Xero is changing the game for small-business owners everywhere with their simple, but powerful cloud accounting platform. Xero is extremely user-friendly, affordable, and quick.
Tech Pioneers 50 recognises companies that use technology to drive disruption. They recently named Xero as one of the top tech pioneers for 2016 along with Atlassian, Envato, Campaign Monitor, and Canva.
More and more businesses are embracing the move to the cloud. And for good reason. But what does this mean? How can small businesses benefit from cloud computing and cloud accounting?
Cloud Computing Explained
When you use a cloud program, you do not need to install any software on your computer or mobile device. All you need is a device with an internet connection so that you can connect to the software and your data, which is hosted by the service provider.
A powerful machine is not required to run the software, you’ll never run out of space, and you don’t need to be concerned about maintenance and backups. You can work from anywhere in the world, and more than one person can access the same data, any time of day.
Cloud computing includes all kinds of cloud-based packages, including data storage programs, design packages, and cloud-accounting software.
Cloud packages are popular because of the many benefits to their users. Here are a few of their perks:
- Better collaboration with teams and clients as everybody can access the same file at the same time.
- All changes are automatically saved, ensuring that everybody works on the latest version.
- More flexibility as you can work from anywhere at any time, whether from your office, the beach, or in your pyjamas from your bed.
- No need for an extensive infrastructure to host large software packages or servers.
- There are thousands of cloud apps on the market, so competition is high and prices are low.
- User packages are usually flexible; you can scale up or down anytime you need to.
- Many cloud packages are accessible from mobile apps, so you can essentially run your business from your phone.
- Upgrades and bug fixes happen instantly without you having to lift a finger.
The History of Accounting and the Birth of Cloud Accounting
Italy is widely recognised as the birthplace of the double-entry accounting system. Its first recorded use was in the 13th century in Genoa, and over the 800 years that followed, little has changed. The first big transition happened when computers became widely available and affordable to businesses in the mid-1980s.
In 1987, a computer-based accounting package, TurboCash, was launched. It evolved into what we know as Pastel today. You may be familiar with Pastel since they dominate about 80% of the accounting-software market in South Africa.
Cloud accounting is again transforming the accounting industry.
In the early 2000s, Microsoft brought out an online accounting package called Great Plains, which later evolved into SAAS. In 2012, Gary Epstein, the managing director of Quickbooks, said that South Africa is not ready for cloud accounting yet.
Within just a few years, the accounting landscape changed tremendously; both Quickbooks and Pastel released cloud versions, and other online packages, like Xero, are taking the country by storm.
In 2015, the Cloud Accounting Institute performed a survey in which they found that 73% of companies worldwide use cloud-accounting apps.
Benefits of Cloud Accounting
Cloud accounting comes with all the advantages of cloud-computing packages, including these benefits that are unique to cloud accounting:
- All users can work on a single ledger. The owner, bookkeeper, and accountant can access the same data, at the same time. Any changes made are updated in real-time.
- No need to make back-ups or update the package. We have all probably experienced accounting files that have been corrupted or lost. This does not happen with cloud accounting.
- The costs for cloud accounting packages are low. Usually, small businesses buy off-the-shelf packages and pay for an annual license. If they don’t like the package or want to downgrade, they are stuck with it for the rest of the year.
- No need to maintain an expensive server that is powerful enough to handle more than one user.
Xero Cloud Accounting in South Africa
South African small businesses and accountants are embracing the new technology of cloud accounting. In May 2016, Xero had their first road show in South Africa, which was attended by over 600 accountants and bookkeepers.
As South Africa is one of Xero’s fastest growing markets, they are incorporating special features for South Africa that includes:
- VAT functionality to comply with our VAT regulations.
- A change from billing in Dollars to billing in Rands. This will be implemented before the end of 2016.
- An IFRS reporting template that will be released soon.
Xero is also adding Gmail and Outlook 365 integration. With this new feature, users can view all their customers in one place, including email correspondence pulled in from these email packages.
Receipt Bank and Xero
Xero is compatible with many independent add-ons. One of them is Receipt Bank, a package that will change the lives of bookkeepers forever.
Receipt Bank pulls information from invoices and receipts to deliver the data in a digestible format – either as downloadable spreadsheets or linked directly to your Xero account. All they need are your invoices.
Every user receives a @receiptbank.me email address when they sign up. A forwarding rule can be set up to pass all invoices that you receive by email directly to Receipt Bank. They also have a scanning app, which works with both iPhone and Android – you just take a photo of your slip and it is pinged off to Receipt Bank.
This powerful application can save hours of manual data input. Their application is quick, efficient, and surprisingly accurate.
Ready to Implement Xero?
There is a global shift in the way we work; a shift from working in an office to being location independent. Cloud computing allows this shift to happen.
Moving to a cloud accounting package will give you the freedom to do business from anywhere, and will decrease the time you spend on your accounts.
If you’re curious to find out more about Xero and Receipt Bank, or are ready to make the change, get in touch with Contador Accountants to discuss your cloud accounting options. We’re certified Xero advisors.
Moving your accounting to the cloud is different from what you’re used to and it may take some time to adapt. But, if you’re willing to take the plunge, you will soon reap the benefits.