With the new financial year upon us, there are the usual pieces of information that we need at 31 March for standard balance date businesses. Please see further details below.

The end of a financial year/start of a new one is the perfect time to review the systems that you use in your business! We are massive fans at Cloud Accountants of using technology to not only create efficiencies in your businesses, but to provide the necessary tools for you to grow your businesses. Now is the time to review your existing technologies/systems to make sure that you are keeping up to date with any changes. Please make contact with us and we can assist.

We are encouraging and educating all of our clients to use Xero Files for uploading these important documents as a starting point. Please check out the functionality if you haven’t done so already.

Files for Xero will improve the efficiencies with preparing year end financial statements and tax returns for us at Cloud Accountants and your business.

We recommend setting up a ‘Cloud Accts’ folder and start to put the necessary docs into this folder. These would include:

• Confirmation of bank and credit cards balances at 31 March
• RWT interest certificates
• ACC invoices
• Fixed asset invoices, review of fixed asset schedule
• Legal fee invoices
• Stock takes
• Loan documents, statements
• Hire purchase documents, statements
• Payroll details
• Home office details
• Wages details if you do not use an online system

Bad debts to be written off, review of Accounts Receivable

Before March 31, you need to review your Accounts Receivable and determine whether any of your invoices outstanding are recoverable or not.

If they are old and you have made every step to recover these, you must write them off as a bad debt expense before the end of this financial year.

For guidance there is some help from Xero here – Of course please contact the Cloud Accountants team for guidance.

Stock takes

If you hold stock in your business, it is important to prepare a stock take on 31 March. If you do not use a stock system (that ideally links to your Xero organisation!) we can process this stock take for you in your year end financial statements.

Happy New Financial Year!

I cannot attend this year and there does not appear to be an Auckland repeat, so I thought it would be an idea to put together some questions that I would put to the board of Xero. (and maybe, just maybe obtain some responses from Rod either at the AGM or prior )

1. Competition is heating up in the online accounting space both locally and globally. How does Xero, both now and in the future, differentiate itself from its competitors? Especially compared with Intuit and QBO in the US. What is your point of difference?
2. Culture in the workplace. Xero has grown very quickly over the past few years both with paying users and the number of team members. How do you retain the ‘small startup/everyone mucks in’ culture when the company has this extreme growth? Is it a challenge to retain some of the team?
3. Xero has a very open API so third parties can connect to the accounting engine with relative ease. Where do you see the future for this to continue for Xero? And is there any intention to buy companies/systems to add to the suite of Xero services? This is in light of Intuit in the US buying Invitbox, an accounts payable processing system.
4. There is a lot of noise in social media especially on Twitter around Cloud Accounting with different vendors. Do you have a company policy with engaging with competitors? ‘Discussions’ around their products and/or pointing out limitations? Is it not a dangerous game to go down this road?

What other questions would you add?

When Hamish Edwards (Xero co-founder) recently tweeted that he was looking for an accountant, and that ‘if you wear a brown cardigan or have a comb over you need not apply’, it got me thinking.

In 2012, what does an accountant look like?

Are there still the pin stripe suits and ties? Or has it gone as far as jeans and t-shirts?

For me, it is not so much about the appearance but the following:

• Having a positive attitude and Passion!
• Being straight up and honest (the truth hurts sometimes!)
• Having a tech and entrepreneurial streak
• Being able to communicate across different mediums
• Being flexible to change

Any others?

[Disclosure - I own 3 cardigans, none brown...]

I’ve been using Xero for over 4 years now and I’ve learnt some great tips and tricks along the way that I’m looking forward to sharing with you over the coming months.   I’m confident these will help you use Xero more effectively and efficiently plus save you time as well!

Bank Rules

These are fantastic when set up correctly in Xero and they make reconciling some transactions so much easier and faster!  I’m going to use Entertainment transactions as my example as entertainment needs to be split 50% to entertainment and 50% to non-deductible entertainment.

How to add a Bank Rule around entertainment

1. Go to Manage Account on your dashboard and click Bank Rules

2. Click on create rule and select Spend Money

3. In the 1st column you will select ‘payee’ and in the 2nd column select ‘contains’ and then in the 3rd column type in the name of the place you want to add as a condition to this rule e.g. Prego, Salta Cafe.  Ensure you select ‘any’ and not ‘all’ at top of bank rule screen.

4. In the description enter in ‘Client meeting’ and code to entertainment -deductible and put 50% in the percentage box

5. Next add a new line and ‘Client meeting’ again but this time you will code to entertainment Non-deductible and put 50% in the percentage box.

6. Save this by clicking the save button at the bottom of the screen and name your rule ‘Entertainment’.

7. You can keep adding conditions to this bank rule as required. Whenever transactions are imported into Xero that match your bank rule, Xero will do the split and code automatically for you. All you need to do is hit ok.

Check out the Xero help centre for more information on Bank Rules.

But any accounting engine is only as good as the information that is going into it.

With bank feed transactions being reconciled on a regular basis, accounts receivable and payable being processed and reconciled, GST returns/Payroll being checked and paid throughout the year, Xero (with some add-ons) certainly makes accounting simple and more intuitive.

There are some tricks and better habits to get into however.

And these will make the end of year preparation of financial statements that much more efficient. This is a positive for everybody, our clients and us their accountants!

Emma Laing, our head internal Xero consultant, has been working closely with some of our clients for a period of time now, and has some very good tips around using Xero which are specific to the way we do things at Cloud Accountants.

She will be highlighting some of these tips in a series over the next few months.

A warm welcome to Emma, our guest blogger!

There has been a lot of talk on LinkedIn and other forums around the use of bookkeepers with accountants, when the businesses are using an online accounting system such as Xero.

I believe that it is a misconception that bookkeepers will become redundant, if a business was to move to Xero.

At Cloud Accountants we are a 100% Xero practice. We use bookkeepers (we call them Xero Consultants!) with many of our clients, and they (the Clients) tend to fit into one of the following groups:

• ‘We love Xero, and the way we can access real time information around who owes us money at anytime. But we would prefer your team to process all of the transactions, GST and Payroll for us. Our time is better spent focusing on marketing initiatives and growing our business’
• ‘We are happy to process transactions in Xero, but we would like a ‘checks and balances’ around GST return filing time to make sure that we have coded the transactions correctly’
• ‘Can you assist with setting us up in Xero, and ‘hold our hand’ for a period of time until we become familiar with the system’

I would make this point as well:

Although Xero is a simple system to use, we have not been afraid to communicate to some clients that they are probably better off letting our Xero consultants assist with (or process completely :)) the transactions, GST and Payroll for their business. Because after all, the cleaner we receive the information at year end (or for periodic reporting) the more efficient we can be at completing with accurate statements!

And we are all about working smarter and more efficiently!

Our chief Xero Consultant, Emma Laing (pictured), says that clients are loving working closer with us in Xero.  ‘It gives them piece of mind knowing that transactions are processed correctly and especially getting that green reconciled tick!’

We work very closely with Glennis and the team from Katalyst Office Management with many of our clients, and the partnership works very well!

And the work that Melanie and the team are putting in with the NZ Bookkeepers Association is great for further collaboration with accounting firms.

So is Xero negating the need for a bookkeeper?

We don’t think so here at Cloud Accountants.

What I enjoy the most about Xerocon is the chance to not only hear about what is on the horizon with the system and add-on’s, but to rub shoulders with like minded accountants that are using technology to provide a better and smarter service to our existing and potential clients.

[Although far too many are still coming up with excuses with why they have not embraced Xero and other online systems, shame on you!!]

It was a surprise to be awarded the Partner Innovation Award, with the calibre of nominations in the category – very proud to say the least! Congratulations to all of the winners and nominees, you are leading the charge!

I enjoyed presenting in the Modernise stream alongside Margaret from the Engine Room, Brad from Wise Advice, and Guy from Interactive Accounting in Australia. It is great to give some insights into the way we operate in an online accounting firm. Also a Q & A with Xero co-founder Hamish Edwards around agreed monthly fees.

There was plenty to take away from Xerocon this year, but these are the 3 that we are most excited about at Cloud Accountants:

Workflow Max practice management + Tax

With the announcement just prior to Xerocon (good timing!) that Xero had purchased Workflowmax, Rod proceeded to announce that accounting firms would receive it free for their practices for life! We just need to add a few clients to Xero. Very cool! We are in the process of moving all of our clients to the Tax system and are looking forward to a tighter integration between Xero and WFM.

Xero Report Packs

We are looking forward to having new and improved year end reports straight out of the Single Ledger in Xero. Better notes, and the ability to customise and standardise across our client base will be excellent! We do use the reports for our end of year statements currently, but it will be a big advantage to have standard reports that all of our team members will have access to, to apply to each client. We will also be able to upload custom spreadsheets or text straight into the reports for making each unique with external data when required.

Spotlight Workpapers

This was a ‘Wow’ moment for me! We continue to improve our internal processes at Cloud Accountants using technology to do things smarter and more efficiently. Old crappy checklists and excel workpapers are archaic and clients despise them. We have used an online information grab in the past which has filled a gap, but seeing Richard and team demo Spotlight Workpapers with a full integration with Xero was awesome! We are looking forward to the roll out for March 2012!

You can see Xero’s wrap of the event here.

Big thanks to Barnie (for his patience) and Samuel!

You can listen here:

There are 2 parts to this:

• Transparency when it comes to your financials
• Transparency when it comes to your accountant

Financials

Do you know how your business is performing right now? In real time?

The technology is available now for you to keep a constant eye on how you are going. And now, not in 3 or 6 months time. This is important for your business so you can take the necessary steps now to change if you need to. If you find out that there are problems occurring in your business, it may be too late!

This also impacts on your cashflow and tax projections and keeping on top of your IRD obligations.

Because you will be connected constantly with your accountant, they should be advising on a regular basis. Analysis of aspects that are important to your business so there are no surprises!

Your Accountant

Do you have a clear and predetermined scope of engagement with your accountant? And also agreed timeframes on work?

You should do!

At Cloud Accountants we provide a clear proposal for engagement that is specific to our clients’ individual needs. We make sure that we take the time to outline exactly what is involved so that there are no surprises. (We don’t like surprises!)

It is made crystal clear that anything outside of this agreed monthly fee will be estimated and billed for separately. This way our clients know exactly what they are getting and when they will be getting it.

Our clients value the transparency and honesty, and they thank us for it.

Next up – Are you over the GST changes yet?

So what do you do? It may sound like a personal question….and maybe it is!

Do you relax by playing/watching sport? Spend time with the kids? Maybe DIY is your thing? Read or go to the movies?

These are the activities that you should be involved in, doing the things that you want to do!

But for many small business owners, they are spending their spare time preparing quotes and invoices, processing their business transactions and accounts, or at GST time – spending the whole weekend going through receipts and processing their data!

All small businesses (and freelancers and contractors for that matter) need to create efficiencies in their transaction processing, invoicing and dealings with the tax department!

The technologies are there (Xero, Smartpayroll, Workflowmax, Unleashed, and many many more) for you to make the financial part of your business life a breeze, and leave you free to do the things that you want to do. This could be the suggestions above or working more on growing your business.

Now there is a thought!

For many, the online world can seem a pretty scary place. Cloud Accountants can step you through the process with ease.

It is time to take back some control!

Next up – Transparency