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Being creative with Xero

Working in Xero’s UK support team, I get to hear a wide range of requests or suggestions from our customers.

A couple of months ago Richard Burton from Hoodeasy, a company that sells leavers hoodies to students, contacted me about an idea he’d had. Richard’s been using Xero since June 2008 for his small business that sells personalised hoodies to groups of students in the UK, particularly for those leaving who want a memento.  He was considering how the development of an application to enable his various suppliers to access Xero, and add draft invoices directly into his account, might be achieved.

Richard told me that he sometimes struggled to keep on top of all his paperwork and so he thought if his suppliers could add invoice details directly into Hoodeasy’s Xero system, it would save him several hours a week. Rather than have Hoodeasy go to the bother of building a custom application I thought it might be simpler for them to either:

  • Request each supplier fill in a simple spreadsheet which could be emailed to Hoodeasy and imported into Xero
  • Or that he simply invite each trusted supplier into his Xero organisation using the  employee role. This gives them secure and restricted access to enter their draft invoices.

Richard preferred the second suggestion and promptly sent his suppliers employee role invitations from his Xero organisation. He then contacted them to explain further.

Richard reported back:

None of my suppliers were worried about the proposal from a technical or security point of view. They all seem comfortable with web-based software which is great. I didn’t have to educate them and they found it very easy to add invoices. Hoodeasy’s suppliers now get paid sooner because we get the invoices instantly and any queries can now be resolved instantly over the phone. It’s a win-win relationship.

But, paying suppliers early – surely that’s counter intuitive in a cash starved economy?

Negotiating extended credit terms with suppliers can be a quick way to free up cash in hard times. Reducing credit to incentivise suppliers to enter their invoices directly in Xero seemed quite a price to pay to free up several hours each week.

I challenged Richard on whether he thought the benefits outweighed the costs:

We don’t go to production with an order until we have payment and so our cashflow is fine. I’m more than happy to pass some of those benefits down the supply chain if it means that they’re happy saving me a few hours a week in bookkeeping.

This arrangement isn’t going to be suitable for every businesses but it does show how technology can change the dynamics of relationships between supplier and customers. Queries can be resolved quickly and payments made promptly. A small business owner can free up time to focus on their business rather than worrying about staying on top of bookkeeping.

Xero saves you time because it’s easy to use. Having suppliers do your bookkeeping for you – it doesn’t get much easier than that!

 

Read more about Business, Small Business

 

14 comments

Adrian Pearson
26 November 2009 #

Clearly another benefit of cloud accounting. Nathan, can I suggest that Xero integration with Billflo (http://www.billflo.com) would serve the same purpose?

Nathan Travers
26 November 2009 #

Hi Adrian – thanks for the tip. I’ll ask the Network Team to take a look.

Ian Sweeney
26 November 2009 #

Richard’s comment about wanting to pass the benefits on to his suppliers is something we regularly hear from our small biz customers. We also have customers who take the opposite approach so as to manage cash-flow or get early payment discounts. The nice thing about shifting to truly electronic invoicing is that the (e-invoicing) customer gets to choose the benefit.

Nathan, in regards to Adrian’s suggestion, we’d love to talk to the Xero team about an integration.

P.S. Adrian, thanks for the mention!

Kind regards,
Ian Sweeney
CEO billFLO

Antz
26 November 2009 #

Here’s another suggestion: if the supplier is also using Xero, what about having the ability to link the two Xero accounts to allow a form of “EDI”?

Eg. every month I receive a bill from Xero for my monthly subscription. Would be great if a draft supplier’s invoice automatically appeared in my Xero too.

With more and more businesses switching across to Xero, creating those networks of “Xero-friendly” businesses can only increase.

Catherine Walker
26 November 2009 #

@Antz – it sounds like our Xero Network might already take care of this! While 3rd-party organisations can use our network to integrate their software with Xero, we also use it as a Xero-to-Xero network allowing 2 organisations using Xero to send and receive invoices.

Here’s an overview page in Help Centre that also has a short video on how to set it up: Xero Network

Hope this covers it!
Catherine

Kimball Fink-Jensen
26 November 2009 #

This is a really good example of an approach to accounting called “lean accounting”, a corollary to lean thinking. The idea behind lean accounting is to speed up the cash-to-cash cycle just as lean thinking is designed to speed up the flow of materials and information through any process.

There is a growing movement towards lean accounting world-wide – I attended the 5th Annual Lean Accounting Summit in Orlando in September.

The idea that suppliers can load/transmit their invoices to their customer’s systems direct, and then get paid “next day” is an example of cash moving through the system. In lean thinking the plan is to improve cycle times, first from say monthly to twice a month to weekly to daily to hourly (or whatever is possible). However that won’t work if the accounting system remains marooned in traditional accounting cycles.

Congratulations Xero for creating an environment that facilitates “everything, everyday” activity – let’s now see the rest of the activity base in our respective economies strive to catch up!

Kimball Fink-Jensen
Principal
KAIZEN Institute New Zealand

Rod Drury
27 November 2009 #

Thanks Kimball, that’s really interesting.

Martin Salo
27 November 2009 #

Well, in Estonia, we have an official E-Invoice standard, that enables companies to exchange invoices electronically with each other or with consumers. When for example a telco issues me an invoice, it automatically appears at my online bank and I just have to click a button and enter a pin code to make the payment. For each company that issues e-invoices, every receiving party can choose if they want to receive it by post, by e-mail or directly to my bank.

The standard:
http://www.pangaliit.ee/files/est_arveldused_e-arve/e-invoice_1.0.1.pdf

Thinking about creating a Xero Network service, enabling Xero to directly receive / send invoices according to the standard. Then it wouldn’t even matter which program is sending / receiving the invoices, it would just work.

Rod Drury
27 November 2009 #

Thanks Martin, that’s really useful. We’re digesting that. Would be good to have a standard invoice format that the vendors can use and pass to each other.

We’re up for it.

Rod

Campbell
27 November 2009 #

@Antz appeared not to know about sending invoices via teh Xero Network which OG helped on. I want to repeat his question though – why does Xero not use it’s own network to send invoices? I know there will be a valid reason but it seems of having to re-key my Xero Invoice!

Rod Drury
27 November 2009 #

Irony not lost :) We just haven’t got to linking our billing engine to the Xero Network yet. We bill from our subscription engine and account for it in Xero. So much to do, so much to do.

Rod

James R
29 November 2009 #

Hi Rod.
It is good to hear that you ‘account for it in Xero’.
Its sometimes suggested to me that our company will outgrow Xero if we meet our targets and that we should consider switching to other accounting software (whose very name’s send shivers down my spine)
I argue that the Xero feature set has grown with us and will continue to grow and that the nature of Xero SaaS with its API and Xero Network will enable us to plug in 3rd party tools or develop our own to meet requirements outside the Xero feature set.

You do market Xero as being for small businesses though so i’m interested in Xero’s plans as you grow. Do you anticipate that Xero will still be using Xero in 5 years for its core accounting functions?

Rod Drury
29 November 2009 #

It’s a good question.

It’s really to us that we always are compelling for very small businesses – because by number that is the largest market and it forces us to make things easy. We have watched software in the SME space drift up to larger bases. For example ‘N’ is in a tough space being pitched at larger SMEs so still fairly expensive at the small end. They are now pitching themselves as an SAP companion or replacement. So keeping at the small end is a key strategy of ours.

However, as we go go deeper in features, those requirements are often driven by handling more data and workflows. So we seem to be building increasing fit for larger companies as well.

Often the complexity of a growing business requires special Line of Business (LOB) software that can quite happily link into Xero through our API. So the accounting can actually get easier as you make that transition.

You will see us deliver more and more features for larger business over the next year. For example better coding for large volumes, payment batches etc.

At some point we may consider high volume Xero – where we pull some transactions out of our standard engine into subledgers that are optimized for volume. Say you need to bill 1000′s of customers a month. We need to do that for ourselves but keen to hear if this is of interest to many others.

Small business are really hard to label. Some are small and very complex. Some are bigger and fairly simple. So as we build more and more we fit more and more.

So in summary, we’ll always do very small businesses, but hope that we can still be the #1 choice as you grow up alongside us.

Hope that helps,

Rod

Amanda Ellis
30 November 2009 #

@Rod @Campbell it would be good to receive invoices from Xero over the Xero-to-Xero network. Nobody I deal with invoices me this way, and I would love to see the feature in action.

Regarding lean accounting and paying bills quickly, I would love to be able to request an invoice from someone through Xero (like you can in Freshbooks). Sometimes it’s hard to get suppliers to send through an invoice and I want to be able to pay it while I have the funds.

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