge and it continues to be - is deciding what to do with our time. You manage to find a right door to open and you open it successfully and it inevitably then just takes you into a room with lots more doors. Our single most limiting factor is the time that we have.

JM:

Yes, talking about how you manage your time. I have to say you are the most proactive, responsive person that we speak to in the Xero ecosystem. You are in touch with us before we are in touch with you and you respond to every single email personally that is sent directly, constantly keeping people up-to-date and constantly marketing. How do you do it all? How do you go through that process and how do you manage your time to make sure you can provide such high level of service?

DT:

I work with an incredible team. I am thrilled and fortunate to have the great team we have. We are very fortunate that we have solved a really important problem for business owners. I think a key characteristic of our team is that they learn by doing things and they are committed to learning and providing great service something that is very important in this rapidly moving market.

A recommendation or introduction carries more weight than just a cold email...

JM:

I see so

many Addons do sales and marketing and lot of product development but they don’t have the time and resources for training and support. It’s very difficult to balance. How did you manage this process?

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JM:

Let’s talk about the growing pains - you had the Add-on developed, beta tested and you are going through that process of taking it to market once you are happy with the product. From what I see there’s a lot of pains that Add-ons go through in the market as the customer base grows and as your teams grow - all of those things that happen all at once. Give me your thoughts on the growing pains that happen and how you avoided them all? What pains did you have and how did you avoid them?

DT:

One of my favourite Silicon Valley entrepreneurs, talks about how it’s much more important to delight 100 users, have a product experience that delights 100 people, than to have 10,000 people that are so-so or ambivalent about that product. I think you can definitely fall into the trap of trying to scale prematurely.

xumagazine.com/subscribe JM:

Let’s talk about the journey from there. You have come up with this idea of chasing and know there has got to be a better way. How long was

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I understand you raised money just before you came to Xerocon here

Issue 07 / 95

in Australia last year. Can you tell us the story of how that happened and any tips you have for people that are going through that process and looking for investment?

DT:

Identify who you want to work with and have a really compelling deck of what your vision is. I think a recommendation or introduction carries more weight than just a cold email because people get up and take notice so seek out people with whom you have a relationship or who can introduce you into investors that you want to talk to. Another great piece of advice I got was enjoy going and pitching because the emotions are contagious. It has such a huge impact if you’re excited about doing it and that’s going to rub off on people.

The other piece of advice would be to be resilient because you going to get told no and that should be the case, because if that’s not the case, I don’t think you are building something ambitious enough. So if you get rejected a lot the overwhelming majority of the time, that’s nothing to be worried about and remember, ultimately at the end of the day, you only need to find one investor who resonates with you. They get excited about it the same way that you are excited and then you are off.

The initial stage was all about getting from one stage to the next...

DT:

My experience is, the US is a big market. It’s hugely tantalizing. You cannot do it in half measures. As a company we are excited about the prospect but are still very conscious that we must have the same high standards, quality relationships, and experience we have always strived for. We pride ourselves in delivering and making sure that we are not spreading ourselves too thin.

JM:

Thank you so much David for your time and your advice. Great speaking with you.

JM:

You mentioned already that Chaser is looking to push into the US market more. Do you have any tips for people around that whole process because some people sometimes appear to come undone trying to push too far to get that market.

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96 / Issue 07

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

How to review a Xero file (and make money doing it!)

Words: Jeri Murphy, WhichAddon.com @whichaddon

Back in March 2015, I realised that what I was doing was different to many other Xero advisors. I realised that most Xero accountants and bookkeepers ask for access to a client’s Xero file as part of an initial free consultation in order to prepare a quote for the proposed bookkeeping or accounting services for that potential client... In the meantime, I was being paid in advance for doing the exact same thing whilst at the same time building the relationship with the potential client and empowering them with the knowledge to solve the problems they were facing. It was at that time, I decided to share my process in a training course called ‘How to Review a Xero File’. I want to share the process with you in this article, so you can get started making money reviewing Xero files today. If a client contacts you because their Xero file is not working for them, have you ever thought of providing them with a ‘review’ service, prepaid by them, in order for you to help them and for you to prove your expertise and build a relationship with them right from the start? Why just jump straight into explaining your fees when you don’t even know each other? Here’s how I do it: A client contacts me to let me know that they need Xero bookkeeping, training or help because they know their Xero file just ‘isn’t right’. I advise them that I can certainly help them and my suggestion is to provide them with a ‘Review and Repair’ service. I explain what this is – in brief: 1.

1-1.5 hour phone call with me and the business owner and/or main Xero users

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2. During this call – with screen sharing and webcam if they want – just like I’m there – the  client can share their Xero file with me and show me what they are struggling with.   3. The client doesn’t have to give me direct access to the Xero file – after all, they don’t  know me from a bar of soap.   4. During the call, I review the Xero file, asking questions about accuracy and validity of the  numbers, answering questions, giving tips and tricks, solving problems.   5. At the end of the call, I have a list of the areas that need to be addressed as advised  during the call. This becomes an action list on what needs to happen   6. I send the action list to the client and advise them exactly what needs to be done to get their Xero file working for them, as they need it to. I provide them with the Help Centre links to key areas and advise they can complete the tasks themselves, or they may wish to advise our ‘repair’ services or possibly pass them onto another Xero advisor in their area.   7. This session is also recorded for the client so that they can watch it back at any time to get the tips, tricks and training detail as required.   8. I generally charge Aud$275 Aud$440 for this service depending on the time of the call, 1-1.5hours.

Issue 07 / 97

Can you see how you are empowering your clients with valuable insight, expertise AND an action list to take the next steps? They will always have a memory of you being very helpful and solving their problems. This kind of service helps you to grow your client base and build important relationships for future opportunities.

If you provide a ‘Xero Review’ service like this to your clients, you are: 1.

2. 3. 4. 5.

Empowering your potential or existing client with practical knowledge and tips Providing feedback on what’s going wrong in Xero and how it happened Advising how to fix problems in the file (without your help)  Helping client create an action plan of things to fix or keep an eye on  Teaching the client what evidence they need to source to confirm the accuracy of their numbers in Xero Providing tips and tricks to speed up processing time, promote efficiency and reduce mistakes  Providing useful knowledge on how to keep their Xero file up to date in real time

review service can help solve these issues for them and they will learn something along the way to make sure they don’t have the same problems again.

The next time a new client calls Review Process Checklist: or emails you to find about your accounting or • Get invited to Xero file as Adviser or ask bookkeeping services, I client to share their Xero file from their challenge you to discuss screen   your review process • Review Statement Balances of each account with them... key question: ‘Is that • • •

Statement Balance for each account correct?’   Review Bank Statements Imported Balance if available   Review Reconciliation Report   Review Bank Account Transactions looking for Unreconciled transactions   Review Conversion Balances for actual bank statement balances   Review Sales Awaiting Payment   Run Invoice and check template   Review Sales in other statuses   Review Purchases Awaiting Payment   Review Purchases in other statues   Review Purchase Orders   Review Profit & Loss   Check for weird looking amounts and messy Chart of Accounts   Drill down into different accounts to check for correct allocation and GST mistakes   Review GST Audit Report

• •

Review Wages & Super accounts   Review Profit & Loss by Tracking Category if applicable   Review Balance Sheet at today’s date   If ‘Historical Adjustments’ > look at Conversion Balances   Review Balance Sheet at Conversion Date   Review Payroll Liability accounts – Wages Payable, Super, PAYGW   Review Other tax accounts   Review Fixed Asset Register for Pending Items   Run Fixed Asset Reconciliation report if applicable   Review Tax Codes   Review Users

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The next time a new client calls or emails you to find about your accounting or bookkeeping services, I challenge you to discuss your review process with them. Listen to the issues that they are facing with their Xero file and describe how your

• • • • • • • • •

• • • • • •

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98 / Issue 07

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

The must have book of

2016

This is a book about the extraordinary economic, social, personal and emotional impact accountants across the world are having. The 57 inspiring accountancy practices featured in its pages come from every continent, and are of every size and age. And by reading their stories you will:

“Wow! This book is a desperately needed wake up call to the profession.” Gordon Gilchrist, 20 20 Innovation “Any accountant who doesn’t read this book, or sits on their hands after reading it, ne eds their head examining.” Amy Harris, Crunch Boards

See how they are generating growth, creating jobs and changing lives. Understand how they are making the world a happier and fairer place. Discover the four main types of services accountants provide that make all of this possible. Debunk the 15 excuses that prevent some accountants achieving their full potential. Learn how to build an accounting firm that is extraordinarily rewarding for everyone involved, both financially and emotionally.

xumagazine.com/shop XU Magazine reader offer: Order online the print edition of “The world’s most inspiring accountants” and get a PDF copy of its sister book “The UK’s best accountancy practices” free of charge! We want to hear from you! Get in touch - email: hello@xumagazine.com

Issue 07 / 99

The cost of (poor) cash flow and what you can do about it If you’re having cash flow problems then you’ll know that paying your bills on time is hard. But that’s not the only cost of poor cash flow. Jordan MacAvoy, vice president of Marketing at Fundbox, explores some other costly side effects of poor cash flow and offers tips for fixing them... Cash flow is king, right? It’s business finance 101. When cash doesn’t flow into your business you can’t pay your bills, employees or make investments to help move your business forward. Or you make those payments and are left in the red. It’s a crisis situation that no small business wants to face. Yet, many do. Statistics vary, but somewhere in the region of 60% of small businesses deal with cash flow problems each year, while 80-90% of businesses that close their doors do so because of cash flow issues. Now that’s the worst-case scenario. But periodic cash flow problems can impact all areas of your business. Even if your cash flow forecast points to better times ahead, 100 / Issue 07

Words: Jordan MacAvoy, Fundbox Jordan is the Vice President of Marketing at Fundbox, a cash flow optimization tool and a Xero Add-On. Prior to joining Fundbox, Mr. MacAvoy spent nearly 6 years at Demandforce, where he was the Director of Business Development, overseeing go-to-market efforts across both emerging and established verticals. Prior to Demandforce, he held both marketing and business development roles at a variety of seed stage and venture-backed companies. Mr. MacAvoy is a graduate of Boston University. @fundbox

the consequences of a cash flow negative situation at any time can be far-reaching. Aside from not being able to make rent or payroll on time, here are just some of the other costs of poor cash flow. Your Credit Score Suffers While we’ve come a long way, and companies like Fundbox are looking beyond credit scores, many companies still use this a primary way of assessing your business. If cash flow challenges

cause you to not pay your bills on time or miss credit card payments, your personal and business credit scores will suffer. In addition, a healthy business credit score can help you negotiate favorable payment terms from vendors and mitigate the need to put up personal collateral when seeking capital or even a commercial property lease. A poor credit score leads to the inability to take advantage of those beneficial terms and can further impact cash flow in your business. All of this assumes you are cash flow positive, which leads to my next point.

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Growth is Stunted If you want to grow your business, then you need to invest in it and that usually requires good cash flow – as a side note, the faster your business is growing the more stress it has on your cash flow. Whether its buying inventory, marketing, hiring new talent, or moving to larger premises, your ability to pay your fixed costs, while funding growth, is essential. Without a keen sense of if and when cash is coming in, it’s almost impossible to take the risk and grow.

any cash flow variables that pop up along the way. A SWOT analysis is also a really useful exercise to help you identify and manage risk before it presents itself.

Your employees are your number one asset...

That applies to getting third party financing, too. If you can’t demonstrate stable and consistent cash flow (past, present and future) then your chances of getting a traditional bank loan to fund your growth are slim. Without enough cash on hand to repay your loan, traditional, risk-averse institutions won’t work with you. Despite online solutions being an alternative option for businesses that don’t meet the high bar for a bank loan, cash flow is still taken into consideration when assessing serviceability. That’s not to say growth is out of your reach, but until your cash flow situation improves, it may take time. Here are some things you can work on in the meantime: •

•

Build Your Business Credit Score. This will improve your chances of funding approval. Work on Your Debt Coverage Ratio. Even if you’ve been turned down for financing, some providers will revisit your application 6-12 months out once your situation has stabilized. In the meantime, work on your debt coverage ratio (DCR), this indicates how much cash you have in relationship to your debt. Banks, which will hold you to the highest bar, typically look for a DCR of 1.15:1 or higher. Your accounting software KPIs can help you understand where you are and where you need to be. Have a Plan B. If your cash flow problems are periodic, growth is still possible. Be sure to manage any risk associated with your growth plans by having a “Plan B”. This will help mitigate the problems created by

Employee Morale

If your business is living invoice to invoice, keeping that fact hidden from your employees isn’t easy. Poor cash flow can tempt many businesses to delay payroll. While it may help stop the bleeding for a short while, it also sends a clear signal to your staff that you’re in crisis mode and may prompt them to think about polishing up their resumes. Likewise, if you’re not paying your suppliers on time, your frontline employees will be the first to hear about it. Your employees are your number one asset. Consider them as you plan and manage cash flow. Utilize their input more. Brainstorm ways together to preserve and generate more cash. The IRS May Come Knocking

Don’t Fret, You Do Have Options The best way to manage stress is to tackle the cause. If it’s cash flow, then you do have options, some of which I’ve discussed above. One of the best places to start, however, if you haven’t done so already, is to wrap your arms around cash flow forecasting. Spend some time projecting your cash flow for the next 3-6 months: • • •

What payments are owed to you? What are your outgoing expense obligations? That’s the easy part. Next, how is all this timed?

The timing of cash in and out of your business is a critical part of managing cash flow. If you know you’ve got to make $15,000 in payroll on the 15th and 30th of each month, you better have cash coming in before those dates to cover the expense. Think about your accounts receivable schedule, when are customers typically paying you? Even if your terms are 30-days, if they usually pay you at Net-45 or longer, factor that into your forecast.

As you develop your All that forecast, consider other variable costs worrying that can throw off your predictions – about money inventory purchases can quickly take to support a spike in sales, software a toll on your license renewals, marketing costs, etc. health...

The IRS doesn’t care about your cash flow situation, but they will have a problem if you’re not paying your payroll taxes or quarterly estimated taxes on time. Many business owners underpay their estimated taxes (or avoid paying them at all) when cash flow is tight. It’s not a good strategy; the IRS can impose penalties and interest for missing your tax obligations. Instead, talk to your accountant to understand how you can better manage your payments and take advantage of tax deductions to offset the cost.

This entire exercise will help you understand what cash you have left with on a recurring basis, after you’ve met these obligations. It will also help you spot any bumps in the road. Take Steps to Mitigate Problems Before they Arise

Subscribe for free to read the full magazine Stress

No surprises here. All that worrying about money can quickly take a toll on your health. Worrying about how you’ll make payroll or pay your family’s health insurance premiums can quickly take its toll.

As you look at your cash flow forecast think about the steps you can take now to mitigate those periods when you know cash flow is going to be tight. Perhaps you need to fast track your invoicing and collections process or change your invoice terms. Could you cut unnecessary expenses, raise your prices or reassess your supplier contracts. Every business is unique, but think long and hard about where your business could improve. It’s a worthwhile exercise that will steer your business on the right course.

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Issue 07 / 101

Out now - order your copy!

The book begins by tackling the initial set up of Xero to ensure optimum configuration for success. From there, the next logical step is to set up the automated bank feeds, which is the best innovation in bookkeeping in years. Now that your bank data is ready for importing, we will tackle the most common transactional items, being sales invoices and purchase bills. Despite these being largely transactional, we will work through

ways to automate the process where possible, save time, and avoid potential human errors along the way. Then we will start checking reports and analyze what is working or not and make changes to workflows and setups. The end result is that you will have a fully configured system ready to use and years of experience offering best practice solutions to what have been, for years, unnecessary roadblocks in your business.

xumagazine.com/shop 102 / Issue 07

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

...and finally

5 financial reports your business needs now Words: Marta Bright, Insightly Marta Bright is Insightly’s Content Manager. She’s been writing about the ‘business of technology’ in the Silicon Valley for more than two decades. @insightlyapp

A lot of business owners don’t like numbers. Some are downright scared of them... This is the wrong attitude, says smallbusiness strategist and Xero certified advisor Danetha Doe. “You should embrace numbers. They’re your best friend,” she says. “They tell you a story so you can make decisions—whether you can hire a new employee, expand to another location or take that vacation to Italy.” Numbers have taken Danetha a long way, from NFL cheerleader to CEO of Danetha Doe Consultingand one of CPA Practice Advisor’s Top 40 Under 40 accounting professionals in 2015. Danetha advises other business owners to depend on the following five financial reports. They’re essential if you want to hear the story your own business is telling you. The balance sheet Your balance sheet indicates your financial position. It indicates your liabilities and assets. Your liabilities could be loans or other forms of debt. You need to keep Continued on page 110...

Pictured: Danetha Doe To learn more about Danetha Doe, visit: danethadoe.com

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Issue 07 / 103

Add-on Directory Bills & Expenses

Receipt Bank | @ReceiptBank receipt-bank.com

OVER

5 0 0 ADD-O

To advertise, please email the team at: advertising@xumagazine.com

MMC Convert | @mmcconvert mmcconvert.com

CustomerSure | @CustomerSure customersure.com Exsalerate | @exsalerate

AutoEntry | @OCRexSoftware

exsalerate.com

autoentry.com CONVERT

Fuseboard fuseboardapp.com

Global Leader in Data Conversion Intelligently Capture Invoices and Receipts straight into Xero

Highrise Connector By Xero help.xero.com/Network_Highrise Infoodle | @infoodle infoodle.com Infusionsoft By Zapier | @zapier zapier.com Insightly For Xero | @insightlyapp

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XpressConvert xpressconvert.com.au

Conversions CONVERSIONS

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CallPro CRM | @callprocrm

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breadwinnerhq.com callprocrm.com/eur CapsuleCRM | @CapsuleCRM capsulecrm.com Carry The One For Salesforce carrytheone.co.uk ClickDesk Live Chat | @ClickDesk clickdesk.com Collabspot | @collabspot collabspot.com Client Heartbeat | @ClientHeartbeat clientheartbeat.com ClubHub | @ClubHubSSL clubhub.co.nz/ commonsku | @commonsku commonsku.com Communigator communigator.co.nz ConstantContact | @ConstantContact constantcontact.com CRM Online

insightly.com JunariCRM+ | @JunariCRMplus junaricrmplus.com Legrand CRM | @Legrand legrandcloudcrm.com/home Magnetism magnetismsolutions.com Customer Mailchimp#1 byOnline OneSaas | @onesaas Relationship Management for

onesaas.com/integrate Small and Growing Businesses MailSync | @MailSync www.insightly.com mailsyncapp.com Ninjodo | @Ninjodo ninjodo.com OnePage CRM | @OnePageCRM welcome.onepagecrm.com OneSaas for Salesforce | @onesaas onesaas.com OneSaas for Zoho CRM | @onesaas onesaas.com/integrate Pepperi pepperi.com PropertySuite | @PropertySuite propertysuite.co.nz QikBizCRM | @QikBizNZ qikbizcrm.com Quick Win Development | @quickwindev quickwindevelopment.com Really Simple Systems | @ReallySimpleSys reallysimplesystems.com/uk Solve CRM | @solve360 solve360.com SugarCRM Klix Connector | @klix_media webdatadesign.com.au SyncApps by Cazoomi | @Cazoomi cazoomi.com Vision6 | @vision6 vision6.com.au WORK[etc] CRM | @WORKetc_support worketc.com Xploite | @xploiteapp xploite.com

crmonline.com.au

104 / Issue 07

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Add-on Directory Zendesk by Cloud Elements | @CloudElements cloud-elements.com Zendesk by Zapier zapier.com/zapbook/xero/zendesk

Bespoke Integration BESPOKE INTEGRATION 3Bit Solutions 3bit.com Axis Direct | @NZAxisDirect axisdirect.nz Custom D | @customdhq customd.com Databuzz | @databuzz

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The Logic Studio

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logicstudio.nz

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Debtor Tracking DEBTOR TRACKING

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Complete CashďŹ&#x201A;ow ConďŹ dence www.satago.com

chaser.io

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Digital Fusion

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Chaser | @chaser_io

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webgility.com ecwid by Stitch Labs | @StitchLabs

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smartAR | @getpaidontime

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smartar.co.nz

Loaded Commerce by Carry The One carrytheone.co.uk

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Your invoices paid on time, automatically

www.chaser.io Check Business check-business.co.uk CreditorWatch | @creditorwatch Dynamic Solutions Ltd dynamic-solutions.co.nz EndGame | @GoEndGame end-game.com/xero ExcluServ | @ExcluServ excluserv.co.uk Foundation Data foundationdata.co.nz Harmonic New Media harmonicnewmedia.com Hashbang | @hashbangnz hashbang.co.nz Infopower customintegration.co.nz Interlockit.com

interlockit.com iSOS isos.com netengine.com.au numernet.com nuSoftware | @nu_Software nusoftware.com Open Sauce Systems | @OpenSauceSystem opensauce.systems Red Arc Systems redarc.systems Red Jungle Limited | @redjungle redjungle.com Sixtree | @sixtreeau sixtree.com.au Smudge | @smudgeio smudge.io

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Documents DOCUMENTS

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businessbackbone.co.uk Evernote by Zapier | @zapier

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neto.com.au OneSaas for Opencart | @onesaas

formitize.com/en Google Docs by Zapier | @zapier

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Auto email payment reminders while profiting from late fees and interest charges latefeemanager.com LedgerLive ledgerlive.com Mentio | @mentiohq mentio.ca ONECLICK Cash Collection | @ONECLICK_Apps oneclickcashcollection.co.uk Promptly | @Paid_Promptly

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Add-on Directory Shopify by Carry The One carrytheone.co.uk Shopify by Pipemonk | @pipe_monk pipemonk.com Shopify By Stitch Labs | @StitchLabs stitchlabs.com Shopify By Tradevine | @TradevineTeam tradevine.com Squarespace | @squarespace squarespace.com Stitch Labs | @StitchLabs stitchlabs.com Storbie | @storbiecommerce storbie.com Synergy 8 | @SynergyEight synergy8.com TaxJar | @TaxJar taxjar.com TradeGecko | @tradegecko tradegecko.com Tradevine | @TradevineTeam tradevine.com Veeqo | @Veeqo veeqo.com Vextras - Kiwi | @vextras vextras.com Volusion by Vextras | @vextras vextras.com Web Widgets websitebuilder.nz Zeald | @zeald zeald.com Zen Cart by Carry The One carrytheone.co.uk

ActionStep | @Actionstep actionstep.com Active Collab By Trio | @Trio_Tech triotech.co.nz Acuity Scheduling | @AcuitySchedulin acuityscheduling.com AffinityLive | @affinitylive affinitylive.com Autotask by My Accounting Toolbox myaccountingtoolbox.com aXcelerate | @aXcelerate axcelerate.com BookingBug | @bookingbug bookingbug.com briefcase getbriefcase.net BuilderTREND | @BuilderTREND

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Invoicing &&Jobs INVOICING JOBS

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buildertrend.com

106 / Issue 07

buildXACT

geoop.com Harvest | @harvest getharvest.com Houston Medical houstonmedical.net iCOS LIVE - Online Transport Management | @iCOSLIVE icoslive.com IMS Service Track i-man.com.au inForm | @getinformapp getinform.com Intellibook | @intellibookapp intellibook.co invoiceASAP | @invoiceASAP manage.invoiceasap.com iTrade itrade.net JobAdder | @jobadder jobadder.com JobPro Central jobprocentral.com

XU Magazine - the independent magazine for Xero users, by Xero users. Find us online at: xumagazine.com

Add-on Directory Socket | @socketapp socketapp.com Sohnar Limited / TrafficLive | @TrafficLIVE trafficlive.com SpannerPlanner | @spannerplanner

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mydesktop.com.au 25% off your first year with code XU16

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imporex.com.au JobReady | @JobReadyNSW JobSync | @jobsyncapp

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zapier.com Imporex

jobready.com.au

Arlo

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zapier.com Zapier | @zapier

pocketsmith.com Podio by Phases

zapier.com Zendesk by Zapier | @zapier

xepod.net Podio by Zapier | @zapier

zapier.com Zenoti | @ZenotiSoftware

zapier.com

zenoti.com

Progressclaim.com | @progressclaim

Payments

progressclaim.com PropertyTree | @PropertyTree

Acuity Scheduling | @AcuitySchedulin

propertytree.com Re-leased | @re_leased

acuityscheduling.com Authorize.Net | @AuthorizeNet

re-leased.com Re-View | @Re_viewsoftware

reseller.authorize.net Bill and Pay | @BillandPay

re-view.com Real Estate Investar | @reiaustraila

billandpay.com Bill.com | @billcom

realestateinvestar.com.au Rerun | @Rerunapp

bill.com Chargify | @Chargify

rerunapp.com RightSignature | @RightSignature

chargify.com Checkeeper | @Checkeeper

rightsignature.com SafeGuard My | @safeguardmy

checkeeper.com/xero CheckVault | @CheckVault

safeguardmy.com

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Add-on Directory Directli | @Directli

Stripe (Canada) | @stripe

directli.co.uk

stripe.com

DPS Payment Express | @PaymentExpress

HR Partner hrpartner.io

Stripe (IE) | @stripe

evopos.com

Square | @Square

Infinity RMS | @InfinityRMS

squareup.com

eazycollect.co.uk

infinityrms.com

Sush.io | @sushio

eWay | @eWAY_

iZettle | @iZettle

sush.io

eway.io

izettle.com

Swipe HQ | @SwipeNZ

Ezidebit | @Ezidebit

Kounta | @kounta

swipehq.co.nz

ezidebit.com.au

kounta.com

Transfer Mate | @TransferMate

GoCardless | @GoCardless

MINDBODY | @mindbodyonline

transfermateonline.com

gocardless.com

partner.mindbodyonline.com

TransferWise | @TransferWise

IntegraPay | @IntegraPay

transferwise.com

integrapay.com.au

uCollect | @ucollect_biz Your payments partner

ucollect.biz

Possboss | @posbosshq IMS Payroll imspayroll.co.nz Intertec TimePro timesheets.com.au iPayroll ipayroll.co.nz KeyPay | @KeyPayApp keypay.com.au

Direct Debit, ACH & Credit Card collection for Xero invoices - automatically NZ, AU, US, CA, UK, EU

www.ucollect.biz

MyPAYE | @MyPAYE mypaye.co.uk Payescape payescape.com Payment Evolution | @payevo paymentevolution.com

Payroll &&HR PAYROLL HR

PaysOnline | @paysonline

Automated Data Processing Inc. | @ADP

Simplepay.ca | @simplepaycanada

paysonline.com.au simplepay.ca SimplePay.co.za simplepay.co.za SimplePay.com.sg simplepay.com.sg Smart Payroll | @smartpayroll smartpayroll.com.au SurePayroll | @SurePayroll

Reporting Reporting Ag Profit | @AgProfitAus agprofit.com.au Asset Guru | @Asset_Guru asset.guru

lps.surepayroll.com Talenox | @Talenox talenox.com Tanda | @TandaHQ tanda.co Thankyou Payroll | @ThankyouPayroll

Fixed Asset Management made simple

thankyoupayroll.co.nz The Payroll Site | @ThePayrollSite

sales@asset.guru

thepayrollsite.co.uk

www.asset.guru

Web Payroll | @WEB_Payroll webpayroll.com.au Workforce Guardian | @workforceguard workforceguardian.com.au ZUUS Workforce | @zuusworkforce zuusworkforce.com

Benchmarking.com.au benchmarking.com.au Bizeo | @bizeo bizeo.com.au

Point of Sale POINT OF SALE

Blink Reports

CIN7 | @Cin7online

Bode Tree | @BodeTree

cin7.com ClickPOS | @ClickPOS_Online clickpos.com

Stripe by Commerce Sync |

Clover by Commerce Sync |

@commercesync

commercesync.com

eposnow.com Evopos | @evoposdms

stripe.com

paymentexpress.co.uk Eazycollect | @eazycollect

Epos Now | @EposNow

commercesync.com

blinkreports.com bodetree.com BPM bpmglobal.com Bstar | @BstarAustralia bstar.com.au Calxa | @calxa calxa.com

108 / Issue 07

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Add-on Directory Carbon Analytics | @co2analytics co2analytics.com

My Own CFO | @myown_cfo myown-cfo.com

Cash Flow Story

Copper | @copperproject Deputy | @deputyapp

cashflowstory.com

Timestamp | @timestamphq

copperproject.com

timestamphq.com Total Synergy | @totalsynergy

deputy.com

Checkmybooks | @checkmybooks

Ento | @entohq

checkmybooks.co.uk

totalsynergy.com.au Tradify | @tradifyhq

ento.com

CrunchBoards | @CrunchBoards

Everhour | @everhour

crunchboards.com

tradifyhq.com TriggerApp | @triggerapp

everhour.com

Cyfe | @Cyfe

etz Technologies | @etzTechnologies

cyfe.com

triggerapp.com Tymwise | @kapaitymwise

etztec.com

DataDear | @DataDearApp

Flexitime | @FlexiTimeTeam

datadear.com

tymwise.com vWork | @vWorkApp

flexitime.co.nz

DiGA | @BiznizBackbone businessbackbone.co.uk Dryrun | @Mydryrun

Freshdesk | @freshdesk Neatly | @go_neatly neatly.io

dryrun.com

Panalitix | @panalitix panalitix.com

Bring Clarity to Your Cash Flow & Compare Financial Scenarios

ProfitSee | @MyProfitSee myprofitsee.com

vworkapp.com WorkflowMax | @WorkflowMax

freshdesk.com GeoOp | @GeoOp

workflowmax.com ZeroTime

geoop.com Google Calender by Zapier | @zapier

zerotime.io ZUUS Workforce | @zuusworkforce

zapier.com Harvest | @harvest getharvest.com iCOS LIVE - Online Transport

zuusworkforce.com

Xero Practice Manager PRACTICE MANAGER Class Super | @ClassSuper

Management | @iCOSLIVE icoslive.com

class.com.au DataDear | @DataDearApp

IMS Service Track i-man.com.au

dryrun.com

Intertec TimePro timesheets.com.au jobprocentral.com

quickwindevelopment.com

figured.com Financial Driver | @FinancialDriver financialdriver.com Float | @FloatApp floatapp.com Grappster | @grappster grappster.com Infoodle | @infoodle infoodle.com Klipfolio Dashboard | @klipfolio klipfolio.com LivePlan | @liveplan scoreboard.liveplan.com Mentio: Business Mentor | @mentiohq mentio.ca Momentum atsora.com Moxy Cloud Reporting moxyreports.com

exsalerate.com FORMbasic | @formbasic

KeyPay | @KeyPayApp

Fathom | @fathomhq Figured | @figuredapp

quickwindevelopment.com Exsalerate | @exsalerate

JobPro Central | @JobProCentral

Excel Int. Tools - QWD | @quickwindev

fathomhq.com

datadear.com Excel Int. Tools - QWD | @quickwindev

keypay.com.au

formbasic.com.au Mogul

MinuteDock | @minutedock minutedock.com

mogul.nz Practice Ignition | @ignitionapp

Nexonia | @nexonia nexonia.com

practiceignition.com Receipt Bank | @ReceiptBank

NextMinute | @NextMinuteApp nextminute.com

receipt-bank.com Spotlight Reporting | @spotlightrep

Outlook Int.Tools - QWD | @quickwindev quickwindevelopment.com

spotlightreporting.com Stryke Tax | @stryketax

ProWorkflow | @ProWorkflow proworkflow.com

stryke.com.au Time Tracker by EndGame | @GoEndGame

Roll | @rollhq rollhq.com

end-game.com Trustworks | @trustworksnz

SmartBiller | @smartbiller smartbiller.co.nz

trustworks.co.nz Xero Workpapers | @Xero

Sohnar Limited / TrafficLive | @TrafficLIVE

xero.com

trafficlive.com Streamtime | @streamtime streamtime.net

Cloud Integration/Outsourcing

Cloud Integrator/Outsourcing Advance Track | @AdvanceTrack

Synergist | @Synerg1st

advancetrack.co.uk

BlueHub | @Blue_Hub

gettimely.com

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Issue 07 / 109

...and finally

...Continued from page 103

track of them. You will also need this information when you apply for funding or when you need to show documentation to support your net worth as it relates to your business. Your business also has assets, no matter how small it is. If you’re running a business online, your assets may consist of a laptop. If you have a product-based business, your assets may include a warehouse full of inventory. Your assets can also be intangible, intellectual property like trademarks and patented processes. “Your balance sheet tells you how much your business is worth at any given time. You should review it at least once a year, because it’s very important to have an idea of your company’s worth for tax-filing purposes,” says Danetha. The income statement This is one of the most frequently used reports by business owners. While you might review your balance sheet once or twice a year, you should review your income statement often. Another difference: your balance sheet is a snapshot of a point in time, say July 1, 2016, while your income statement is a picture of a period of time, such as July 1, 2016-August 31, 2016.

flow is king.” If you’ve been in operation long enough, you might also see cash flow as the pulse of your business.

The budget “If it’s weak, you could be on edge of disaster,” says Danetha. “All business owners have known days when cash is just not available. It’s not a good feeling. But your cash flow statement will help you better plan for those times when cash is tight.”

“You should review this report at least once per quarter, ideally once per month,” advises Danetha. “It tells you how close you are to reaching your revenue goals and helps you keep tabs on expenses that may need to be reduced.” The cash flow statement You’ve no doubt heard the phrase “cash 110 / Issue 07

Your budget is a guesstimate—because you can’t plan for everything. But your budget keeps track of unplanned spending and you can use this information to better prepare for next year. “Consider your dream purchases as well, like a revamped website, a redecorated office or even a trip to a conference in Tahiti,” says Danetha. “Lay out your expenses month by month and use your budget as a guide for your decisions.”

Your budget is a guesstimate - because you can’t plan for everything...

Your cash flow statement tells you how much cash your business has left over after a specific period, usually over a year’s time. You may be thinking, “But doesn’t the income statement calculate this?” Yes, but sometimes the two numbers are different. Whereas your income statement reflects all income earned during a period, your cash flow statement shows when the cash was actually received. If you have a business that sends invoices and allows clients to pay within 90 days, the two reports could be vastly different.

Manage your finances well and you can afford to dream, instead of stare at the ceiling and worry...

Your income statement shows whether or not your business earned a profit during that period of time. It’s also known as a profit-and-loss statement. It’s calculated according to income earned minus expenses incurred.

good. But you can avoid it by reviewing your A/P regularly.

Manage your finances well and you can afford to dream, instead of stare at the ceiling and worry. But if you do need help, there is an accountant prepared to assist you at any time. You can find one at xero.com/advisors.

Accounts receivable and payable Your A/R report shows who owes you and when. Your A/P shows who you owe and when.

“You should review these reports every two weeks,” advises Danetha. “Your A/R will help you manage cash flow by alerting you to clients that are late. If they are, gently remind them. They’re in business too and may have forgotten. Although if they continue to pay late then you need to have a professional discussion with them and start charging late fees. Or let them go.” Your A/P report will help you stay on top of your bill due dates and manage your cash. Having a bill sneak up on you, or forgetting about it and paying late, is not

Above: Marta Bright, Insightly

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