The Beauty of Xero's Cloud-Based Accounting Software for SMBs

The Beauty of Xero’s Cloud-Based Accounting Software for SMBs — How the SaaS Brings Efficiency & Visibility to Business Management


Xero is a beau­ti­ful, friend­ly, ele­gant­ly designed account­ing tool built specif­i­cal­ly for small busi­ness­es (not accoun­tants). It includes all of the finan­cial tools a small busi­ness needs. Xero inte­grates with more than 500 oth­er best-of-breed busi­ness appli­ca­tions and apps, enabling easy data con­nec­tiv­i­ty with them to pre­vent repeat­ed­ly enter­ing the same infor­ma­tion or copy­ing and past­ing. Xero con­nects every relat­ed piece of data, using that to track the loca­tion of every cent involved in busi­ness finances, and recount­ing it all in a real-time, drill­able process that hard­ly deserves the moniker of report­ing. It’s a stream­lined account­ing sys­tem that makes man­ag­ing a busi­ness’ books less of a chore. Xero is sim­ply beau­ti­ful.

Imagine a busi­ness own­er who employs one oth­er full-timer, a few part-timers, and, depend­ing on the time of year, one or more 1099 free­lancers. She man­ages the details and logis­tics of her par­ty plan­ning busi­ness from a tablet and her omnipresent smart­phone.

Of all the tasks involved in run­ning her busi­ness, her least favorite is doing her books — invoic­ing, pay­roll, accounts payable, and espe­cial­ly han­dling employ­ee and con­trac­tor expense reports and reim­burse­ments. In fact, she finds man­ag­ing her busi­ness finan­cials an unpleas­ant chore she dreads a lit­tle more every week.

She uses Quickbooks, but her pur­suit of finan­cial man­age­ment tools with fun and easy-to-use inter­faces inspired her to try oth­er solu­tions. She tried — and loved — such best-of-breed, single-function, or niche tools as FreshBooks for invoic­ing and Shoeboxed for receipts. They removed the chore from work­ing with invoic­es and receipts, but get­ting them to share infor­ma­tion with Quickbooks for pay­ments, rec­on­cil­i­a­tion, and expens­es proved a big­ger headache than sim­ply using the built-in Quickbooks equiv­a­lents. For on-site sales, the busi­ness own­er has long used Square, with its lit­tle plas­tic card-swiper attach­ment for her smart­phone, but it pre­sent­ed sim­i­lar inte­gra­tion hur­dles.

The busi­ness own­er loves run­ning her busi­ness but hates the mechan­ics and process­es of han­dling her busi­ness’ finan­cials.

Xero is a friend­lier, more ele­gant­ly designed account­ing tool built specif­i­cal­ly for small busi­ness­es. It includes all the finan­cial tools a busi­ness needs, includ­ing invoic­es, quotes, inven­to­ry con­trol, pur­chas­ing, accounts payable, pay­roll, expens­es, and rec­on­cil­i­a­tion of every­thing.

It also inte­grates with more than 500 oth­er appli­ca­tions so that exist­ing book­keep­ing sys­tems can grad­u­al­ly tran­si­tion to Xero or con­tin­ue using lead­ing single-purpose apps with­out intro­duc­ing data con­nec­tion hur­dles. In fact, Xero leans heav­i­ly on auto­mat­ed data trans­fer, shar­ing, and pre-population method­olo­gies to remove as many hur­dles as pos­si­ble, espe­cial­ly the task of repeat­ed­ly enter­ing the same infor­ma­tion or man­u­al­ly copy­ing and past­ing data from one sys­tem or area to anoth­er. It then presents a busi­ness’ finan­cial data clean­ly and, frankly, beau­ti­ful­ly.

Sleek Design & High Readability Position Business Owners for Success

When Xero bills itself as “beau­ti­ful account­ing soft­ware,” it’s not just mar­ket­ing speak. Xero is designed about as far from the sen­si­bil­i­ty of 1990s CPA CD-ROM soft­ware as pos­si­ble. That beau­ty is not just in how it looks, but in how it works.

Looks count for some­thing when dis­cussing a user inter­face in which a busi­ness own­er is expect­ed to spend as much time, to vis­it as often, as her account­ing sys­tem. Xero deliv­ers on its claimed “beau­ti­ful” user inter­face as well as any account­ing prod­uct — indeed, any busi­ness tool — could pos­si­bly hope. Every screen and fea­ture is sleek and clean — and not just on the mobile app. The mobile inter­face is unde­ni­ably well-designed and unclut­tered, but it’s also feature-rich; every­thing a busi­ness own­er might need is there, not stripped away to cre­ate the illu­sion of a clean inter­face.

Accessed from a desk­top or lap­top com­put­er, Xero’s brower-based inter­face is as sleek and clean as the ver­sion that appears in mobile, which is a wel­come sur­prise. Type is read­able and sur­round­ed by ample white space, with­out oth­er text shoe­horned into every inch of screen real estate. Everything that is on screen has a pur­pose, and noth­ing that doesn’t absolute­ly need to be there is includ­ed. That alone goes a long way toward reach­ing that “beau­ti­ful” bar.

How Xero Works: From Invoices & Inventory to Transaction Reconciliation

The way Xero learns about a user’s busi­ness, includ­ing finances, clients, and prod­ucts, and then con­nects that data to reduce repet­i­tive and annoy­ing tasks is what tru­ly makes the ser­vice beau­ti­ful. Looks help, but they’re backed by func­tion­al­i­ty.

Creating an invoice, for exam­ple, changes and is auto­mat­i­cal­ly stream­lined as time goes on, the more one uses Xero to man­age the busi­ness finances. The first time, one must ful­ly define the client, includ­ing name, con­tact infor­ma­tion, and oth­er per­ti­nent details. The same for the prod­uct or ser­vice sold for the first time to that client or any client.

The sec­ond time an invoice is cre­at­ed, typ­ing part of the client’s name sug­gests the client; select­ing the client from the sug­ges­tion list then pop­u­lates all the oth­er fields auto­mat­i­cal­ly. Products and ser­vices are the same — start typ­ing the name, pick the pre­vi­ous­ly used prod­uct or ser­vice, and then the descrip­tion, unit price, tax rate, and oth­er rel­e­vant details instant­ly pop­u­late the invoice. For busi­ness­es that make use of Xero’s inven­to­ry track­ing of phys­i­cal goods, the sys­tem also removes prod­ucts sold on the invoice from inven­to­ry, auto­mat­i­cal­ly in the back­ground.

Using the mobile app, an employ­ee can record an out-of-pocket expense. If the employ­ee — or a dif­fer­ent employ­ee or con­trac­tor — has sub­mit­ted the same expense before, Xero’s mobile app will rec­og­nize that con­nec­tion with­in the busi­ness account and offer field com­ple­tion sug­ges­tions based on the pri­or expense entries. The app will then allow the employ­ee to scan a phys­i­cal receipt or invoice and attach it to the expense report before send­ing the expense off as a request for reim­burse­ment.

The busi­ness own­er imme­di­ate­ly receives the reim­burse­ment request — only with­in the Xero inter­face or with an option­al email alert — and can then review the request while see­ing it in the con­text of all reim­burse­ment requests, past and present requests from the same employ­ee, and the his­to­ry of sim­i­lar reim­burse­ment requests from all employ­ees and con­trac­tors. Acting on the request — approv­ing or deny­ing — trig­gers oth­er auto­mat­ed actions includ­ing adding approved expense reim­burse­ments to the employee’s pay­roll, which, in turn, auto­mat­i­cal­ly updates the busi­ness’ pend­ing trans­ac­tions ver­sus bank bal­ance as well as accounts payable, P&<, and oth­er reports in real time. Bank rec­on­cil­i­a­tion can then be done quick­ly and eas­i­ly from Xero online or mobile, and either one trans­ac­tion at a time or in batch.

Moreover, not every action has to be tak­en with­in Xero itself to reap the rewards of the prod­uct. Xero inte­grates tight­ly with more than 500 oth­er appli­ca­tions like FreshBooks, Shoeboxed, Vend, PayPal, Debtor Daddy, and so many oth­ers. There’s an entire cat­e­go­rized App Marketplace for all the apps that con­nect with, enhance, or even replace, parts of Xero. Data from all of them can be pulled in and used with­in Xero to pop­u­late and con­nect with oth­er data from Xero itself or oth­er apps that wouldn’t nor­mal­ly com­mu­ni­cate with one anoth­er.

The con­nec­tions Xero draws between data aren’t rev­o­lu­tion­ary. We live in an age in which each Like changes which posts appear and are left off tomorrow’s time­line on Facebook, when ser­vices like Quantcast con­nect length of car own­er­ship with favorite tele­vi­sion shows and edu­ca­tion lev­el to help busi­ness­es build pre­dic­tive con­tent and adver­tis­ing mod­els.

It shouldn’t be news­wor­thy that an account­ing pro­gram can auto­mat­i­cal­ly pop­u­late client or employ­ee data in invoic­es and expense reim­burse­ments or dynam­i­cal­ly man­age inven­to­ry and sup­pli­er pur­chase orders. It shouldn’t be news, but it is because it’s such a rar­i­ty in the realm of busi­ness account­ing soft­ware.

Insight & Reporting Efficiency Make for a Friendly Financial Workflow

Xero’s beau­ty extends to how clear and clean it makes the win­dow into the busi­ness’ finances. Every trans­ac­tion can be instant­ly recalled, iden­ti­fied, and rec­on­ciled against the over­ar­ch­ing view into the busi­ness. Every dol­lar is tracked and report­ed at a click. A busi­ness own­er can under­stand her entire busi­ness finan­cial pic­ture instant­ly and with­out an account­ing degree.

Like even the most basic account­ing soft­ware, Xero pro­vides the usu­al cru­cial reports such as a gen­er­al ledger, P&<, and var­i­ous income and expen­di­ture reports. It goes beyond the basics with many oth­er reports also com­mon to com­peti­tors, but then Xero does some­thing unique, and, for a busi­ness own­er, love­ly. The reports Xero gen­er­ates are not sta­t­ic, basi­cal­ly ink-on-screen state­ments. Every item is click­able. One can drill down from any report, no mat­ter how high lev­el, through every lay­er, every activ­i­ty, every trans­ac­tion, to reach the dis­po­si­tion of every cent, to find the ker­nel of data at the heart of any activ­i­ty.

Looking at the Profit and Loss Report, for instance, the Expenses sec­tion can be opened to reveal cat­e­gories, then each cat­e­go­ry drilled down into to show each type of expense, then fur­ther to each ven­dor paid, and from there, it’s just as easy to get to a par­tic­u­lar vendor’s pay his­to­ry, the rate he charges, and when those rates change. Income cat­e­gories open like flow­ers at a click, reveal­ing inner petals of indi­vid­ual trans­ac­tions, which can then branch off to cus­tomer data and tra­verse the stalk into the inven­to­ry roots of prod­ucts sold.

Every account­ing prod­uct cre­ates reports, but those are typ­i­cal­ly a dozen or so end-of-week or month­ly reports that have to be com­pared man­u­al­ly, line-by-line, to glean any insight into the busi­ness’ finances and per­for­mance. Xero gen­er­ates reports that, when print­ed, are the same sta­t­ic pieces of infor­ma­tion. Before they’re print­ed, how­ev­er, Xero’s reports aren’t like the state­ments of old at all. They’re lay­ered insights that start at the top and allow instant, easy, beau­ti­ful insight into every trans­ac­tion and detail, no mat­ter how small, live on the com­put­er or mobile screen.

Xero Provides an All-Encompassing Platform for Business Finances

Returning to the busi­ness own­er who employs one oth­er full-timer, a few part-timers, and 1099 free­lancers. Xero has replaced the dread­ed chore of man­ag­ing the finances of her par­ty plan­ning busi­ness, of copy­ing and past­ing data between sec­tions of Quickbooks and between it an Square, Freshbooks, and Shoeboxed.
She no longer copies and pastes because Xero auto­mat­i­cal­ly con­nects rel­e­vant data, even sug­gest­ing exist­ing data when she begins typ­ing into invoic­es, checks, and oth­er forms. She has been freed from the tedious, error-prone method of pulling reports and com­par­ing and cross-referencing them line-by-line to under­stand the per­for­mance of her busi­ness, its per­son­nel, and its prod­ucts and ser­vices.
Xero has even stream­lined her pay­roll process­es by con­nect­ing employ­ee and con­trac­tor pay and tax data with her dig­i­tal time clock app and approved expense reim­burse­ments.

Xero con­nects every piece of data with oth­er data it affects and relates to, using that to track the loca­tion of every cent of the busi­ness finances, and recount­ing it all in a real-time, drill­able process that hard­ly deserves to be called report­ing. It’s a stream­lined account­ing sys­tem that makes man­ag­ing a busi­ness’ books sim­ply beau­ti­ful.

Pariah Burke

Author, consultant, trainer, guru: Digital Publishing, ePub, InDesign, Illustrator, Photoshop, Quark. Empowering, Informing, Connecting Creative Professionals™