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


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.


How we avoided the apocalypse

There’s a bit of the old tele-evangelist about some coaches to the accounting profession.

The end of the world is nigh ! Repent from your evil ways! Give your money to me and heaven awaits!

Or put another way, “There is no future in traditional accounting models so abandon the timesheet! I can show you how to make a million dollars per partner by working 20 hours a week!”

OK, granted…sometimes people – and accounting firms – actually do need to change. The problem is there’s just so much noise! Amongst the cacophony, where can we find the music?

The only possible fate for a world where accountants still use timesheets.

Last year we were at the point where we knew we had to make some changes to the way we delivered our services – not because we did it badly but because we wanted to do it better. But to implement every accounting practice initiative recommended by the numerous industry experts would take a small army a lifetime to complete.

What was the stuff that we actually needed to do – like, really needed to do – and how could we ever find the time to do it?

So it was that last September there was a voice that broke through, just a little. It took an email about becoming an ‘iPractice’ to finally get my attention. It was from Tim at Focus Growth Strategies (FGS). I’m not sure what it was that stood out about it. Perhaps it was that some of the more techno stuff appealed to my inner geek – running your practice from an iPad and all that. The thought of doing so while sitting on a beach didn’t hurt either.

More than anything though I think it was that it wasn’t trying to scare us into action. Of course it tantalised with promises of a practice without timesheets – what accountant doesn’t long for that world? But it also offered balance. “If you want to hang onto them, that’s OK – we will show you how to have the best of both worlds as well.” No doomsday prophesies.

The clincher though was this: “The iPractice will show you exactly how you do it – Strategy, Implementation and Technology”.

One of the biggest barriers to change was the question of who was going to do it. The learning curve in going from an entrenched system to knowing something else well enough to roll it out across a practice, and deal with all of the migration issues and training, and… well, ‘curve’ is a generous term. Perhaps ‘wall’?

A DIY rollout would no doubt have been poorly executed. Even worse (because after all, we were used to living with a system that didn’t really work properly), the result may have been new applications that did nothing more than replicate the old ones. We needed the outcome to be better than that. What is best practice? Do we really ‘have’ to do the things that we think we have to do? How can we leverage our IT to deliver efficiency and create value for our clients?

But now here was FGS offering to give us the leg-up we needed to get over the wall. These guys weren’t just telling us what we needed to do. They were offering to do it for us! It still took a while for us to finally pluck up the courage but in the end, having little to lose and much to gain, we signed on for a ‘review’ of our systems. It took one meeting for us to realise a review wasn’t necessary. We knew what we had. We needed to spend that time, effort and money on going for it.

Last Tuesday Tim and I met with our accounts manager (Kim) and our product champion (Claire) to road-map the critical things we needed to do to be ready by 1st July. So far that involves:

  1. Having WorkflowMax (WFM) ready for people to enter time; and
  2. Having people familiar with how to do that (i.e. training).

Left to right: Claire, Tim (from FGS) and Kim.

In terms of the work required before 1st July, that means configuring WFM with all of our client database information and setting up our tasks for timesheet entries and billings. We’ll also need our practice Xero file ready go – the Xero ledger we’ll use to operate the practice. We plan to gradually phase out our existing system, which means we can replace our client ledgers with Xero ledgers as work for 30th June 2012 comes in over the next year. That takes the pressure off us having to have everything ready to go by 1st July.

As we were sitting there talking through the various things that needed to be matched between the old and the new systems and what we could expect to be different and so on, it suddenly struck me how simple it was. A lot of work, but not complicated. The reason was that there was someone there to connect the dots for us. FGS know what we need to do to make it work. The terms are familiar. The problems we were expecting have already been anticipated. And best of all, this is still accounting!

It’s not just that one voice is louder than all the others now. The noise has actually quietened. We don’t have to do it all. We’re not abandoning our timesheets yet! The doomsday clock has started ticking backwards. Was there ever really an impending apocalypse at all, or had we simply been drinking too much of the Kool-aid?