KEY POINTS:
Accounting software. About as dreary as filing a GST return but bear with me. If you can suffer through a mini dissertation on the former, you may find a way to relieve the pain of the latter.
With the new financial year beginning next month, now is a
common time for businesses to review their accounting software.
I've been using local start-up Xero's web-based software for the past six months and it has slashed through the tedium of small-business bookkeeping.
The result of IT entrepreneur Rod Drury's latest venture is a classy product that taps into the growing international trend for web-based "software-as-a-service" tools.
I run my freelance journalism business through a GST-registered limited liability company. The book-keeping requirements are modest, with just a few invoices sent out each month and one or two expense items clocked up each day.
Prior to Xero, keeping on top of day-to-day accounting requirements meant diligently updated a single cashbook spreadsheet, which would ultimately be emailed to the accountant after April 1. This spreadsheet was also the starting point for my laborious DIY attempts at filing six-monthly GST returns.
Tens of thousands of small New Zealand businesses are in a similar boat. Even at this simple level, keeping on top of the books can sap an annoying amount of time and energy, so I've been pleasantly surprised how much time I've saved using Xero. It adds up to several hours each month.
Xero's killer time-saving feature is its ability to automatically import a daily update of a business' bank account transactions.
Xero efficiently matches deposits into the account with any outstanding invoices for the same amount and intuitively remembers previous payments, so recording the weekly eftpos spend to fill the company car's gas tank becomes a matter of a single click.
Most banks now provide feeds to Xero.
Two other key time-saving and stress-reducing features are its ability to generate GST reports for any specified period and its easy system for processing expense claims, a common headache in small businesses.
Being web-based, access to Xero is via login through a browser rather than downloading software on to a computer. This means a business can access its accounts from any internet connected computer. The financial data is stored by Xero, not on the user's PC or laptop, and enhancements to the software are activated automatically.
This web-based model has liberating benefits, such as allowing users to update their accounts from any computer when they're travelling. A lost or stolen computer does not mean the accounts are also lost or could fall into the wrong hands.
On the other hand, a reliable internet connection is necessary and some companies don't like the idea of their data being stored by someone else, although backups to a business' own PC can easily be made.
Another advantage of the web-based platform is it enables easy access to the accounts for a company's accountant.
A common perception is that this type of solution would be opposed by accountants because it effectively does them out of work.
But Drury says it frees accountants from mundane parts of the job.
Xero's software-as-a-service platform gives it a running start in terms of innovation but this doesn't mean Xero will have an easy job persuading all businesses to switch to its software.
Companies that have spent money on one package are loathe to ditch it if it works.
However, given it costs $49 per month (excluding GST) I would expect any business moving up from the cashbook approach to bookkeeping should experience a good return on investment with Xero in terms of time-savings and improved productivity.
www.xero.com
