Xero

A Comprehensive Guide for Accountants and Bookkeepers

Amanda Aguillard

• Publisher: Wiley
• Year: 2021
• Print ISBN:
  9781119759225
• Edition: 1
• eBook ISBN:
  9781119759218
• Topic: Business
• Subtopic: Accounting
• Index: Business

Learn how to maximize value and increase efficiency in Xero with basics and best practices 

Xero: A Comprehensive Guide for Accountants and Bookkeepers is a how-to guide for Xero's US-based advisors. Xero is rapidly gaining traction as an accounting and bookkeeping software, as competitors' strategic changes have left professional advisors looking for an alternative. The rapid adoption of cloud technology by businesses has left many accountants and bookkeepers in need of a guide to quickly gain the Xero skillset. This book covers all features available in the Established subscription plan in Xero. You'll walk through the technical details of how to take advantage of everything Xero has to offer. 

In addition to introducing you to the basics of using Xero, this book provides best practices that will help you streamline bookkeeping workflows and leverage this cloud-based accounting platform. Author Amanda Aguillard also connects the dots between accounting theory and the Xero interface and features, so you will understand exactly why you're doing what you're doing. In today's cloud computing world, we need all our tech tools to play nicely together, and this book delivers on that goal, showing you how to integrate Xero to your other software for seamless operation. 

• Master Xero's interface and features—specific for the US version of the software 
• Learn how to integrate Xero with other cloud-based software 
• Discover best practices that can help you maximize the value you get from using Xero 
• Access the companion website, full of templates for reports, invoices, bills with payments, and more 

Xero: A Comprehensive Guide for Accountants and Bookkeepers , along with its companion website, is your one-stop resource for becoming fluent in the features and functionalities of this  global accounting software platform. 

CHAPTER 1
Introduction to Xero

The difference between Xero and other accounting solutions is that its functionality and language is designed specifically for business owners and operators. The accounting jargon has been banished and replaced with everyday language, such as “money in” and “money out.” But the system has by no means been dumbed down. Xero has the capacity to grow with you from your spare room to the boardroom.

—Source: Wayne Richard, Partner and COO of Bean Ninjas.

Unlike other accounting products, Xero was built as a cloud platform from day one. Founded in 2006 in New Zealand, the company started off by offering cloud-based accounting software, but has evolved to provide a full spectrum of connected tools and services that can help small businesses succeed. As a company, Xero's purpose is to make life better for people in small business, their advisors, and communities around the world. Xero helps small businesses work with their closest ally, their accountant or bookkeeper, whether doing taxes, understanding their finances, or making plans to grow. The platform brings all of the necessary data and information together in one place so small businesses and advisors can collaborate together and succeed.

A truly global company, Xero has more than two million subscribers worldwide as of March 31, 2020.¹

While Xero's home markets of Australia and New Zealand see small business adoption of the cloud in excess of 50%, other regions, including the United States, show adoption of less than 20%.² That means there is tremendous opportunity for U.S.-based accountants and bookkeeping professionals to advise clients on cloud technology.

Working in the Cloud

If you have only previously used desktop accounting software, you are in for a treat! Xero, like other cloud-based applications, runs in an internet browser. This means that both the software and the data live on Xero's servers. No software is installed on your hard drive.

There are many advantages to using cloud-based software, including:

• Physical security of data. My companies are based in New Orleans, which, in 2005, faced one of history's biggest natural disasters with Hurricane Katrina. Most New Orleanians left their offices on Friday afternoon, without any indication that a hurricane would hit the city. (At that point, the hurricane was forecast to go to Florida.) The data that was lost on onsite servers to flood, heat, and humidity was immeasurable. By storing our data in redundant remote servers, it is better protected.
• Automatic software updates. In my years in public accounting, I can recall many hours of waiting for software updates to be installed on the server, usually at the most inopportune times, like the middle of busy season. With cloud-based software, updates occur in the background and generally without downtime. Because software is upgraded at the application level, developers can constantly make the product better. Each year, Xero releases dozens, if not hundreds of product improvements. Almost universally, these updates are included in the monthly subscription of cloud applications at no additional cost.
• Reduced capital costs. Because servers are not needed on premises to hold software, and large hard drives are not required to store data, businesses can be run with minimal hardware. Cloud software typically does not require long-term licenses either, so the commitment is only month to month.
• Simultaneous user access. Multiple users can be in the file at the same time and with Xero, an unlimited number of users are included with every subscription.
• Flexibility in hiring. One of the biggest struggles for accounting and bookkeeping practices is finding qualified talent. When the firm's software is accessible anywhere, the firm can source employees from a much larger talent pool, and in some cases, take advantage of wage arbitrage.
• Easier access with better controls. True browser-based software can be accessed on any hardware with proper login credentials. Because the data is gated by passwords, rather than being downloaded to a hard drive, the data remains secure on any device, yet user access can be denied immediately by firm administrators if needed.
• Real-time, single-ledger data. In my time in public accounting, I often communicated year-end adjustments to clients that never made it into the file. Nearly every year, I would have to start with fixing prior year balances. With cloud-based software, the accountant or bookkeeper can make the adjustments on their own and not depend on the client.
• Availability of mobile apps. Many small business owners leverage time out of the office to work on their company bookkeeping. Desktop applications do not offer mobile versions. Having the ability to handle simple tasks on a smartphone or tablet gives owners flexibility.
• Collaboration. When all users are looking at one common ledger, discussions can occur more easily. Advisors can communicate with other people on the client's support team, like lenders and investors, and share information.
• Ability to customize an ecosystem. Using a cloud-based general-ledger package means the ability to craft an entire ecosystem of operational software around it. Pick the best solution for any piece of business operations and connect with integrations. If needs change, switch out only one piece of software while keeping the core general ledger.
• Access to machine learning. Aggregation of data creates opportunities for software to aid in automating simple tasks, like bank transaction coding, based not only on the learnings from that client's file but also from the billions of transactions processed in apps.

Xero's Security Protocol

Xero takes security very seriously. It is certified as compliant with ISO/IEC 27001:2013 by EY CertifyPoint and has produced a Service Organization Control (SOC 2) report. Security reports are available at https://www.xero.com/us/about/security.

Xero is committed to protecting sensitive data with multiple layers, including:³

• User access. Because Xero offers unlimited users for one subscription price, there is no incentive to share login details. Each user should be granted access through their own Xero account. This means that each user's activity will be tracked in the backend of the system. It also means that user permissions can be tailored to the user needs, without giving too much or too little access.
• Two-step authentication. Xero strongly recommends the use of its two-step authentication for login. This allows users to require a second unique code generated by a smartphone application in order to gain access.
• Data encryption. All data transmitted between Xero and the user is encrypted using TLS (Transport Layer Security). Data is also encrypted in storage centers.
• Secure data centers. Xero holds client data in enterprise-grade hosting facilities with constant monitoring and surveillance, onsite security staff, and regular security audits. Data is held in geographically separate, redundant environments.

Choosing the Right Subscription

There are two kinds of Xero subscriptions.

Partner edition subscriptions are available through verified Xero Partners (accountants, bookkeepers, and advisors) and must be paid under the partner billing account.

• Ledger ($3 per month): This is the perfect subscription for annual bookkeeping or write-up work for tax return preparation. It does...

Table of contents

• Cover
• Title Page
• Copyright
• Foreword
• Preface
• Acknowledgments
• About the Author
• Chapter 1: Introduction to Xero
• Chapter 2: Leveraging Xero within an Ecosystem
• Chapter 3: Xero HQ
• Chapter 4: Navigating through Xero
• Chapter 5: Creating a Xero Organization
• Chapter 6: Settings
• Chapter 7: Contacts
• Chapter 8: Inventory
• Chapter 9: Banking and Bank Feeds
• Chapter 10: Bank Reconciliation
• Chapter 11: Sales and Invoicing
• Chapter 12: Purchases and Bills
• Chapter 13: Fixed Assets
• Chapter 14: Multicurrency
• Chapter 15: Advanced Tools
• Chapter 16: Reporting
• Chapter 17: Month-End Reconciliation
• Chapter 18: Advisory Tools
• Chapter 19: Xero Expenses
• Chapter 20: Xero Projects
• About the Website
• Index
• End User License Agreement