1. How does Cloud Accounting work?
To sum up, cloud accounting means storing and accessing accounting data over the internet and online software instead of one’s computer. Since the software is hosted in a remote server, it does not solely rely on a hard drive therefore it results in a safer choice for accountants or business owners. People can add or adjust data through an online platform with instant updates on all devices. There are also some other very popular usages of cloud computing such as google drive, dropbox, and Apple iCloud.
2. What are the benefits of cloud accounting software?
Software Keep Update
Technology is evolving every day, including clouding software. When you are always able to work with the latest version of the software since they update automatically, you can utilize the latest technologies or features to improve your workflow.
Easy to access
As long as you have an internet connection, you can connect to cloud accounting software anytime. It makes your team have greater flexibility in working with your operations.
Reduce manual tasks
Cloud accounting software like Xero usually has integrations or bank feed functions that allow you to import transaction data safely from the bank to your cloud software. It reduces time in manual data entry as well as the reconciliation process.
Generate Reports instantly
Generating financial statements are no longer a problem for cloud accounting users. You can have your financial reports instantly with your software to comply with accounting standards.
3. What are the problems with traditional accounting software?
Huge Storage Cost
With the fact that data need to be stored in a local drive or in physical copies, there are great risks in terms of storage and transfer of data. And once the data is lost, there are huge costs to recover.
Limited people have the access
Since only a few computers have the software, very few people are able to get access to the accounting software which makes accounting work more inefficient in terms of collaboration and transparency.
Not able to adapt company growth
Given the software will not update automatically, the original software may not be able to manage the scaling business. The software then becomes a burden for the company instead of a tool.
4. What are some business processes that Xero can improve on?
Business owners who adopt Xero primarily do so because they want to make use of a business tool that will make running their business easier. Xero offers a simpler and more efficient way of managing some of the most tedious business processes out there, such as managing the invoicing of clients.
With Xero, businesses can create template agreements, invoice clients right away while making it easy for them to settle their payments, and even provide business owners with features that will allow them to follow up on any outstanding invoice! By automating many business processes, business owners will have the freedom to refocus their energy on the key revenue-driving activities that will help grow their business!
5. What factors should I consider when transitioning to Xero?
Once you have made the decision to move your business to a cloud accounting system like Xero, you have to take into consideration what this transition would look like. The following are factors to consider that can help smoothen the adoption of Xero:
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Is it necessary to migrate all the financial information of my business?
Many businesses often want to migrate all of their historical data from their old accounting platform onto Xero. However, to the extent that all the financial data of a business is already backed up and accessible, large data migration may not be necessary. Because this is a task that needs to be balanced with time and cost, sometimes it will be best to limit the migration of information to just what a business needs to meet its statutory record-keeping obligations. In these circumstances, it would be best to discuss these issues with your accountant!
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Should you work with a professional accounting firm to smoothen the process of adopting a cloud accounting system?
A common issue that a business experiences when moving to a cloud accounting system is that their financial information may require formatting in order to be successfully imported into Xero. Not only can this task be time-consuming, but it can also be complex. If a business decides to simply migrate its closing balances, a professional accounting firm may not be necessary for the purpose of getting started on Xero. However, if a business decides they want to migrate all their information, then working with a professional accounting firm can guarantee that no complications will arise during this exercise.
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When do you want to complete this transition by?
Choosing when to start your business on a new online accounting platform is much easier than you think – depending on your requirements, you can start either on a new month or a new fiscal year. If you don’t need to port all your data over from your old accounting platform, simply bring across your closing balances: it’s a clean break.
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How will my team adjust to this change?
The physical change from using one accounting system to Xero is also accompanied with a mindset change for those who will have to use this new system. Business owners need to give their staff enough time to familiarize themselves with Xero by establishing a timeline and providing clear instructions on how to use the platform. Doing so can minimize the occurrence of any accounting issues going forward that arise from a lack of familiarity.
For those who are engaging a professional accounting firm to help facilitate this transition, ask them if they can host any training sessions!
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What other integrations will your business need?
Businesses all have different needs and will use different business tools to address their everyday challenges. Ensuring that all these different tools can work together can often enhance the core capabilities of a business whilst increasing the accuracy of the information utilized. If there is a specific business tool that your business needs, check first to see if it integrates with Xero here. If your desired tool doesn’t integrate, then you can also consider the variety of options found on Xero’s App Marketplace to see if there is a suitable alternative!
