Why businesses are making the swap to Xero

In today’s competitive business world, effective financial management is the key to success. As a business, you often need to handle multiple tools simultaneously, such as payroll, accounting, and inventory management, which can lead to inefficiencies and errors. This is where Xero comes in. This cloud-based accounting software seamlessly integrates all essential functions, making it an indispensable tool for businesses of all types. With its automation, flexibility, and scalability, Xero is not just accounting software but a strategic tool that can help your business grow and thrive.

Efficiency through automation

For many business owners, time is precious. And yet, so many businesses waste hours on repetitive tasks like bank reconciliations, generating invoices, and tracking expenses. Not only do these tasks consume hours of your day, but they are also prone to human error. Xero automates all of this, from automatic bank feeds to recurring invoices and tax calculations. It allows users to focus on what truly matters: growing their business.

I have some clients who are small businesses with a high volume of transactions and many miscellaneous expenses. For example, I worked with a café that managed their finances manually using spreadsheets. They tracked sales, expenses, and wages without bank feeds or automated transactions, and didn’t use Xero to manage any of it. This resulted in two things:

1. The café owner accidentally underreported GST due to miscalculations and ended up facing a fines and interest charge they could’ve otherwise avoided. And;
2. Payroll Errors. Unfortunately, by manually calculating wages, the café accidentally ended up incorrectly paying their staff.

The beauty of Xero’s automation lies in its accuracy. Financial errors can be costly, leading to compliance issues or lost revenue. By automating processes, Xero ensures that financial data is consistent and reliable, reducing the risk of mistakes. After switching to Xero, businesses often find that they save hours each week, which can be reinvested into customer relations, product development, and strategic initiatives.

I have previously worked as an accountant for a wedding and event management company. The company handled a wide variety of orders, including venue setup, catering services, and other projects, with each project having different costs and expenses. However, as the business grew, managing became increasingly chaotic, especially as customer demands became more personalised, significantly increasing the complexity of account management. The owner often spent a lot of time reconciling the account, but these two things in particular created the most difficulty.

1. Errors and unclear accounts: Each wedding project involved multiple suppliers and expenses. And because the company relied on manually entering each cost, it not only ate up their precious time, but it also led to errors causing unclear accounts.
2. Customer payments and refund issues: Due to varying payment methods from customers—some paid in instalments, while others paid in full—financial management became a significant challenge, resulting in numerous refunds and payment errors.

By switching to Xero, the owner regained the time they used to spend reconciling these errors and managing their accounts and were able to focus on what was actually important in their business: serving their customers.

Streamlined inventory management

Another great feature of Xero is inventory management. For those in retail or manufacturing, managing inventory can be a hassle. But with Xero’s inventory management capabilities, this task becomes simple and efficient. You can track stock levels, calculate costs, and assess profitability in real-time. This helps ensure you have the right products at the right time, avoiding overstocking or shortages.

What’s even more beneficial is that Xero integrates inventory data directly into your financial reports. This allows you to make smarter, data-driven decisions. You can analyse which products bring the most profit and adjust your pricing, promotions, and purchasing strategies accordingly.

There is a timber sales company that specialises in providing various types of wood for export and industrial use. Due to the wide range of wood types and the need to provide different specifications and sizes based on customer requirements, inventory management has become a complex task. In the past, the company relied on manual spreadsheets to record inventory and track the quantity and price of each type of wood, which led to frequent inaccuracies in inventory data. This resulted in stock shortages or excess inventory when customers placed orders.

Since adopting Xero, the company has been able to track the quantity, size, and cost of each type of wood in real-time. Xero automatically updates inventory information, ensuring that the inventory levels for each type of wood stay within reasonable limits, avoiding overstocking of certain types of wood and reducing storage space waste. At the same time, Xero helps the company calculate the cost and profit of each type of wood, ensuring accurate financial reports.

Additionally, Xero integrates inventory data with financial reports, enabling the company to analyse which wood types and specifications generate the most profit. Based on this data, they can adjust procurement strategies, reduce the purchase of low-profit wood, and optimise pricing strategies to maximise revenue. With this feature, the company has improved inventory management efficiency, reduced losses, and ensured that customers receive the wood they need on time, significantly improving customer satisfaction and sales.

I have many clients in the restaurant business, who previously relied on paper invoices and spreadsheets for financial management. Since swapping to Xero, they’ve noted two major benefits.

1. Simplifying bank reconciliation: Xero supports a direct connection with bank accounts, automatically importing transaction records. This allows restaurant owners to easily complete bank reconciliation, reducing manual data entry and minimising the risk of errors.
2. Better control of finances: Xero’s budgeting feature helps restaurants better control costs, set budgets, and track the variance between actual spending and the budget in real-time. This helps restaurants optimise operations and maintain a healthy financial condition.

Integrated payroll for simplified management

As a business owner, managing payroll is always a priority—but it can also be one of the most tedious tasks. Xero simplifies this by integrating payroll directly into the platform. From calculating wages and deductions to submitting tax filings, Xero streamlines the entire payroll process, ensuring it’s done right every time

I am currently working on a case related to this. The client has the Xero system but hasn’t been using its payroll functionality. Their company processes payments by having the accountant calculate everything on a spreadsheet and then send it to the owner, who transfers the money via the bank. This approach has led to two major issues: first, PAYE and holiday pay are incorrect. Second, there’s no software link to the IRD to reconcile PAYE, resulting in discrepancies between PAYE on Xero and the IRD. We are now helping them set up the system step by step and correcting previous errors.

Flexibility with mobile access

For busy entrepreneurs, Xero offers exceptional flexibility. It allows you to manage your finances seamlessly, whether you’re travelling for business or managing multiple projects remotely. Xero’s mobile app allows you to handle everything from invoicing clients and tracking expenses to reconciling bank accounts, all directly from your phone. This makes financial management more convenient and perfectly adaptable to your lifestyle.

The app’s mobile access is invaluable, particularly in today’s dynamic work environment, where remote work and hybrid models are becoming increasingly common. Xero ensures you can stay productive and in control of your finances no matter where you are.

Scalability for growing businesses

One of the main concerns for clients when choosing financial software is whether it could grow alongside their business. Xero addresses this with its scalable features that adapt to businesses of any size. Whether you’re launching a startup or managing a well-established enterprise, Xero offers flexible pricing plans and add-ons, allowing you to grow without outgrowing the platform.

This scalability avoids the hassle and cost of system changes as your business expands. The client can start with a basic plan and seamlessly upgrade as the business grows, all without the disruption of switching systems. Xero’s flexibility makes it a reliable long-term solution for evolving financial needs.

Xero is more than just accounting software—it’s a comprehensive solution for managing all aspects of your business’s finances. From automating routine tasks to offering powerful insights and flexible tools, Xero makes financial management simpler and more efficient. Whether you’re a small startup or an established business, Xero’s scalability, global reach, and collaborative features make it the ideal choice. And with a 30-day free trial, there’s no reason not to give it a try.

But if it’s still too overwhelming, our team at Gilligan Sheppard are experts when it comes to using Xero. Whether you need help setting up Xero, training in how to use the software, or are looking to outsource, we can help. Reach out to us here to take the first step toward transforming your financial management.