payment gateway statements to directly feed into the Xero system. Just like receiving email into your inbox, transactions feed into your accounts, ready for you to process. See Chapter 4 for more on bank feeds.
You can create and send invoices, account for expense claims and purchases, and do your bank reconciliation via mobile devices, meaning you can issue your clients with invoices while you’re on site with them.
Through the concept of a single ledger, both you, as the business owner, and your accountant can access the same data, reducing the need to transfer data and improving efficiencies. Your tax accountant can finalise end of year accounts directly into the business organisation. See Chapter 11 for more on this.
You can enable the software to communicate with other Xero users or other online software programs. This means Xero users can invite other Xero users to connect with them, which unlocks a portal between the two users’ data files — so, for example, when an invoice is created in one file, it appears to the other file as a draft bill. This opening up of data files minimises data entry, improves accuracy and hopefully helps with cash flow! More complex communication connections can include CRMs (for managing customer relationships), inventory management, e-commerce and other add-on business solutions. With Xero at the core of your business’s operations, you can create a fully connected cloud business platform. See Chapter 16 for more on this.
Xero has been described as similar to those vitamins disguised as gummy candies — users enjoy the software so much they forget they are actually doing accounting.
PROS AND CONS OF WORKING IN THE CLOUD
Do you recall the first time the internet really worked for you? I do. From my apartment in Toronto, I co-ordinated a reunion with friends from Singapore, New York and Texas via email. We were to meet beside the Snuffleupagus at Sesame Place in Pennsylvania. I was so impressed: I arrived at 10 am and everyone was there! We hugged and shrieked in excitement. Using email had saved us a small fortune in telephone charges, and it was a breeze to use — all of us from the moguls to the mums understood how to do it. These days, imagining a time before email is hard. And one day, imagining a time when everyone didn’t conduct all their business in the cloud will be hard!
Working in the cloud means working via the internet — the files you’re accessing and working on aren’t stored on your computer. As with everything, benefits and concerns of working online exist. But, indisputably, working across the internet is the way of the future. Governments across the world are funding infrastructure that enables access to high-speed internet connections, ensuring their citizens remain competitive.
Without realising it, you may already be using cloud services. If you’re using a smart phone, email, internet banking, Skype, Google Apps, or storage services such as Dropbox or Evernote, you’re embracing the internet — and some of these devices or services make use of the cloud.
If you’re not already convinced, here are some of the benefits of cloud computing:
Reduced costs: Working in the cloud means you have no requirement for in-house servers to host other computers on the network. This reduces your ownership, maintenance and insurance costs.
Real-time data: You can access accurate and timely reports, which can assist with informed decision-making.
Productivity gains: The time taken to respond to issues is minimised because data can be accessed wherever you can access the internet. Integration features mean you don’t need to re-key data, because fields are matched and flow from one area to another. You also don’t need to install or upgrade anything on your computer.
No platform issues: Mac or PC? You no longer have any need to worry what platform you’re working on because you access the internet via an internet browser.
Collaboration: Multiple users from around the globe can simultaneously log in and view the same information, depending on their access levels. Yes, you can review business reports while cruising the Nile!
Flexibility: Applications can evolve to suit business needs.
Reasonable pricing: Many applications have reasonably priced packages available and offer options to suit different business requirements, from the micro through to the enterprise business. You can start with a low-cost package and, as you grow your business, move to a bigger package.
Reliable data backups: Data is stored in the cloud. If your computer crashes, or the business floods or is affected by fire, you can still access your data via the internet. Note: Backups of your own important data should still be made — just think of the cloud backups as a trapeze you can grab. In a way (and with slightly mixed metaphors!), it’s a double safety net! In the case of Xero, you can manually download the complete General Ledger from Xero (see Chapter 9) or use an automated back-up solution such as BackUpMyBooks (www.backupmybooks.com) or Control C (www.control-c.com) — see Chapter 16 for more on add-ons.
Cool factor: Getting out your Android after enjoying a coffee meeting with a client, taking a photo of a receipt and uploading it straight to your accounting package as an expense claim is pretty darn cool!
As with everything, you should be aware of some aspects of cloud computing. Here are some of the concerns to keep in mind:
Availability of internet access: Access to the cloud is dependent on internet access. No, or slow, internet access may affect your decision to work in the cloud.
Data storage questions: Because data can be stored anywhere in the world, you need clear information on its actual location. What country, and under what jurisdiction, is the data stored in? Note: Xero data is stored with Amazon Web Services in the United States, a leading hosting provider. The United States has sensible laws governing the protection and confidentiality of data.
Longevity: Will the software provider be around to look after your data forever (well, as long as you need it to be, at least)? Note: Once a Xero subscription is cancelled, the data is archived for seven years. It can’t be accessed by anyone unless the subscriber requests reactivation of the subscription.
Security: What security is being maintained over business data? Note: The security encryption of Xero is equivalent to that used by online banking. If you’re happy to use online banking, you should be happy to use Xero. All users require unique passwords to access the application, and Xero logs users out after 60 minutes of inactivity. Xero also includes the option of two-step authentication.
Ownership: Who has ownership of your data in the cloud? Note: With Xero, the direct subscriber to Xero owns the data.
Everything you do in business incurs some risk, including the way you operate. If you consider the risks of your own computer crashing, or being susceptible to a virus, floods, theft or fires, you may be far better off putting your faith in an organisation that has the infrastructure and systems in place to better protect and store your data.
Exploring Xero’s Different Editions
Xero offers a number of different editions. As your business grows, you can upgrade packages, or, if you decide you no longer need a larger package, after 30 days you can downgrade.
The editions come in starter, standard and premium packages. The uses and features of each package are as follows:
Starter: