Business accounting can be overwhelming if you don’t have the right tools. Xero is a robust accounting software that can help you streamline essential accounting processes. In this article, we’ll introduce Xero and how you can benefit from it.
Managing your business finances can be a time-consuming task that can overwhelm most business owners. Businesses both large and small face similar accounting challenges no matter how much they’ve grown. But unlike SMBs, large corporations have the financial muscle to deploy sophisticated accounting solutions unavailable to smaller businesses.
Due to budget constraints, most small business owners in the early stages of growth are more likely to use traditional methods to do their accounting. This often leads to problems caused by human error and poor planning in the long run. Fortunately, there are versatile accounting solutions like Xero designed for SMBs to help mitigate these issues.
Xero accounting solutions can streamline your business accounting tasks so that you dedicate more time to grow your business. In this article we’ll go over Xero’s pricing, features and how to use them.
Founded in 2006, Xero has over 3 million customers, and is among the leading cloud-based accounting software for businesses, accountants, and bookkeepers. It is a budget-friendly accounting solution that combines usability and versatility to meet the needs of SMBs and independent professionals.
The accounting platform offers robust capabilities that help you automate business accounting tasks like transaction reconciliation, invoicing, calculating sales tax, and financial reporting. You can also access your accounting tools from any device, and the platform includes features like accounts payable to help you keep track of pending bills and prioritize what to pay first.
Xero can also double as an expenses manager to help you keep tabs on business expenses. The data capture feature can extract information from receipts, thus speeding up the reimbursement process.
Beyond these basic capabilities, Xero can help with inventory management and sending purchase orders. With the inbuilt templates, you can create quotations and estimates and convert fulfilled quotes into invoices to save time.
Xero has three pricing plans to choose from, making it a flexible solution for businesses with various needs. In addition, Xero doesn’t restrict the number of users for each plan.
The Early Plan is the cheapest package, priced at US$12 per month. Designed for small businesses getting started with cloud-based accounting software, the plan is ideal for freelance bookkeepers searching for a robust platform for their services. However, the plan has a limit of 20 invoices and 5 bills.
Xero’s most popular package, the Growing Plan, is priced at US$34 per month, and is best suited for businesses that have grown past the startup stage. Unlike the Early Plan, Growing Plan users can send an unlimited number invoices and bills.
Priced at US$65 per month, the Established Plan offers access to premium features unavailable to Early and Growing Plan users. While this plan is ideal for any business, it’s best suited for organizations with a solid foundation, especially those that regularly deal with cross-border transactions.
Choosing the best Xero pricing plan for your situation depends on your business’ needs and goals. Having a clear understanding of those factors then will help you choose the right plan for your business.
Business owners need to track their financial health to ensure growth. Typically, clear and concise financial information is critical for a better understanding of business processes and operations. With a plethora of outstanding accounting features, Xero is a versatile solution that can make your business more efficient.
You can connect all your business bank accounts and import transactions automatically. This feature makes item reconciliation easy and quick. For instance, if you bought office inventory, the transaction is automatically imported to Xero.
To connect business bank accounts:
1. Select Accounting from the main menu and click Bank Accounts
2. Click on Add Bank Accounts and identify your bank, then follow the on-screen instructions to add a bank account successfully
Accounts reconciliation is vital for accurate accounting management. Having your transactions reflected in Xero lets you have a seamless view of business finances and eliminate the need to manually import bank statements. Having a live feed also facilitates daily transaction matching and reconciliation.
Invoicing is a critical task when running a business since it impacts cash flow. Online invoicing helps companies to send digital invoices directly to the customer’s system, eliminating the need to handle such tasks manually. Unlike traditional invoicing methods, Xero enables you to create and send invoices from anywhere you have internet access.
To create an invoice on Xero:
1. Navigate to the Business tab and click on Sales Overview
2. On the Sales window, click the New icon and select Invoice from the dropdown menu
3. Fill in the fields with appropriate information and save the invoice
4. If you need someone else to approve the invoice, click Save and select Save as Draft
To save time creating regular invoices, Xero has a repeating invoice function that helps you design a template and automatically generate the invoice at specific intervals.
Xero saves the template in the Draft tab if you need to adjust the amount or other particulars. You can create a template by navigating to the Repeating tab in the invoice category and clicking the New Invoice tab to design a template.
Xero invoicing feature can also help you send invoices quickly and get paid on time by eliminating the complexities associated with invoicing. Xero has a currency conversion system that streamlines invoicing thanks to real-time conversion rates if your business handles international transactions. Most importantly, the software offers accurate timeline tracking to help you know when a customer views an invoice.
Sending bills and invoices to your clients and suppliers need to be fast and accurate to ensure consistent cash flow for your business. In accrual accounting methods, you use two different accounts to record expenses and income before they’re settled. Accounts payable helps to track what you need to pay the vendors regardless of whether you’ve paid or not.
You can access the billing feature in Xero in several ways, the quickest way being to click the plus (+) icon at the top-right corner of the screen to activate the dropdown menu and select the Bill option. When you type the vendor’s name, the software will suggest contacts to select. While you can create contacts from here, it’s best to add vendors in the contact menu and include important details since you may need the information when paying the bills.
Dates are vital since they determine when your expenses will appear on your reports. On the Due Date field, refer to the terms set by specific vendors. If you’re using Net 30 terms, type +30 in the Due Date field, and Xero will complete the calculation.
To create and approve bills:
1. Go to the Business icon and click Purchases
2. Click on New and select Bill
3. Type the necessary information in respective fields
4. Record the items you’re paying, and you can also reorder the items
5. When necessary, click on the Upload icon to include related items
6. If you’re dealing with billable expenses, click Assign Expenses
7. Save the new bill for approval
8. To add more information about the bill, click Add Note
Billing helps businesses understand how much they owe. The information can help with accurate cash flow predictions and generate insightful reports since you can quickly compare gross income and total expenses for a specific time.
The expense claim feature helps you and your team record information about their spending in Xero, and allows you to attach receipts. Attaching receipts ensures accountability and provide a point of reference for tax purposes. This feature minimizes the possibility of losing receipts since you upload them directly on Xero.
To create expenses claims:
1. Click on New and select Add Receipt
2. In the Receipt From field, type the company name appearing on the receipt
3. In the Date field, type the date from the receipt
4. Record the appropriate description for reporting purposes and fill the Quantity field
5. Select the account to post the transaction, then add the VAT details of the item
6. Save the entry
7. Click Submit for Approval to claim the expense
Expenses claims involve personal money that a company needs to pay back to you. This feature simplifies reimbursements, accounting, and reporting. Most importantly, the ability to upload receipts for any expenses makes it easy to verify whether the money was spent for a specified purpose.
Generating complex business reports can be a daunting process. With more than 40 customizable report templates, Xero simplifies the process of generating your interim and annual financial reports. While business accounting information is never static, it’s great to keep a snapshot for a specific period for future reference, and publishing the reports in Xero helps you save important information for quick access.
It only takes a few clicks to generate and publish a report:
1. Navigate to the bottom of the screen and click the green icon
2. Xero will open another screen with an option to publish the report as a spreadsheet, PDF, or save it as a draft
3. To access the report, locate the Reports tab from the main menu on Xero, select All Reports and choose a report you need to access
Once you’ve published a report, it will be available for all users signed in to your Xero account. This provides a seamless way to share information and collaborate with people in your organization. However, you can also save the reports in other formats if needed.
Xero is a robust and reliable accounting solution for businesses looking for a budget-friendly option that comes with excellent tools and integrations for seamless account reconciliation, tracking, and sales and purchases management.
The best way to streamline your accounting processes is by leveraging industry-leading tools and partnering with accounting experts. At BINERY, we offer budget-friendly accounting services to help you manage your existing Xero account, or help you create one if necessary (a Xero subscription is included in our pricing package). If you want to try out a versatile accounting solution, we can provide reliable support and help you set up and optimize Xero.