Xero, one of the UK’s fastest growing online accounting providers in the Cloud, is the first to launch bank feeds across the UK and Ireland—covering more than 55 financial institutions. The company claims time savings of as much as 90% can be made on the processing of bank statement data. Xero believes that SMEs will benefit not just from time savings, but having greater visibility of daily business performance. We spoke to the company’s UK MD, Gary Turner, to find out more.
Tell us a little about Xero and what it’s doing in the UK.
Xero is one of the pioneers of online accounting and is listed on the New Zealand stock exchange. Worldwide, it has over 27,000 customers, including thousands in the UK, with more being added daily. Our Web-enabled, Cloud-based solution is aimed at small businesses the majority of whom pay only a few pence per day for Xero, though there is also a version for accountants and a ‘personal’ version for home users. We also offer a free 180-day trial.
We believe we differ from our competitors in several ways. We have the combined benefits of being a new player doing exciting things, but with the financial backing needed to ensure we can continue to invest in our product; a truly ‘leading edge’ approach to innovation; an emphasis on easy-to-use (our customers don’t want to waste their time learning to be techies); and we listen—many of our new features are a direct result of the feedback we get from the user community.
So you’ve launched live bank feeds in the UK. What are they?
Put simply, an automated bank feed is when bank statement data is automatically fetched sent to the Xero online accounting software so there is no need for manual data entry. Through Xero, UK businesses (and their accountants) can have access to automated bank feeds from 55 banks and credit cards in the UK now, with more being added soon.
Why should BCW readers care?
Two main reasons: one, there’s no longer any need for manual entry. Estimates based on polling existing users in Australasia suggest up to 90%. One of the businesses involved in the UK market testing of this service reduced inputting time from 1.5 hours per day to 15 minutes—extrapolate that across a year and that’s a lot of time saved. Secondly, most small businesses find it impossible to know exactly what is in the business account at any one time, unless they were on the case with bank transactions every minute of the day—and who has time for that? With automated bank feeds, as soon as the user logs in, they get an up-to-date snapshot of what’s been paid in, & what’s been paid out.
Is this unique? Why isn’t anyone else doing it yet?
Technically, there’s a huge amount of work that’s gone into doing this and we’ve been working on this for some time. We have the experience and expertise—bank feeds are available through Xero elsewhere in the world. Xero is first in the UK though we fully expect our competitors to attempt the same, though whether or not they can catch up remains to be seen.
What kind of feedback have you had from users?
We’ve been market-testing live bank feeds with HSBC customers in the UK for the past year and most users are positively evangelical about the benefits of bank feeds! Here are comments from just two of them: “The bank feed is ideal for me, says Tim Savage of Tim Savage Associates, a firm that provides in interim management services. “I’m always on the move and my files aren’t all in one place, so being able to log into Xero and the latest bank transactions are automatically updated into my accounts—I don’t need to re-enter the information, it’s just there. In practical terms, it saves time and it prevents errors.”
“It works like clockwork, says Tom Perkins, the Creative Director of design company Custom Studio. “It means that there needs to be very little communication between me and my book-keeper—we both know the current situation, it saves us both time and I don’t need to pay her to input bank data. Day to day, I can go into the system, see my latest transactions, as well as the current balance and what invoices have been paid.”
You’re a proponent of Cloud computing. Why?
We can draw a parallel with how we consume electricity: few of us today choose to run household generators. Instead, we opt for the zero maintenance option of obtaining our power from a utility supplier, which has the worry of buying, service, refuelling and ensuring continuity of service.
With Cloud computing, users no longer have capital outlay on file servers and network equipment, expensive software licenses and upgrade charges. Updates and maintenance are taken care of by the service provider, meaning that users can have access to the very latest features ‘pain-free’, with no CDs to insert or effort involved. Plus, Cloud computing supports pay-as-you-go, minimum-contract business models, making it easier to budget, as well as avoiding large, unpredicted costs. And it’s available anywhere, anytime on most Internet-enabled devices.
How has accounting software changed over the past few years?
The concept of online accounting software is hardly new, but the ‘old school’ types of software have been left behind in terms of what they can do with a number of new vendors entering the market, particularly those like Xero. While we admire the past success of old guard businesses such as Sage, its ability to deliver the kind of fresh innovation that is being demanded by small businesses today will always undermined by the fact its business model and products are now quite dated.
So what should I expect an online accounting software system to do?
It should support every financial aspect of your business, including automated invoice generation, flagging up when bills are due to be paid or when a supplier is late paying you, VAT, reports… and of course, automated bank feeds, which mean you have instant and accurate visibility of your precise cash position.
How do accountants feel about all this? Is a threat or an opportunity?
The live bank feeds have been welcomed by accountants—the tweets that were taking place on launch day were amazing. What accountants like is that (with the client’s permission) they can easily log into the client’s Xero system, spot any problems and give timely advice. This isn’t just theory—there are many accountants already doing just this, for instance Guy Robinson, a partner in Moore Stephens, Southampton: “We could see the potential of online accounting to help us spend less time on administration and more time advising clients.
“For us, it means that clients aren’t coming to us six or nine months after the year end when it’s too late for us to help them with issues: instead, we have access to up-to-date information and can advise clients straight way. For instance, a client called me this week with a problem, which I was able to help him solve straight away, because we were both online with access to up-to-date information about transactions. It has to be the way to go—it is part of how we are becoming more of a business advisor for our clients.”
What can we expect to see from Xero in the future?
The beauty of Cloud computing is that it is very easy to roll out new features, so we are constantly evolving the product. We’ll be adding live feeds for yet more banks, and in 2011 Xero will also be focusing more on supporting mobile devices, something we have already started to do but there is scope for more.