Heather Smith - Xero For Dummies

Working in the cloud means working via the internet — the files you’re accessing and working on aren’t stored on your computer. As with everything, benefits and concerns of working online exist. But, indisputably, working across the internet is the way of the future. Governments across the world are funding infrastructure that enables access to high-speed internet connections, ensuring their citizens remain competitive.

Without realising it, you may already be using cloud services. If you’re using a smart phone, email, internet banking, Skype, Google Apps, or storage services such as Dropbox or Evernote, you’re embracing the internet — and some of these devices or services make use of the cloud.

If you’re not already convinced, here are some of the benefits of cloud computing:

Reduced costs: Working in the cloud means you have no requirement for in-house servers to host other computers on the network. This reduces your ownership, maintenance and insurance costs.

Real-time data: You can access accurate and timely reports, which can assist with informed decision-making.

Productivity gains: The time taken to respond to issues is minimised because data can be accessed wherever you can access the internet. Integration features mean you don’t need to re-key data, because fields are matched and flow from one area to another. You also don’t need to install or upgrade anything on your computer.

No platform issues: Mac or PC? You no longer have any need to worry what platform you’re working on because you access the internet via an internet browser.

Collaboration: Multiple users from around the globe can simultaneously log in and view the same information, depending on their access levels. Yes, you can review business reports while cruising the Nile!

Flexibility: Applications can evolve to suit business needs.

Reasonable pricing: Many applications have reasonably priced packages available and offer options to suit different business requirements, from the micro through to the enterprise business. You can start with a low-cost package and, as you grow your business, move to a bigger package.

Reliable data backups: Data is stored in the cloud. If your computer crashes, or the business floods or is affected by fire, you can still access your data via the internet. Note: Backups of your own important data should still be made — just think of the cloud backups as a trapeze you can grab. In a way (and with slightly mixed metaphors!), it’s a double safety net! In the case of Xero, you can manually download the complete General Ledger from Xero (see Chapter 9) or use an automated back-up solution such as BackUpMyBooks ( www.backupmybooks.com ) or Control C ( www.control-c.com ) — see Chapter 16for more on add-ons.

Cool factor: Getting out your Android after enjoying a coffee meeting with a client, taking a photo of a receipt and uploading it straight to your accounting package as an expense claim is pretty darn cool!

As with everything, you should be aware of some aspects of cloud computing. Here are some of the concerns to keep in mind:

Availability of internet access: Access to the cloud is dependent on internet access. No, or slow, internet access may affect your decision to work in the cloud.

Data storage questions: Because data can be stored anywhere in the world, you need clear information on its actual location. What country, and under what jurisdiction, is the data stored in? Note: Xero data is stored with Amazon Web Services in the United States, a leading hosting provider. The United States has sensible laws governing the protection and confidentiality of data.

Longevity: Will the software provider be around to look after your data forever (well, as long as you need it to be, at least)? Note: Once a Xero subscription is cancelled, the data is archived for seven years. It can’t be accessed by anyone unless the subscriber requests reactivation of the subscription.

Security: What security is being maintained over business data? Note: The security encryption of Xero is equivalent to that used by online banking. If you’re happy to use online banking, you should be happy to use Xero. All users require unique passwords to access the application, and Xero logs users out after 60 minutes of inactivity. Xero also includes the option of two-step authentication.

Ownership: Who has ownership of your data in the cloud? Note: With Xero, the direct subscriber to Xero owns the data.

Everything you do in business incurs some risk, including the way you operate. If you consider the risks of your own computer crashing, or being susceptible to a virus, floods, theft or fires, you may be far better off putting your faith in an organisation that has the infrastructure and systems in place to better protect and store your data.

Xero offers a number of different editions. As your business grows, you can upgrade packages, or, if you decide you no longer need a larger package, after 30 days you can downgrade.

The editions come in starter, standard and premium packages. The uses and features of each package are as follows:

Starter: The starter package is suited to the micro or start-up business, with limited transactions. This package allows you to send and receive 20 invoices per month and 5 approved bills each calendar month. You can have an unlimited number of draft or historical invoices, bills and credit notes. You can also reconcile 20 bank statement lines per calendar month. ( Note: This applies to the date of the transaction. So if you have reconciled 20 transactions dated in April, you won’t be able to reconcile any more transactions that are dated in April, even if you try to reconcile them after the month has ended.) Bills and receipts can be captured in the document collection and management software Hubdoc. This solution is powered by Xero. A variety of customisable reports are available, including short-term cash flow and business snapshot dashboards, along with payroll for one person.

Standard: The standard package is suited to the typical small business. Using this package, you can send and receive hundreds of invoices per month, and reconcile hundreds of bank statement lines per week. You can also record payroll for two people.

Premium: This package size grows in relation to the number of employees to be processed through the system. As well as being able to send and receive hundreds of invoices per month and reconcile hundreds of bank statement lines per week, using the premium package means you also have multi-currency capabilities, payroll direct deposit (in the US version) and auto-superannuation (in the Australian version).

Depending on the region, all three packages can include payroll, which may be included in the package price or priced per employee. Check your region’s Xero package offerings for more information.

All editions allow you to access your files anywhere online, invite unlimited users, use live bank feeds and cancel online at any time. (Just bear in mind a cancellation takes 30 days to take effect, during which time subscription charges are still incurred.)

All editions also include the following features:

Automatic online backups

Demo company files so you can explore options

A free trial version before you sign up (only available if you sign up to Xero directly, rather than through an accountant or bookkeeper)