Last Updated on September 19, 2019 by
Xero accounting software: Meaning
Xero accounting software specially designed to make bank reconciliations simpler, easier, generate real-time thoughtful reports and share access with your accountant. Xero is the best cloud accounting software company that resided in New Zealand offering simple accounting software to handle small and medium-sized businesses.
In New Zealand, Xero was founded in July 2006. Today, the Xero system is seen as the leading business accounting software provider. As per the 2014 report, around 50% of people increased the number of Xero users. You can say the number of Xero accountants increased twice i.e. 11,573.
Now you might be thinking what’s new in the FreshBooks accounting software that you should use it? Scroll the page!
Why should you use XERO accounting software?
- The first and the best thing is that Xero business is ‘on the cloud’. This implies that you can approach it from any place just using the internet. You can even access it at the same time. There is no need to worry about backups and version control.
- Using your online banking, the Xero accounting system directly takes its information. This helps you in avoiding any kind of mistake in typing the numbers. It not only saves loads of time but also provides more accuracy.
- You can keep Xero right up to date. Every day uploading your bank information enables you to see where you actually stand financially whenever you want. Instead of relying on historical accounts or gut feeling, you can easily take informed business decisions.
- Xero online accounting can be done using the easy-to-use Xero App. You can send out sales invoices to your customers even while traveling in any corner of the world. You are not required to wait to get back in the office.
- Purchase invoices and receipts can be scanned and attached electronically to your Xero entries. Thus, Xero beautiful accounting software helps to reduce the paper trail.
- Xero bookkeeping makes life easier by setting up certain ‘rules’ within the software. It automatically allocates items to the correct analysis code.
- Xero online accounting software provides aid with debt collection. You can automate the process of sending statements. You can also send the invoices and statements by email in order to reduce both the time and cost of postage.
Let’s move on towards the features of Xero cloud based accounting software.
Features of Xero cloud based accounting software
- Share information with the accountant
- High-level security
- Great user interface with a responsive dashboard
- Affordable monthly plans
- Easy recording and tracking
- Invoice and quote management
- Inventory management
- Managing your bills
- Easy bank reconciliation
- Payroll management
- Business management tool
After knowing the qualities of this accounting software, you may be curious to know how to use it. Move further on this page.
How to use Xero in 12 easy steps?
Set up your bank account feeds: At first, you need to set up your bank account feeds. This includes credit card and PayPal accounts.
Set up your chart of accounts: When you wish to shift from another accounting software, then you need to import your chart of accounts into Xero. Or you can modify the default chart of accounts. In order to make changes to your accounts, follow two steps: Go to Settings > Chart of Accounts.
Reconcile often: This cloud accounting software makes bank reconciliation much easier than ever. Your transactions are automatically pulled as Xero is connected to your bank. Reconciling your account weekly not daily can also ensure the accuracy of your accounts.
Set up your organization details: In case, you have a limited company, make sure that you have a registration number and registered office address. The registration number and address needs to be displayed on any invoices issued by you.
Select Settings > General Settings > Organisation Settings
This is to input or update your entire business’s contact details.
Set up your financial settings: Visit Settings > General Settings > Financial Settings. It enables you to enter your company details:
- Financial year end: This ensures you to have the right year-end for your reports.
- VAT Details: VAT scheme, VAT number and VAT period.
Add users: Go to Settings > General Settings > Users to add users. This allows you to add your accountant, bookkeeper, and other necessary stakeholders. You can find further information on users such as:
- Add a user’s details
- Send an invitation to a user
- View your Xero users
- Edit a user
Add your company’s branding: Next step is to set up your invoices using terms of payment, contract, and logo.
This will nail down your terms of payment that can improve your cash flow. Now when you will have shorter payment terms, then it can help you to get paid earlier.
Want to set up various branding schemes? Simply go to Settings > General Settings > Invoice Settings.
Add payment services: Now you are required to link to any active payment services to your Xero accounting systems. The payment services can be PayPal, Stripe, or GoCardless. It becomes beneficial for customers to pay you. For this step, go to Settings > General Settings > Invoice Settings > Payment Services
Set up payment reminders: If you set up payment reminders and organize your credit control systems then you can make payments faster. Try to set up payment reminders when it becomes your habit of reconciling receipts daily. Follow 4 simple steps to set payment reminders, Settings > General Settings > Invoice Settings > Invoice Reminders
Learn basic reports: It’s important to learn the working of basic Xero reports. In the starting, when you have input some data, just look at your Balance Sheet, Profit, and Loss, Aged Receivables, Aged Payables, etc.
First Go to Reports > All Reports to check all the options available to you.
Set up payroll: The Xero Payroll enables you to supervise your staff costs. This function enables you to keep all the payroll costs at one place, no need to pull in information from a separate system.
Connect apps: If you use Xero’s wide range of apps and add-ons, it can serve as the best method to streamline repetitive processes and save your time.
All these apps have a wide range of functionalities like cash flow forecasting, document management, and so on.
Look at the pros and the cons of Xero to use it effectively without any error or delay while operating.
Pros and Cons of Xero
- Xero financial software enables banks that they can easily feed transactions into Xero automatically. This eliminates the need to manually input transactions. It is a big advantage.
- Xero’s interface reconciles the bank transactions to Xero transactions. Bank “rules” automatically categorize transactions that often recur. And these rules work without any human intervention.
- The “Open APIs” of Xero allow application writers to integrate their applications with Xero.
- The most challenging Xero module is the reporting module. Yes, options are available to export all reports to Excel. But in the end, manual manipulation is only left until reporting becomes more robust.
- Shifting from one screen to other i.e. navigation between screens can be a bit challenging if corrections have to be made.
- Maybe you are looking forward to a global search function but there are search functions which are specific to particular screens only.
In today’s fast-paced world, a busy entrepreneur needs tools that can go along with him anywhere and anytime to manage cloud account and business deals. Xero features make your business data accessible at every moment. Xero accounting software is the answer to all your financial needs.