Xero allows users to access real time financial information, which is crucial for growing companies. The added benefit of using Xero, however, is the ability to utilise the Xero Add-On ecosystem and create bespoke, tailored business processes for each individual business.
We take the opinion that, a startup should seek to implement, from day one, effective operational and financial systems that can scale with the business without significant additional cost or manual input at a later date. Xero allows us to do this and add significant value to our clients from the outset of their business, increasing their investment attractiveness and reducing costs in the long term as revenues commence and grow.
At Nuvem9 we like to categorise the Add-On ecosystem into the following categories of solution when discussing with clients:
Integration: these add-ons are cloud solutions in their own right but have a Xero interface that allows the transfer of financial data from that solution into Xero. This removes duplicated data entry, reduces the risk of user error, and integrates the company’s financial system better into the wider operational processes for that business. As an example, we have a client that has integrated its Magento webstore with Xero, thereby enabling all transactions on its online site to be transferred into Xero as draft invoices at the start of each working day. They previously used Sage and had to employ a clerk solely to input the records from Magento onto Sage. Other notable mentions are Timely, an appointment software tool which allows salons, hairdressers etc. to turn each booking into a Xero invoice, and a wide range of CRM integrations like HighRise, for example.
Automation: there are a growing range of tools that are being used to take previously manual intensive financial processes and automate them via specialist Xero add-on tool. For example, Satago and Chaser allows for automated and consistent credit control processes. Receipt Bank removes Purchase Ledger data entry costs via OCR automation. Kwanji and MarketInvoice enable Xero interfaces in key treasury functions. Our rule is that if any financial process in the business is repeated by a person there will be an Add-on to replace that process.
Enhancement: these tools add value to an existing process with a Xero link. Once set-up they will continue to generate savings for a business time and again. For example, Stripe, Paypal and GoCardless payment links on sales invoices will increase the speed at which an invoice is paid.
Analysis: whilst the range of reporting in Xero is good and growing with each release, the default nature of the report formats mean it is likely a client will have a specific need that cannot be met directly in Xero. The availability of tools such as Fathom, Spotlight, Crunchboards, ProfitSee, Smeebi and Float enable data to be exported from Xero and analysed in much more customised detail in the reporting tool. The alternative is to use spreadsheets, which are more costly to set up, and less flexible in changing with the needs of the business.
For our startup clients we are using a tailored formula of solutions from each of these categories as appropriate to create the best value added solution for that specific business. To date our favourite and most effective solutions have been:
1. Kwanji
In previous lives we have had experience managing treasury functions for global groups of companies and the cost of moving money from one territory to another used to be horrendous. Kwanji provide access to a foreign exchange (FX) marketplace whereby you register the amount you want to pay and the country to where you need to send it, and they then list the FX brokers that will facilitate your payment. The added benefit is that the initial anti-money laundering application process happens only once; Kwanji collect all the information required at the outset and then do the work themselves in obtaining approval to use each broker available in your marketplace. Invoices are imported via a Xero integration and therefore makes the process even more efficient. This tool is allowing our startups to stretch their GBP further when making international payments via competitive rates, and cut out unnecessary bank fees in the process.
2. Receipt Bank
The premise of Receipt Bank is so simple, yet massively effective in a small company. Purchase invoices are uploaded to your Receipt Box inbox via email, Dropbox or direct browser upload and Receipt Bank crunches the data via OCR to produce a draft Xero invoice, including analysis by line entry. The monthly fee is so small compared to the time saved that we are often left scratching our heads that there are still businesses on Xero that don’t use it!
3. GoCardless (& Directli)
If you have ever attempted to apply for a Direct Debit facility at a high street bank you know that this can be a tiresome, long and more often than not, fruitless task for a young, early stage business. With GoCardless you can be set-up for collecting direct debits online within a matter of minutes. One of our clients is a software consultancy business and was experiencing consistent issues with getting businesses to pay on time. We have transformed their cashflow by implementing a GoCardless payment link on every Xero invoice issued; this allowed an online payment screen to be generated and money started to be transacted faster. In addition, the majority of clients have now transformed over to a recurring direct debit solution.
Directli is an extension of the basic GoCardless tool utilising GoCardless and Xero to allow for management of recurring subscriptions.
4. Float
For startups cash is king and we have recently started to see the benefits of Float, a cashflow management tool. Xero data, including budgets, are imported to Float and then cashflows are generated based on different scenarios and criteria that can be saved and presented. We don’t think we’ll ever use a spreadsheet based cashflow again given the flexibility and value add that this tool brings to our clients.
5. MarketInvoice
We did not include MarketInvoice just because we were asked to write this guest blog! It would have been on the list anyway. MarketInvoice allows businesses to access working capital funding against a Purchase Order or Invoice. The Xero interface allows for a swift, easy, online application; all the paperwork required is available via your Xero link and approval can be obtained in around 48 hours max. Having had experience of setting up trade invoice facilities for companies in the past I am amazed at how easy this process has now become versus the legacy systems operated by traditional financial institutions. This service is ideal for our startup clients seeking to leverage faster access to funds via a forward thinking funder.
If you would like more information on how Nuvem9 are using Xero and its add-ons contact us today for a free Xero consultation.