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The future of accounting is online – part 5

This week I’d like to talk about the No Risk Solution.

We all want to help small businesses. The global financial crisis (which we’re not quite out of yet)  means all business owners are having to pay more attention to their finances. Many of the smaller operators are struggling and need much greater visibility of  their cashflow if they are to survive. Banks are demanding quality, accurate financial information and a hastily prepared spreadsheet is simply not good enough anymore.

Anything that saves you time and money and provides greater real-time visibility of cashflow is a tool that business owners and their accountants could really do with in tough financial times. Here’s what we’ve found happens in such an environment:

  • Almost all businesses need a greater focus on cashflow.
  • For banks to roll over credit facilities, many will demand monthly management accounts.

Where does Xero come In?

  • Xero helps businesses to have accurate, timely and up-to-date financial information.
  • Xero makes it easy for businesses and their accountants to collborate cost effectively. It also aides in the preparation of professional, accurate monthly management reports.
  • Xero has unlimited users and access, so the business owner and accountant use the same financial system and general ledger data for the different jobs they need to do. No more double handling of data.

As an accountant I always wanted to give my clients a no risk option when it came to accounting software. I have certainly had my fair share of clients who’ve told me their existing software sucks. So I don’t want to recommend any software where a risk exists. For instance I don’t want them to pay a large amount of money upfront for a piece of software that will soon be out of date, and which lives on just one computer and allows just one user.

Xero has a monthly subscription fee and is a better option for many small businesses for two reasons. Firstly if they decide it’s not for them, they can stop the subscription at anytime. Worst case scenario is they may have paid for a month or two. Secondly a monthly payment fits better with the cashflow cycle of most small businesses, which generally do not have cash reserves and cannot afford expensive hire purchase agreements. Also, the free trial means they can try before they buy, which just makes good sense.

An online accounting system like Xero can be implemented quickly, and easily. There’s no large, outlay upfront so where’s the risk? And Xero gives a real-time, better view of cashflow which is essential to both the accountant and the business owner.

Hamish Edwards is a Chartered Accountant and the co-founder of Xero. You can view the introduction to this series here. More information on what Xero offers accountants can be found here.

 

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