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!