Feb 21, 2019
Numbers, general ledgers, chart of accounts, reconciliation, linking bank accounts from one thing to another and then sending out your BAS. It's something that unless you're a number freak and a super geek and really, really enjoy the accounting lifestyle, you're not going to enjoy that part about your business. We're going to talk about the best ways that you can make the bit you don't like the bit you don't mind. You still might not love it but trust me, it will be easier.
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There are lots of different packages out there in Australia for accounting and bookkeeping. There's Xero, QuickBooks, MYOB Essentials, MOYD Standard, Reckon One and Saasu just to name a few. What it comes down to is lots of names and lots of people tending to go into different directions. What I would suggest is think about what the software does and what it is that you do and how can you make them work together.
There are lots of different accounting packages and lots of businesses that use them. Some are old school businesses that love certain packages, while others are newer businesses that are gravitating towards different packages, and there are different reasons for choosing each of them. One of them would be if you're looking at Xero or Saasu software as a service model. You've got a good advantage there that there's not a big capital investment into the product. Now over the long term, you're probably going to end up spending more on the product, but then you're getting automatic updates, it's available anywhere in the world, and ultimately I think it's a stronger product. You've got MYOB on-premise and up until recently, QuickBooks and Reckon were the same company in Australia but they've split out and they've got two different accounting packages that are now competing with each other.
What I don’t like
In my opinion, having used MYOB, QuickBooks, and Xero, unless there's some really special case, I'm not a big MYOB fan. I see it all the time, locked file problems, multiple users over the network using it. Times where if the working file, the MYOB file gets above 300 megabytes, it breaks down and doesn't work anymore. In my opinion, MYOB is old and clunky. They should've done something with it years ago and now they're doing too little too late. That goes for QuickBooks as well. It's no better, it's the same thing just a different name.
What I like
For everything that I've been doing, I find that Xero for most businesses is the best solution and that comes down to what I was saying earlier. What do you do and what's the best thing that can work for what you do? You just need to make sure you're sweet with the government and so the way that I would suggest going is with Xero if it integrates into the applications that you use. For a long time, the application stack that we use in our business didn't allow for us to use Xero, we could only use QuickBooks and so we're limited to QuickBooks. That's what we used because it made our life easier as it had less double data entry and less chance for human intervention creating a problem and that's ultimately what we want, automation.
As soon as Xero came available, we jumped straight on the Xero bandwagon with zero regrets and most applications are doing the same thing. Your CRM tools and your marketing tools and your payment gateways, everything is coming together in a very, very sweet synergy when they're sharing data between the applications and normally Xero. The reason Xero is so popular is that it has that flexibility with what's called APIs or Application Programming Interfaces, but it's also because it's a robust system that's available anywhere that links into all of the major banks within Australia. That's right if it doesn't link into your bank it's because you're not one of the major banks, but it automates so much for us.
To put it in perspective, we were paying $300 a month to have QuickBooks managed and that was weekly reconciliations. We moved to daily reconciliations and moved across to Xero on the guidance of our bookkeeper and the cost for us went from $300 a month down to $220 a month. The $300 was managing one company of about 10,000 transactions a year, but this move also brought on an extra two companies, so there are three companies being managed all within Xero and it was costing us $80 a month less with daily reconciliations. I was thinking how is the bookkeeper telling us to do this? It seems stupid from a business perspective, but it's so much faster than they can actually charge a set rate per month and be confident in their decision where before when we were using QuickBooks, it wasn't as easy. If we had a busy month, they had to go through a heap more transactions as opposed to Xero, which automatically reconciles.
Xero is Right For Us – 5 Out of 5
Now I know you might be saying oh but Josh, there are other products that auto reconcile as well and you can create rules and that is the case. That is why it's always to make sure you do the best thing and the best fit for you and your business. For us, Xero integrates into all of the different areas where we create invoices. It integrates into all of the different payment gateways that we use, and it lets us see and make sure that we're doing everything that we should be doing with the government. It also predicts how much our BAS is going to be very easy and know that it is up to date near exactly as to what the numbers should be.
Be Aware of This
One of the negatives to Xero out of the box is it does not let you do backups very easily and that can be a big red light for certain companies. If you can't have a backup of your data, you might be stressing out and I would be too. There are plugins for it that let you back up the data out of it and you need to make sure that you are responsible for your backups. When you're storing something in the cloud, it's your responsibility to have backups, not theirs. If for whatever reason Xero disappeared and left zero imprints on the world and zero backups for you to have, you would be up shit creek with zero paddles. That's why you need to make sure you are responsible for your backups.
Remember Sensitive Information
This comes the next part. You are storing data in the cloud, so depending on the type of company that you're working with or working for or you've created, you may have problems having other people's data in the cloud, other people's contact information and financial records in the cloud. It's your responsibility to keep your backups and it's your responsibility with the data that you've put int here so make sure that whatever you're putting in there is okay for the industries that you're in. Besides that there's the obvious, it's in the cloud, if my internet goes down I don't have access to it. Yep, that's a thing and that's becoming more and more of a problem for people and people are becoming more and more understanding of the necessity to have dual redundant line internet connections coming into their business premises.
For now, I would say without a doubt, give Xero a whirl. It's very cheap for what it gives you and it's very easy, much easier than all the other applications. The other ones look like they've got a beautiful interface for something that was made in 1992 but not great for something that you want to be using day in and day out. You want simplicity. That's my two cents, I hope you have had some good advice out of this. Stay good!