For a long time, the conversation on digitalisation has been about how it can improve your business—how it improves efficiency, lowers costs, and minimises errors. This time, we want to put the spotlight on some of the intangible but equally impactful benefits of digitalising your accounting processes, particularly for small and medium businesses (SMEs).
The advent of technology has brought many new products to the market, but cloud-based Software-as-a-Service (SaaS) solutions remain one of the biggest game-changers for SMEs. The accessibility, affordability, and customisability of these solutions make them perfect for businesses of any size and industry.
At Harvest Accounting, we use Xero—a cloud-based accounting software tailored to meet the needs of SMEs. We use Xero in our own accounting practice, and we offer it as part of our service package to clients.
Here are some of the personal reasons we advocate digitalising your accounting processes:
Digital accounting is sustainable
Accounting involves data—lots of it. Every transaction your business makes needs to be filed and recorded. If you’re doing things manually, that means keeping stacks of printed receipts and invoices in someone’s desk drawer somewhere. Not only is this unsightly and vulnerable to loss or damage, but it also leaves less room in the office for actual staff.
Even businesses that use digital accounting tools like Excel or even enterprise software will find themselves in need of more storage after a few months.
When your business is scaling, traditional accounting processes are simply not sustainable. As your company grows and transaction volumes increase, you will need to adapt by increasing storage capacity and hiring more staff to handle the workload.
This would inevitably result in delays and inefficiencies. Nothing breaks the momentum like having to search manually through unorganised folders to find old documents. Plus, using manual accounting methods for high transaction volumes leads to a high margin for human error.
We advocate cloud-based accounting software like Xero because it allows you to store data in the cloud, so you never have to worry about storage. It will also keep your records organised even after your business grows and many year’s worth of data are recorded. It will grow with your business no matter how many employees you hire or how big your business gets in the future. Upgrading your requirements is as easy as upgrading your plan.
A big plus is the ability of SaaS solutions to integrate with other powerful applications. This allows you to customise your software ecosystem to meet your needs. No matter which industry your business is in, there should be an app out there that can customise Xero to suit your business and create greater efficiency.
To give one example, our client Treetop Therapy, a speech therapy clinic here in Singapore, had already been using Cliniko, a practice management system for clinics, to track client bookings and session information. We integrated Cliniko directly with Xero, so even though Treetop Therapy sends out their invoices through Cliniko, all the transaction data flows straight into their books hosted on Xero. This totally eliminates additional steps of duplicate data entry.
Transitioning to the cloud is also far more environmentally friendly since it removes the need for paper and external hardware. This is a small but impactful way for your company to reduce its environmental impact.
Digital accounting is inclusive
Another important trait of cloud-based SaaS software is its accessibility.
Traditional enterprise software was created with big corporations in mind. This meant that the modules and features these offered weren’t useful for SMEs, or at least not applicable to SMEs of a certain size. They also come with hefty price tags to boot.
Cloud software like Xero, on the other hand, gives SMEs the processing power that was previously only available to large corporations at a fraction of the cost. The flexibility and scalability of these products make them ideal for SMEs that still have a lot of room for change or growth.
Digital accounting also allows you to be flexible, especially in a globalised world where remote work and flexible schedules are becoming the norm. This trend has been accelerated even further by Covid-19.
For teams with mixed work environments—such as those where employees can choose to work from home on certain days—the cloud provides the flexibility they need to work from home while still meeting their financial reporting obligations.
Digital accounting is collaborative
Accounting has traditionally been viewed by businesses as a service. You outsource all your accounting needs to a third party, and then you get together twice a year—once at the financial year-end, and once for filing taxes.
All that time in between, you only have a piecemeal or outdated idea of the state of your finances.
With SaaS solutions like Xero, you get better visibility into your financial health, anytime and anywhere. Because all of your company data is stored on the cloud and updated in real-time, chief decision-makers and stakeholders get full visibility into the company’s financial health.
Xero also has reporting functions that allow you to easily filter out data by time frames or interpret data into charts and graphs for easy analysis. If you have more specific reporting requirements, there’s always the option to integrate Xero with a reporting tool like Futrli.
Up to date information is invaluable. One of our clients told us that because of the transparency that Xero provides, he’s able to make data-backed financial decisions more frequently throughout the year—crucial especially in a period of high uncertainty.
Xero also provides a short-term cash flow feature. This allows you to visually project your bank balance for the next month and see how invoices impact your finances if they’re paid on time or expected to be late, and when your upcoming bills fall due.
Having all the information and reporting capabilities readily accessible allows you to be ready to make appropriate and timely decisions as your company grows.
The majority of our clients engage us monthly to discuss their accounting needs. We discuss their numbers and help clients make better decisions. We also have regular check-ins with clients to get a sense of business in the next few months and where the business is headed, which is far more helpful than meeting just twice a year.
Especially now that the pandemic has affected so many of our clients financially, the regular check-ins allow us to provide better financial advice. Reviewing your business’ financial health annually at year-end is way too late—now more than ever it’s important to act and react fast to ensure you capture opportunities as they come by and predict when things might get tight.
Digital accounting is better for everyone
The higher efficiency of digitalisation makes for less human error, especially in areas where it counts.
Poorly formatted and inconsistent invoices generated from Word are unprofessional, and it’s time consuming to boot. Your invoice is a reflection of your company, and the template you give out to suppliers or clients will provide an impression of your company.
Xero enables you to send out invoices faster via email straight from the platform using one of its pre-set templates—no need to download as a PDF and attach it to emails manually. And certainly much faster than printing out and sending by post!
You can even automate the collections of receivables by implementing invoice reminders, saving valuable time and avoiding awkward conversations with your customers about unpaid invoices.
Fast and accurate accounting also allows you to process payments faster, which means your suppliers get paid on time and the right amount. Xero allows us to do this via batch payments where we can bundle multiple bills from the same supplier into one payment transaction. It’s fast and easy, and suppliers get a single payment and reference statement for simplicity.
Our team and our clients are much happier not having to fiddle with these tedious processes. Automation gives us more time to focus on the things that matter the most to our businesses. And what matters to us is helping you enjoy effortless accounting.
Digitalisation helps us help you
The best benefit of digitalisation is that it’s freed up time for us to become better collaborators for your business.
Small businesses often don’t have the biggest budget for accountants or in-house financial officers, and tend to rely on their own research and intuition for financial decision-making. But because of cloud-based tools like Xero—and other integrations in our toolkit, like Receipt Bank, HReasily, and Futrli—we’re able to give our clients the feedback and insight they need to handle their finances efficiently.
If you’re looking for a digital solution to your accounting needs, then we’re here for you. Get in touch with us here to find out how simple accounting can be.