Can Xero really replace your accounting practice software?

Xero is great for bookkeepers. But does it work for accounting practices? We take some time out to think about that a little more, now that we’ve been using it for a while.

It’s one thing to make great software for small-medium enterprises, and Xero do just that. As an SME ourselves, we love the efficiencies Xero brings to our internal bookkeeping procedures.

It’s another thing altogether for an accounting firm to use Xero ledgers to replace a practice level general ledger system. We’re trying to do just that. Does it work?

Hopefully over the coming weeks and months we’ll approach this very question from a variety of angles. This time around though, I want to consider it from a data entry perspective.

In Xeroland, you can run your practice from the beach and every client is a tech-savvy twenty-something with perfectly reconciled books. We hope to visit there someday…

There is a Xero utopia where the client is getting most of their data in automatically using bank feeds, and collaborating with their accountant to make sure that the result is accurate and meaningful. The accountant then uses that same ledger to prepare statutory reports at the end of the financial year. If every client can do that, you’ve got it made. That’s the dream.

We have a number of clients where the ‘dream’ is already working brilliantly. There is a real sense in which Xero is fundamentally changing the landscape for accounting firms.

There is one thing we’d like to see though that would make Xero even better – because as we all know, there’s another kind of client. Their particular style will be many and varied, but there is one trait that consistently defines them. They don’t use software to keep their records. This can be a problem for Xero.

If your client doesn’t use software and you can’t get a CSV from the bank, there’s no easy way to get data into Xero. Even if the client could get CSVs, some banks don’t provide a year’s worth of transactions in CSV form anyway, and if you’re depending on the client to get them for you, may lose your window of opportunity. This may even be a problem where a client is committed to using Xero. Perhaps they are a new client and have only just made the switch, but you still need to prepare financials for the period prior to Xero. Or maybe they use Xero for their main trading entity but have a few side projects that you also need to prepare accounts for.

The bottom line is that we accountants sometimes still find ourselves in any number of situations where we have to do some old school manual data entry. We don’t like it, we would love to never have to do it again. And Xero is certainly a big part of our ticket out of there. But sometimes for a variety of reasons it still happens.

Xero is, at its core, an SME accounting product. That’s what makes it so easy to use, and we love that. But that also means that you input transactions individually, one at a time. You write a cheque, prepare an invoice, and so on. Xero makes this process easier by using feeds, and then pre-coding and reconciling much of your data for you. There is also a general journal area for advisers. But none of this is conducive to rapid-fire data entry.

We can’t seem to find a button to import this into Xero.

Our old software, for example, has an area called ‘Bank Statements’ where you enter transactions from statements, line by line. All the major applications have something along these lines. Unless there’s another way of doing it, we’d like to humbly request that Xero add something similar.

It’s important to note that this isn’t a request to change Xero’s MO. Fundamentally, the Xero formula is the future of data entry and we’re committed to it. Our request would be something along the lines of a back door for advisers only, for those times where there simply isn’t any other alternative. The client experience of Xero would not be any different, but Xero would have an area for accountants where effectively, you would create your own CSV by only entering basic data line by line

Our current workaround is based on this same idea. We create our own CSVs in Excel and enter transactions line by line. We then import the CSV into Xero. It’s ugly, but it ends up being a lot quicker than entering individual transactions using Xero’s functionality. Where you have a lot of transactions that don’t go through a bank account, such as items from a personal credit card, you can create a dummy bank account in Xero and import the CSV to it. Because it ends up balancing to zero, it doesn’t show on any of your reports. It would be so much better though if this functionality could be available in Xero.

We get that Xero is a management accounting tool for SMEs, and that means it’s geared towards helping businesses do their bookkeeping. But we’re accountants, using it as a practice level general ledger product. And as far as we can tell, we’re a core part of Xero’s strategy for market penetration. Can Xero really replace your accounting practice software? From a data entry perspective, the answer is still ‘yes’. But there will be times when you’re really not going to like it.

We’re relatively new to Xero so if anyone has any ideas they’d like to share, we’d love to hear from you. How do you get a year’s worth of transactions into a ledger quickly when you don’t have anything to import from?

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The bookkeeper’s perspective

This time around we fire six questions at our internal bookkeeper.

Sometimes new things come into focus with a change of perspective, which is why from time to time we’re asking some of our team members to offer their reflection on the Xero journey. If you’re considering whether Xero can work for your accounting firm, you’re almost definitely going to want to find out how it copes with your practice accounting.

Just another day at the office for Lauren.

Lauren Degnan wears a lot of hats at Dewings. She’s the kind of person you can pretty much throw anything at – we often do – and you know that it will get done well. She manages all of those regular practice management things that need to be done in order for us to function, she remembers when things are due and frankly, she helps to make people like me look more capable than I really am. We don’t want to say she’s perfect – just that we’re yet to to find any kind of fault. In short, every firm should have a Lauren.

One of Lauren’s responsibilities is management of our internal bookkeeping. She makes sure that all the data is in so that our practice reporting and planning can get done. Lauren also prepares our budgets. So naturally the transition to Xero affects her directly – we now run our practice accounts through Xero and this means that Lauren has to get all the information in there.

Our first ‘Six Questions’ post looked at things from the product champion’s perspective. We directed those same six questions to Lauren, and here’s her response. Hopefully there’s some encouragement here for anyone considering the impact that Xero will have on their internal accounting processes.

  1. What do you love about Xero/WFM so far? Once all the setting up is done, everything is more automated which will make doing my jobs much quicker and will also allow me to keep on top of everything.
  2. Is there anything you hate? I don’t hate it, but the timesheets are a bit harder and more time consuming to use for someone who does lots of small tasks during the day.
  3. Can you see it making a difference to the way you work? It will make my job quicker and easier because all the facets of our accounts are now in the one package which means less reconciling between information from different software and sources. As mentioned before, I will also be able to keep on top of things more, rather than having a busy start to each month, my workload will now be more evenly spread over the month.
  4. If you could only make one enhancement request what would it be and why? I’m not sure that it’s really an enhancement, but speeding up the rate that the screen refreshes each time. When I’m working quickly through things, the pause that I get while the screen refreshes can be a bit annoying.
  5. Is there a moment on the journey so far that stands out for you? Probably the point when I had everything finally set up for the accounts and started using it on a day to day basis. My workload is so much more even now because instead of having to code hundreds of transactions at the start of each month, I now code the entries daily as they come in through the bank feeds. Has taken the pressure off the start of the month for me..
  6. Overall, if you had to choose, old system or new system? Once all the setting up is complete, new system.

Xero room to move

Have you ever felt like you knew someone, only to discover that maybe you’d been misreading the signals? When we started this blog, we conceived the name as a little play on words, and thought it would also give Xero some free publicity. It turns out Xero thought otherwise. We’ve now got a new URL, thanks to the Xero legal team!

One of the things about this blog that I hope will resonate with firms nervous about undertaking a journey to the cloud is how uncool we are. As a firm, we have our share of issues to tackle like any other normal accounting practice. We’re not part of the new wave glitterati. Social media is still something we’re relatively new to. We’ve never blogged before. And we’re not caught up in the Xero hype. If there’s any encouragement to be taken from that, I like to think it’s that if we can do it, anyone can!

Perhaps it was that wide-eyed naiveté that got us into trouble recently. When we first decided to move everything over to Xero, we were looking for some real testimonials from firms that had been through the same thing. It’s very difficult to find anything beyond the nauseating gushiness of the Xero fanboy and fangirl clique. So being all giddy on the prospect of our impending transformation, we came up with the idea of blogging about the journey – as it was happening. Not only would this provide a more realistic resource for firms that might consider doing the same as us, but as I’ve said before, there’s a certain catharsis in writing about your experiences – especially when things aren’t going as well as you’d like! Plus, we thought, “Xero are all about the new paradigm of vendor/customer interaction and collaboration! Surely they’re going to eat this stuff up!”

And at first they did. Not having much experience at this, we figured Twitter was the best way to get the word out, so after doing some research online and reading a couple of books, we started writing and then tweeting our posts. The Xero team were soon retweeting us and directing traffic to our blog. It was all rather intoxicating. Heady times!

Does my bum look big in this?

It’s been said a few times before in this blog, but just to be totally clear, let me repeat – we love Xero! But we also intend for this story to be as honest as possible. We don’t buy into the cult of Xero, so we’re going to call it when we think the emperor is wearing a little less than he should be! And I have to say, no one here was prepared for what came next.

After developing a little following of our own, I was contacted by Xero and advised that we were no longer permitted to use the URL ‘approachingxero.com’. It turns out that Xero’s Terms and Conditions for partners precludes the use of the ‘Xero’ name in a URL. The explanation given was that Xero protects its brand very aggressively and that using the Xero name in a URL makes it difficult for visitors to determine whether this is an official Xero communique or not. Let me say here that I accept that this is entirely our fault – had we read the T&Cs initially, we may have avoided this from the beginning.

I guess we interpreted our posts being retweeted by the Xero team, right up to the very top, as being an endorsement of what we were doing – retweeted URL included. Perhaps sites like http://www.xerousers.com/ or Twitter handles like @thexerohero led us to believe that there was some grace extended to partners using and affirming Xero.

We were wrong!

It was suggested that perhaps we change the URL (and the blog name) to ‘Approaching Cloud’. Really? Not exactly catchy! Did the Xero peeps really believe that Approaching Xero was a single entendre?

And anyway, changing the URL would break all of our links. So we decided that perhaps we should find out whether they were serious or not. After asking what the implications for leaving the blog as is would be though, we were advised in no uncertain terms that the path to resolution would be swift and litigious.

OK, we were bluffing. So how do you play this game again anyway?

Ouch Xero! We thought we were friends! In the words of Kenny Rogers though, you gotta know when to hold ’em, and know when to fold ’em. And being risk averse accountants, we’re not much for gambling. So from here on this blog will use the URL https://approachingx.com/.

We know that some will defend this action on the grounds that Xero is just trying to protect its brand. Do you mean the same way that possibly the most carefully managed and protective brand in the world allows sites like http://www.appleinsider.com/ and http://www.macrumors.com/ to continue? Or how about the way another marketing behemoth chose to take a collaborative approach and embrace a Facebook page that had already been set up in their name? Isn’t the 21st century ethos for client relationship management more about the spirit of the law than the letter of it?

We always thought Xero was in this same league and looking to disrupt the status quo. But like I said at the beginning, we’re new to all of this. So maybe it’s us who don’t really get the new paradigm?

Don’t worry though – we still love you Xero. You just need to lighten up a little. And we hope we can still be part of the family. Think of us as that awkward Uncle who always says what he thinks. Sure, he’s a bit of a crackpot. But sometimes he might be just the person you should listen to.

The future is now

People can talk about the future, and you can think you get it. But sometimes you need to experience it to truly appreciate it.

My timing may be a little off here, but I think it was sometime around the early 90’s. People in Hypercolor t-shirts were talking about an ‘information super-highway’. Preparations were being made. Infrastructure was being laid. The future was on our doorstep.

I remember very clearly thinking something back then that seems ridiculous now – what do they mean by ‘information’? What do I need ‘information’ for? I have the TV. If I need to know something more, I can always go to the library. What other kind of ‘information’ is there?

Today, it’s hard to imagine life without the internet. How did I work out which hotel to stay in? What did I do when song lyrics weren’t printed on the CD (or cassette!) sleeve? Did I really get most of my news from the Advertiser? And how did I find out what my friends were eating for dinner every night?

In the 50’s people of the future were expected to be immune from the effects of the sun.

Of course the problem (for me) back in the early 90’s was that I didn’t really have any context to put the concept into. I could only use what I knew at the time to inform my picture of the future. It’s kinda like those crazy future concept cars you see from the 50’s and 60’s. It’s laughable in some respects to see what they came up with back then, but in another sense you can kinda see what they were getting at. The best they could do was take what they knew then and try to project it into the future.

So since I already look a little slow off the mark, I might as well keep going. For me it was much the same with the ‘cloud’. I first heard the term a few years back, and again I really didn’t have much context to put it into The best way I could picture it was having all of your apps running through your browser, which to some extent wasn’t completely misguided. But it struck me as a way for software vendors to get more money out of you by charging a subscription fee rather than a one-off payment for a license. Perhaps there’s an element of that that’s true too.

But even once I understood what it was, I couldn’t really conceptualise how it would help me. What do I care in the end whether my software is hosted locally or on a remote server somewhere?

Today of course I could list all kinds of benefits. Reduced server costs, less dependence on backup routines, increased security – they are many and varied. But there’s nothing like experience to really drive it home, and at least one of the more significant advantages of the cloud hit hard for me recently.

A couple of weekends ago my car was broken into. Nothing too severe in terms of loss or damage – just a smashed window, a stolen wallet and a stressed wife. But it meant that on the Monday, I really needed to get that window replaced.

After sorting out the insurance I was ready to track down a replacement window, but it turned out there was only one available in Adelaide (from the approved suppliers anyway) and I had to take a bit of a drive to get there. So I threw my laptop in my bag and headed off, prepared to write-off the day to annual leave. After all, repairs of any kind to a car never go as planned. It turned out exactly as expected – what was meant to take an hour took around five.

After I dropped the car off I was stranded, so I went for a walk. Conveniently, some 50 metres or so down the road was one of Adelaide’s finest coffee shops (it’s The Coffee Barun, for my fellow coffee fanatics out there). I’d been meaning to check out their new premises for a while but it’s a little out of the way from where I live, so this was a good opportunity to visit and drown my sorrows in coffee. Turned out they had free Wi-Fi.

What started out as a day to be written off turned out to be one of my most productive in a long time! Away from the distractions and interruptions of the office, and with an endless supply of fine coffee, I was able to get so much done. In fact there was nothing I couldn’t do.

I checked our bank balance and debtors situation, and looked at how our billings were going for the month. I customised some reports. I sent and responded to a few emails and wrote a new blog article. Then I prepared our bi-monthly newsletter and sent off a draft for review. The fact that my car was taking five hours rather than the promised one was almost of no consequence. And I did it all with my headphones on listening to my playlist on random.

This may not be my only office of the future. But it’s at least part of the future. And most significantly of all, it wasn’t until a couple of days ago that it really hit me just how radical that day was. Ten years ago I could really only ever have dreamed of turning such a disaster of a day into something so productive. Ten years ago of course, my desktop computer was less powerful than my phone is today. You can’t really conceptualise the future until you’re in it. More than ever before, I’m finally starting to get it.

One of the best things about the cloud is that the office is never too far away. Oh wait…

Want to know what the best part of all is? I’m on holidays right now writing this post from Bali! Don’t worry – I get the whole work/life balance thing. The kids are by the pool with Mum and I’ve just ducked away for a few minutes. I’ve checked a couple of things and looked at a some reports. As a director of your own business, you can stretch the cord very thin, but you can never totally break it, if only because you worry about how things are going while you’re away. And that’s ok. After all, I’m hoping to do this a lot more as I get older so a healthy – and accessible – practice is a vital part of the plan.

So this is what they meant by the cloud! I’m a convert! Now if you’ll excuse me, it’s beer o’clock (somewhere in the world) and there’s a pool chair calling my name.

STOP PRESS: We’re changing the URL of the blog thanks to the legal boffins at Xero. It will be happening as soon as I’m back from holidays. Stay tuned for more information.

Two things we love about Xero

You only get one chance to make a first impression. Xero’s been making a few nice moves.

We started our new financial year in a bit of a flurry. Our focus was on getting WorkflowMax bedded down so that we could continue managing jobs, capturing time and invoicing. It’s been a bit of a rollercoaster ride so far as we adjust to new functionality and a different way of thinking.

But we’ve also been dipping our toes into the Xero pool. There are functions in Xero that do more than simply help you to get the job done. They transform the way you operate. Here’s couple of them

Payroll

A typical payroll run prior to Xero.

The payroll functionality is simply fantastic. We pay our team weekly, and our payroll person has said that even after only a few weeks of use, our payroll run is taking her less than half the time that it used to. That’s a massive productivity gain when you’re doing 52 pay runs a year!

It needs a few more reports (there’s nothing for deductions, for example), but overall there are features in the payroll component that leave you wondering how you ever managed beforehand! The employee portal is a great example of this. Employees can log in and see a summary of their leave, apply for leave and also view and print payslips (for those times where, say, they are preparing a finance application).

And the ability of the full version of Xero to pay your superannuation to all the various employee funds for you is an incredible time saver. This feature is only available in the top  version of Xero for clients, but is provided free in the practice ledger (i.e. for our own payroll). Even if we had to pay for it though, it would be worth the premium for the time it saves alone (but don’t get any ideas Xero – we prefer – and are extremely grateful – for having it included at no charge). It’s really like the government’s Small Business Superannuation Clearing House, but all the information is already there. No further input required.

Bank feeds

The bank feeds work brilliantly on so many levels. For the practice, our admin team have said that because so many things are reconciled for them, the time saving per month in data entry and report preparation is huge. Specifically, one comment was “Once you get a few months into using it, I should say you would just be mostly checking what Xero suggests and only entering details for one off type transactions. Will make thing a lot quicker.”

Our practice accountant (i.e. the person responsible for our internal accounting) said “..once I’d set up the bank rules, it only took me an hour to enter data for a 6 month period, which previously would have taken me about 3 hours.”

Naturally this also has fantastic implications for client work. It’s worth noting that bank feeds are not available on our basic ledgers – the ones we would use independently of the client and to which the client has no access (except to view some reports). Of course we pay a significantly reduced rate for those. They’re basically replacements for our practice general ledger software. So at a minimum the client needs to be on one of the retail packages, but there is a raft of options there and in particular some extra ones for Xero practice partners. In my opinion though the additional cost for a retail ledger (either charged to the client or absorbed by the practice) would pay for itself in terms of the savings it will deliver in total bookkeeping and accounting fees. Aside from the benefits of having much of the inputting automated, at the end of the year, with some involvement by the accountant, the ledger is basically complete. And you know the data integrity is going to be pretty good because you’ve been involved in keeping it that way. This opens up a world of possibilities for collaborative service delivery.

This isn’t the sum total of all that is good in Xero, but I wanted to provide some detail on a couple of things rather than sweep over a whole bunch of them. Generally Xero is extremely easy to use and very intuitive.

But it’s features like this that encourage us to remember why we’re in this. I’ve talked about how this isn’t simply a matter of replacing our old software, and how it is instead a paradigm shift in the mindset for operating a practice. This is where the rubber of that choice hits the road. In a future post I’ll discuss some of the functions Xero really needs to truly be practice ready. Sure, the ‘Avant-garde’ will look down their noses at that and tell us to get with the times. But we think there are just some realities of running a practice that have to be faced, and we’re pretty sure the next wave of more conservative practices (like us!) will agree.

But having said all of that, these features make us happy to make the compromise, Why? Because the goal is to provide better client service. Sure, if it’s a disaster internally then the costs outweigh the benefits. But what we’re seeing is massive savings on internal management like our own payroll and reporting, and features on the client side that quite simply will revolutionise our relationship with them.

Artist’s impression of ideal client meeting.

So what system doesn’t have compromises? The better question is where should you be making compromises? Ultimately, we don’t want to run a practice. That’s not the end game – it’s a necessary function of what we’re really here to do. We want to serve our clients in a way that compels them to love us! Not because we’re nice people or narcissists who need to be liked, but rather because happy clients are good for business – theirs and ours. And that’s the mindset shift in a nutshell. Should you compromise your product to operate a system that your accountants feel ‘safe’ with, or change your internal procedures to deliver the best result possible for your clients? Once you start thinking that way, it’s a no-brainer.

Keeping our eyes on the prize

On Monday morning our server went down. We were offline for most of the morning. These are the times you can see with clarity what the goal is and why it’s so appealing.

I’m not going to say that I haven’t experienced moments of doubt with what we’re doing. Even blind panic has shown its face on more than one occasion. But what’s interesting about this journey so far is that like many things in life, the agony and the ecstasy are inextricably connected. We’ve had a few frustrations. But it’s precisely because the goal is so enticing that we have had times where we feel challenged. A life without servers!

There was an interesting article posted this week by Sholto Macpherson at cloud-computing advice site Box Free IT. You probably need to read it if you want to make any sense of the rest of this post. Reading between the lines, you can see that there is some concern amongst the incumbents at Xero’s success in changing the landscape. But ultimately what stands out the most to me is that I’m just not sure that the major players really get it.

“I came because I didn’t know any better, but I stayed because it would cost too much to change. Call me a fan!”

I’m not convinced that accountants stick with what they know because they are loyal. Don’t get me wrong – I think they would if it were that simple. But I don’t think that ‘pedigree’ is the reason accounting firms stay with a software vendor. Buying an enterprise level accounting solution isn’t like going to your favourite supermarket. It’s not a matter of going back to someone you trust each time because they’ve been around for a while, or they smiled at you as they sliced your ham. In fact, the barriers to changing software are so great that it would really be impossible to know what a customer thought of your product if return business were your only gauge. We can testify to sticking with something we really didn’t like, enduring exorbitant price rises year on year whilst getting almost no product development in return, simply because the thought of changing was too overwhelming. And even if we could get through it and were willing to wear the cost, we couldn’t be confident of seeing any real improvement at the end of the process anyway. Does that make us loyal?

It reminds me of Channel 9’s response to criticism of their Olympics coverage. Citing the ratings numbers as evidence of a successful package really tells you nothing of the quality of the broadcast. Unless your viewers have a pay TV alternative, where else do they have to go? If they love the Olympics, they’re going to tune in even if Eddie McGuire and James Brayshaw call every event! Does having no other viable option mean that your customers are happy?

This is entirely anecdotal, but based purely on my discussions with accountants over many years, I can’t remember meeting anyone who’s gushing about how fabulous their systems are. I can’t recall ever being regaled by tales of how software has completely transformed the way a practice operates. Instead, most accountants will tolerate anything if it means getting the job done each year. And the price they pay for this grudging forbearance is significant. For us, it was just under $20,000 a year in maintenance.

So this is the point. Why did it take something like Xero for us to make the switch? It wasn’t because we could replicate the features we had in our existing suite of software, but rather because we couldn’t. Why take the risk for something that basically does what we’ve always done, with perhaps some prettier user interface features and fancier reports? And at a significant cost in both software and hardware? Xero brings a completely new paradigm for running a practice, and the price makes it worth the risk. Especially when you know that others have already successfully implemented it.

When we’re done, it won’t matter if our server goes down. Will we even be using it for anything other than some storage of old data? Even if our internet connection drops out, we now have two services with two different ISPs (one ADSL, one wireless) so we’d just switch connections and carry on.

It’s true, as Sage managing director Alan Osrin said, that “Cloud programs such as Xero’s WorkflowMax Practice Manager…would take a long time to match the features of the server-based incumbents“. We’re wrestling with that to some extent right now. But is that the goal? We don’t want software that will match the traditional way of doing things. We want something completely new. Otherwise why change?

Don’t even think about it…

Server-based, enterprise level software solutions ultimately represent the same way of skinning the cat. We chose Xero not because it replicates but because it innovates. We can already see so much potential for positive change. There are ways of doing things that we hadn’t even considered possible.

If you’ve been following this journey, you’d know that we’re not here to tell you that it’s all beer and skittles. We’ve already discussed some of the hurdles we’ve had to get over so far and we expect there will be more to come. It happens with any new system, and even more so with one that requires a transformation in thinking. There are still some things that we think Xero need to take note of if they want to capture a big slice of the market (my next post will be a review of Xero so far – the pros and the cons). And Clive Rabie of Reckon is right on one thing at least – Xero needs tax, and sooner rather than later!

But this isn’t about finding another master to shackle ourselves to for the next decade. We don’t want a system that does what we’ve always done in a prettier way. This is a flight to freedom! If you want to make it to the Promised Land, you sometimes have to spend a bit of time in the wilderness. Uncertainty and change are scary, but we think the prize will be worth the effort.

The product champion’s perspective

We’ve been using Xero and WorkflowMax for a month now. So it seems a good time to start hearing from some of the team about how things are looking from their point of view.

So this begins a series of sorts. There’s no particular rules, timeline or end-date in sight, save one thing – whenever we do this, we’ll ask our contributor the same set of 6 questions. I guess maybe we should give it a cheesy name of some kind – ‘Pick Up Six ‘or ‘Six and Out’ or something. Then again…

It’s appropriate then that the first person we should hear from is our product champion. Very early on in the journey, FGS suggested that we nominate a product champion – the go-to person who will get to know the applications inside out and help us get everything set up. It was sage advice.

Recently retired facility used to customise a profit and loss statement in our old software.

That person for us was Claire Barber, one of our senior accountants. Claire is a CPA with extensive experience at management level. But even more importantly, she’s the only person in the practice who has even come close to understanding our old report writing system. If you haven’t picked up on this earlier, writing or editing a report in our previous system was a task somewhat akin to cracking the Enigma Code. Ideally you’d need a team of experts working around the clock, 7 days a week to really get a vague handle on it. And even then, like the recipe for Coca-Cola, there’s probably only a handful of people in the world who truly understand it completely. But Claire came as close as any single mortal possibly could to making sense of it, so with those credentials, she was the natural choice.

Claire jumped into it boots and all and has made the entire process a lot easier for us. She liaises regularly with Xero and FGS on all sorts of matters to make sure that the rest of our team have what they need to function. Under her watch we’ve already completed an entire job in Xero, although her focus so far has been mainly internal – things like getting our practice file set up, arranging our bank feeds and charts of accounts, establishing a system for managing our new Xero clients and working out how to generate statutory financial reports. So from her perspective, how’s it going?

  1. What do you love about Xero/WFM so far?   The ease of the software. The help menu and support has been great too.
  2. Is there anything you hate?  I don’t hate anything but one limitation is with fixed assets and not being able to pool.
  3. Can you see it making a difference to the way you work?   Yes it will definitely provide more timely reports for clients with daily feeds and help create efficiencies on jobs.
  4. If you could only make one enhancement request what would it be and why?   I would have suggested being able to import opening balances into a Xero ledger as an enhancement however this has been done via the most recent upgrade so I am very happy about this.
  5. Is there a moment on the journey so far that stands out for you?  There have been only minor hurdles along the way and each time Xero support has been able to help out so the transition is running smoothly which is always good.
  6. Overall, if you had to choose, old system or new system?   New system for sure.

Workflow (not quite to the) Max

For an accounting practice, wasting time is like stopping the production line. So the last thing you want is inefficient systems, right?

OK look…I’m just going to say it. Our users don’t much like WorkflowMax so far. It might end up giving us great information on how the practice is tracking, but the process of getting the data in there – the day-to-day use of WorkflowMax – is cumbersome.

Call us cave-people, but we still believe that time costing for billing our work has its place. I could go into the reasons why, and perhaps I will in a separate post at another time. But for now, suffice it to say that’s how we roll. We’re happy to quote and work for a fixed fee based on a reasonable estimate when required. And we may not bill everything we record. – we often absorb time as client service or value adds. But we want to record all of our time . And besides, often the decision as to whether to bill or write-off doesn’t reside with the person entering the time, so by default all time needs to go to the job at the time of entry until that decision is later made by management. We know there are many others in the industry who agree with us and in fact many of our clients ask for it.

Primitive accountants lived in the constant shadow of danger. But perhaps the greatest threat of all was a timesheet that wouldn’t reconcile.

From our experience to date, using WorkflowMax in this kind of environment leads to wasted time. And that matters. Xero have said they want to give the accounting industry a shake-up. We welcome the rattling of some cages and we reckon Xero has the products to fundamentally shift the way accountants operate. We’re believers! But to really do it well, they’re going to have to have a time recording solution that is flexible enough to be used in a variety of ways. For those practices that operate in the traditional fashion – recording time using timesheets – WorkflowMax still needs a bit of work to make the experience a pleasant one for the user.

So what don’t our users like?

Let me put it very simply – recording lots of little jobs.

A typical manager’s timesheet may have 50 or more lines on it each day. And for every one of those, WorkflowMax requires that there be a job in the system.

Often then, this leaves you with one of two options:

  1. Record lots of small jobs that will clutter your jobs list or, if they are immediately completed, take almost as long to set up as the job itself took to do; or
  2. Put the time against a more generic job, which has the effect of adding a job to your list that may not actually be started. For example, let’s say you have a chat to your client in July about what they need to do to get ready for their 2012 tax work. The discussion touches on other issues and by the time you’re done it works out at around 20 minutes. In all likelihood we won’t bill this time, but we need to record it. You don’t want to create a tiny job in the system, so instead you put it to the “2012 tax returns and financials” job for the client (whatever that may be called). That job is now active. It appears on your job list as being in progress. But the client may not bring in their work until February next year. You now have a job started in your system, cluttering your work list, which actually isn’t started yet and won’t be for some time.

How could this be fixed? We can think of at least three ways.

  1. Introduce the ability to create jobs from your timesheet – perhaps with a popup or a prompt if a job isn’t in the system already. And prompt for a template too, that way you could use standard templates for those little jobs that actually repeat each year and set them up on the fly.
  2. Allow users to change a job’s state from within a timesheet. This would then allow you to set a job to ‘complete’ immediately. It has other benefits too. You may not use this every time, but where you know that the job state is changing with your entry, why not do it all in one action rather than having to go into a separate area to do it?
  3. Have a job state called ‘not started’ that doesn’t show on your job list but does allow you to record time against it. We’re open to suggestions on the state name, but something like that. This would allow a user to put small amounts of time to larger annual jobs that may not actually be started yet without it then appearing on their job list. If there is a concern about this time going missing, you could have a link on a user’s job list job list called ‘Jobs not started’ or ‘Untracked jobs’ which only expands when clicked.

Finally, just one observation about the overall vibe. The whole process of recording time just feels very ‘webby’ and isn’t geared towards rapid data entry. I’ve discussed already how having a table of some sort that allowed for fast entry and editing would improve that no end. Being able to create jobs on the fly would also help.

But even the programming and layout makes frequent use a time-consuming process. I’m no developer, so forgive me if this is way off, but it seems to me that if it were programmed using different tools (e.g. Ajax), this would allow for rapid data entry and editing without having to click and save each individual entry and then wait for the page to render before you can move on. The ‘slow and steady’ approach is compounded further by the fact that there’s actually a bug where if you are too fast it can record an entry twice, which has also been infuriating our users.

Do we have a mutiny on our hands? Not at all. The reality is of course that we’re used to living with a system that we’re not entirely happy with, so we’re no worse off. And actually, up to this point, we love Xero. So if we’re assessing things on balance – replacing what we had with a combination of Xero and WorkflowMax – we still feel like we’re miles ahead.

Further, if the practice management capabilities live up to the promise, even if there were no hope on the data entry side of things, we’re happy to live with a compromise. We’re really excited about the wider possibilities of WorkflowMax. But we have to call it how we see it too.

Taking it to the street, accountant style! WHAT DO WE WANT?! Minor improvements to data-entry efficiency! WHEN DO WE WANT IT?! Sometime in the future, though generally we’re pretty happy so please don’t interpret this as dissent or a vote of no confidence in your overall product offering!

We know that Xero listen and respond to what their users want. So we’re asking Xero to have a look at this and see if they can find a way to make entering time quicker and more efficient.

But we also want to hear from you. So I’m about to get all ‘chain letter’ on you. Send this out to everyone you know! OK, not quite – but hear me out. I know that not everyone is interested in reading our little travel diary and that’s perfectly fine. In this case though we’d love to hear from as many WorkflowMax users in practice as possible – even those that aren’t following us. So we’re sending a shout out to any accounting practices that use WorkflowMax, and we’d love your help. Let us know in the comments – what do you think? How do you use WorkflowMax? And how do you get around the ‘lots of little jobs’ issue? We’re hoping that together we might be able to collaborate on a workaround.

And by the way – we already know about the ‘abandon the timesheet’ solution. We’re looking for an alternative.

Wisdom from the Sherpa

We’ve spent the last couple of months climbing a mountain. It’s time to hear from our guide.

This blog was conceived as a diary of sorts – our journey towards becoming an accounting practice of the future. The emotions and feelings, the new opportunities and limitations, any problems we might encounter and where possible the jubilation of triumphing over them – all of these will hopefully weave together over time to form a tapestry of the sights and sounds as they happen. You can probably tell I’d rather be writing for Lonely Planet! Alas, I am but a humble accountant and this is the best (only) outlet I have.

So far you’ve only seen things from my perspective. But in the coming weeks I hope to share the platform with other team members who are along for the ride.

We asked FGS for a file photo of Tim and this is what we got…maybe the lighting isn’t as good in our offices?

This time around though we’re privileged to transcend the plebeian ramblings of the pilgrims and hear directly from our guide and mentor, Tim Callcott from FGS. I thought it would be great to get some insight from the other side, and see how he thinks we’re travelling.

I’ve previously described Tim as our Sherpa, for the simple reason that changing systems can seem like difficult country, and having a guide who knows the terrain and its unique ‘personality’ makes all the difference. FGS have shown that much like leading someone towards a mountain-top experience, they’re committed to seeing us come through not merely unscathed, but actually enlightened.

It’s important to note though that FGS have no interest in this account – other than to make sure they do the best job they can at what they’re doing. After all, the outcome is being dissected publicly here on a weekly basis! Our own posts come unsolicited and unbiased. But while the ‘straight dope’ is our goal, Tim’s contribution here is entirely his own work.

So without further ado, here’s what Tim had to say – copied and pasted directly from his original.

I guess it is about time I had a crack at getting something on this blog.  John is doing an awesome job (who knew an Accountant could write so well) but from time to time, another perspective is needed.

It is a lot of fun working with the team at Dewings.  When John signed off on the proposal, his words to me were…

“Better buckle up mate.  You’ve never seen a practice quite like ours!”

Well, it turns we have and we haven’t.  The team at FGS have been working with accounting firms across Australia for a long time now.  And there is very little that we come across that surprises us anymore.  Not because we are jaded or cynical.  Not at all.

Instead, we have learned that every firm is unique.  And needs to be treated that way.  Where one firm manages its workflow or creates a marketing piece in a particular way, another does it completely the opposite way.

A one size fits all approach doesn’t work.  It never has and it never will.

Sure, there are core principles that apply to each and every firm – ultimately, they are all offering the same range of services.  And for any accountants reading this who scream “but we are different”, the context of this statement is that you don’t offer dental services or carpet cleaning.  You are accountants and you offer accounting related services.

At FGS, we have a view of what these core principles are and also an opinion on the firm of the future – what it looks like, how it operates and how to get there.  We infuse our advice with this view.  We elaborate when asked for more information.  We never ram it down our clients’ throats.  This makes us a valuable partner for our clients.

Anyway, back to Dewings……

Barely a day goes by that we don’t get a phone call or an email with a well thought out, interesting question from one of the Dewings team.  Sometimes, we must be on speed dial!

We love the fact that the team goes to the Help Menu first.  We really like that they generally have a go at solving the problem themselves first.  And finally, they turn to us.

Because we have worked with so many Accounting firms on their transition to WorkflowMax and Xero, if we don’t immediately know the answer, then we have an incredible database of resources to access.  We are also proud of our relationship with Xero and WorkflowMax – knowing who to turn to for the best answer is a valuable resource!

And so far, we have nailed every question that the Dewings team has asked us.  Sometimes there is a simple answer (like the sub-accounts question from an earlier post) and sometimes, we have to create a work-around because the software simply cannot or won’t do what Dewings want it to.  

That’s OK though because Dewings also want to get our feedback on their operations and a new system and range of software is the perfect opportunity to update procedures and thinking patterns.

Finally, I know John is writing a “warts and all” style of story.  And I have thought and thought about any Dewings warts I could let you in on.  I am afraid there simply aren’t any at this stage.

Although, now that I think about it…….timesheets and the need to record ALL time could be close (nudge nudge, cheeky grin)

Might save that for my next post though.

No sub-accounts? No worries!

We had a little bump in the ride last week. Xero didn’t seem to have sub-accounts. But a sub-account by any other name smells as sweet.

I have to confess that I’m a bit of a nervous flyer.

I’m not someone who refuses to fly – ironically I love to travel – and I don’t get all panicky or anything. I just never feel quite at peace. Maybe I’ve watched too many episodes of Air Crash Investigations.

The worst part is turbulence. Just when I’m feeling about ready to relax and forget about the fact that I’m 35,000 feet in the air, the plane will hit a rough patch. To me turbulence is nature’s way of reminding us that human beings are not meant to fly. It’s just a subtle little nudge that breaks the repose and whispers in your ear “Hey buddy – you’re not supposed to be up here.”

I had a similar nudge last week during a Xero webinar.

We were all gathered in the conference room watching ‘Xero Essentials’ when the presenter began reviewing the Chart of Accounts function in Xero. As she was doing so, almost as an aside she said something along the lines of “..and of course because Xero doesn’t have sub-accounts…”. Cue dramatic music! A quick glance around the room revealed colour rapidly draining from faces. We weren’t sure, but that didn’t seem like something to simply be glanced over. Kinda like a pilot casually throwing in “…and of course because this plane no longer has any fuel…” A little further explanation might be required!

I admit it…I didn’t think to ask whether or not the plane had wings.

It’s not something we thought to ask about as a part of our decision making process. We put it in that group of things that were too obvious to even question. We didn’t ask whether it was double-entry based either, nor if it could handle GST.

It’s nudges like that on this journey that strike at your soul and leave you asking “are we meant to be doing this?”  All these people are counting on us. We’re meant be making their lives easier by giving them systems that help them rather than creating more work. What are we doing here?

I rushed out of that webinar and immediately called Tim at FGS. This may be getting old, but it’s another example of why we need them on this journey with us. They’re like our Sherpa. There are times when the terrain might seem hostile and a little frightening, but they know the territory and when you see it the way they do, you can relax a little and enjoy it.

Tim called me back within the hour. “I have a solution for you!” To be honest, I was reasonably confident he would because they work with accountants. We’re pretty sure sub-accounts form part of the basic building blocks of life for accountants.

Perhaps this is already out there. But a search through the Xero help resources yielded no results, and a Google search for ‘Xero sub-accounts’ (and variations thereof) was likewise inconclusive. A note to Xero: even though you don’t use the term, it might be worth putting an entry called ‘sub-accounts’ in the help section. People (accountants) will be looking for it.

Maybe some Xero veterans will look at this and think ‘I can’t believe they’re posting about this!’ Hopefully one day we’ll think the same thing too. But this is the view of the journey as it’s happening, not a retrospective slideshow where we’ve had the time to collate the best shots. So if you don’t mind indulging me a little, here’s the solution.

Use grouping. It’s still not technically sub-accounts, but for the purposes of our reports, it achieves the same thing.

  1. Let’s say you want to sub-account your Motor Vehicle Expenses. The standard code in the Xero demo company is 449, if you use them. So click Settings then Chart of Accounts.
  2. Create new expense accounts in the same range. Hopefully the process of creating an account is self-explanatory. So in this example, create say 449.01 MV Insurance, 449.02 MV Petrol and so on. Note that account names must be unique, so you probably can’t just have ‘Insurance’ as this will likely exist elsewhere for general insurance items.
  3. Once the accounts have been created, select or create a report where you want to show a summary of those accounts. For example, at the moment, these accounts will all show separately in your detailed Profit and Loss Report.
  4. Once you’ve screened the report, at the bottom of the report click Layout Options and then Edit this layout...

  5. Tick the accounts that you want to ‘group’ together. So in our example, tick all of the Motor Vehicle Expense accounts, including the main ‘header’ account.
  6. Back up at the top of the layout editing screen, click Group Selected Accounts.
  7. A popup appears. The Group Name should be the main account title (or whatever title you want to display on the report). In our example, this is Motor Vehicle Expenses. Select where in your report the group should appear. In this case it is an operating expense. Also, make sure to tick Show summary only.
  8. You can also get it to add future accounts to the group automatically by clicking Define how accounts are grouped and specifying the criteria.
  9. Once you’ve clicked ok, you’re almost done. You then just need to save these adjustments to the layout. On the right hand side of the layout window, either keep the same name or if you want to save a new report, rename it. If you’re basically making this a report that will become the standard, you can also tick Make this the default Profit & Loss for all users.
  10. Then click Save at the bottom, and you basically have sub-accounts that show as a summary in your main reports. Naturally, you can also create other reports that will show you the details of the sub-accounts if you need to.

The thing about the fear of flying is that it’s mostly in your head. Statistically airline travel is probably the safest way there is to get around. It’s just being in an unfamiliar place that makes you lose perspective when you hit those little bumps. Chances are you’re going to be fine. Better than fine even.