Xero is not just another accounting tool…and it should not be used like another accounting tool.
There are many accounting tools on the internet. Some are free. Some are cheap. Xero is neither of those. What it is is DIFFERENT.
You see, the old way of doing accounting is to run your business and do your accounting later – always playing a game of catch-up.
This creates multiple inefficiencies:
Firstly, there are differences between the excel sheet that is giving the instructions and the accounting records – these then need to be investigated which takes time. Usually errors are found – and errors cost money as they result in poor decisions.
Secondly, time has to be spent answering the accountants questions – all time which can be better spent running your business.
Fortunately, Xero has built-in tools (and a whole lot of add-ons) to help you RUN your business THROUGH your accounting system.
1) Bills awaiting payment
This is probably the biggest time saver – you have to keep a track of who you owe money to and how much you have paid.
Generally, this is done by updating an Excel sheet, keeping a file of unread emails or printing out invoices. Then, once a bill is paid, it gets signed, marked as read or transferred to the “paid” folder. However, none of this does ACCOUNTING.
We recommend sending the bill directly to Receiptbank as soon as you receive it. This will capture the bill for you (your accounting and VAT are updated), file it accessibly and add it to the list of bills you need to pay.
When you make your payments, you consult this list in Xero and mark the bills as paid.
You’ve done the same tasks – but directly in Xero which will reduce discrepancies, errors and questions later – AND, it has updated your accounting records sooner, allowing you to have better information and make better decisions.