Budgets & Forecasts

The budgeting module in Xero is easy to use and has some great time saving features – like that you can automatically copy data from one period to another, or that you can do so adjusting the amount (either by a percentage or a fixed amount).  Nice!

But there are some areas this could really be improved.  At present a budget can only be set up at a GL level.  Being able to create budgets at a tracking code level (where the sum of the tracking codes then automatically creates the GL budget) would be a great feature.  This would be especially useful for the many Not for Profit clients we work with (although I can think of lots of other clients who would benefit from this also).

It would also be great if a budget could be imported from Excel (hands up who doesn’t use Excel when creating a budget)!  I know Xero have on the drawing board the ability to “round trip” your budget – to export your current budget from Xero to Excel, to edit in Excel and then import back into Xero.

As this is a wish list (so I can wish away) I would also love to see multiple budgets (or forecasts).  Again thinking mainly of not for profits, where we frequently have to create a budget (that needs to be held as is for the whole year), but then also to set up and report against a forecast.

And finally enhancements to the integration with some of the add-on report writers.  At present we use a combination of add on reporting tools for reporting and forecasting to various clients.  Spotlight Reporting is a good tool for both board reporting and forecasting, and  Calxa is great creating budget plus a wide range of management reports.  But both of these are hampered by the Xero API not allowing (as yet) access to the GL by tracking codes, so we can only report / budget / forecast at the GL level, not by tracking code.

Would you make use of any of this?  Do you run a Not for Profit that needs to report at a more detailed level (acquitting funding, or reporting by program)?  Please leave your comments below.

The last 18 months has been a pretty hectic time for Viridity, with a shift of focus from desktop to cloud solutions.  We have become dealers for Xero, Paycycle & Unleashed and now have many clients up on one or more of these products (with more being added every week). 

We use Xero & Paycycle internally, as well as a number of other cloud solutions: Workflowmax for our internal workflow, time recording and lead management, Google Apps for email and Box.net for our data storage / data transfer.  We continue to review other cloud solutions that might add value internally or for our clients.

Migrating to these products has involved a learning curve, but far less than with corresponding desktop solutions - and without these solutions we would not be able to provide the level of client service that has allowed us to grow our business.

Not everyone in the market is ready for cloud solutions - we still sometimes hear concerns about security, speed or other issues, but we are seeing a continual shift in the market as more people become comfortable with cloud solutions. 

It is clear (to me at least) that these concerns will continue to diminish over time: 5 years ago many people refused to use their credit card on-line, yet by 2011 the majority of us are comfortable with a wide range of on-line transactions.  Most projections of the IT world over the next 3 or 4 years see significant ongoing growth in take up of cloud solutions.

For those of you who currently prefer to keep you data on your local PC or server please keep reviewing what is available in the cloud - there are no right and wrong answers, so I am not suggesting that by rejecting the cloud you are "wrong".  But as the balance continues to tip you might be missing out on options that could deliver huge benefit to your business.  If you do decide the time is right to make that switch we would love to talk to you.

Over the past few months we have seen a change in the size and complexity of businesses implementing cloud based solutions.  Prior to that Viridity had implemented lots of micro businesses (single person, or maybe 1 / 2 staff) most of whom had gone live with either a single solution (Xero) which adequately met all of their accounting requirements or with Xero plus Paycycle (for payroll).

More recently we have been referred an increasing number of “small / medium” clients (from maybe a half a dozen employees to 20 or more), each of which have more complex requirements in one or more areas.  In each case we have been able to meet all their needs entirely through cloud solutions, and have done so far more effectively than would have been possible with desktop software.  A few examples of the businesses we have set up over the past couple of months, or are in the process of setting up right now include:

·         A multi-location service business, running an industry specific (cloud based) “front desk” solution, which we have integrated with Xero for back-office accounting.  We have implemented Paycycle for all their payroll needs, and in addition this client was already using both Dropbox and Basecamp – very eager adopters of cloud solutions!

·         An inventory based business in WA for whom we are in the process of rolling out Unleashed for inventory control & Xero for their accounting.  In addition we are working with their web designers to integrate their e-commerce module into Unleashed / Xero.

·         A training organisation for whom we have provided a complete virtual Finance department (from bookkeeping on Xero and payroll via Paycycle, through to an outsourced CFO service).

A couple of these warrant a far more detailed “case study” write up, which we will be working on early in the new year.

Interestingly none of these clients are local to Viridity (in North Sydney), but the use of cloud solutions has allowed us to provide them great solutions irrespective of location. 

This move to adopt not only online products but solutions made up of multiple online products is very exciting.  The key to implementing solutions comprising multiple components lies in the level and ease of integration.  At times I am put in mind of the wonderful Arthur C Clarke quote “any sufficiently advanced technology is indistinguishable from magic”. 

When I watch the way that Unleashed integrates into Xero I am constantly amazed at how easy this is, and by the thought that all integrations should be like this!  When I demo how these systems integrate (for example how an invoice raised in Unleashed integrates into Xero) I am often asked to “do it again”, because the client can’t quite believe it is that easy.

If you would like to see how easy this is please contact Viridity – we would love to help you make the move into the cloud.

Having been relatively slow to create an online presence (due in part to an unhappy experience with a previous website developer), we are now starting to enjoy not only "being out there" on the web, but also the fun (yes that is the right word) of social media marketing.   Lots of interactions with lots of people, some I would never have met other than through a whole range of online forums.  So a quick summary of where you can find Viridity online, and what we are trying to do with each of these:

Our website www.viridity.com.au

Well that's a simple on, 'cos you're on it!   To date we have used this to advertise our services, but we are also now adding in more client resources, so to all our existing visitors pleaes keep an eye open for various articles and tools that will be added in shortly.

Linked In

As the principle of Viridity I have set up a Linked In account in my name - Rhys Roberts.  If you are on Linked In please connect with me - listed as Rhys Roberts.

On Twitter

A couple of weeks ago I set up a Twitter account, again in my name: Rhys2011.  I am still deciding how to use Twitter, I am determined to avoid the "let's broadcast 20 tweets a day and see what happens" approach (I have just unfollowed a bunch of people who do that).  My thinking is that we will use Twitter to flag alerts on new services, changes to software, new items of interest to our contacts and so on.  Again we would love to see you following.

Flying Solo and Small Business Forums

For the past 6 months I have been a regular contributor to various forums, and have now submitted a number of articles to be published on these websites on Small Business Forum (where you can check out my article on avoiding fraud) & Flying Solo (to be published in November).  You can also check out my forum posts on both those sites under the name Rhys.

Looking forward to meeting you on line!

A few days ago I had a meeting with a client (he had asked Viridity to consult on what systems might be suitable for his business) and his accountant (who had asked to sit in on the meeting as he felt he had something to add to the discussion).

The client was frustrated by the fact that he couldn’t get the information he needed to run his business from the software he was running (no names, this post is not about software per se).  His concerns were mainly around inventory management – he was frequently experiencing stock outs of one product or another, whilst at the same time his overall stock on hand was far higher than he felt it should have been (a point on which all present agreed). 

The accountant put up lots of arguments for why the software in place was “the right solution” – it was easy to use, it was easy to find staff who were familiar with the software, the software was reliable, it offered a “complete range of really good reports”.  This last point though concerned me: it was clear that the accountant’s view of what comprised a complete range of reports was a Profit & Loss and a Balance Sheet (i.e. everything needed to prepare a tax return).  The idea that the client might want to access additional reports that would help to run his business better seemed not to have occurred to the accountant.  I should stress that I know many accountants who would be as horrified as I was by this view!

This experience made me ponder a question: do SMEs in Australia have the financial information they need to improve the performance of their businesses?  This client felt he did not, but I know of far more businesses that do not seem to worry about their financials.  I know this is a very sweeping assertion, but I wanted to put up a number of observations that suggest to me that this is the case.  I would love to be howled down on this topic!

·         Only a minority of businesses routinely run a profit and loss report, and even fewer run a balance sheet.  If these reports are run, it is as part of the process of preparing / lodging the BAS, rather than for the enlightenment of the business owner / manager.

·         Those businesses that do run reports do not routinely have any basis for measuring whether the figures reported are “good” or “bad”.  For example they don’t compare results to a benchmark of other similar businesses, they don’t measure whether the performance is improving or worsening compared to last year.

·         Very few SMEs routinely prepare budgets (compared to large business where well in excess of 90% of organisations budget annually).  The (partial) exception to this in the SME sector is not for profits.

·         In almost 10 years of consulting to SMEs I can count on the fingers of one hand businesses the businesses that have demanded any form of ratio or other financial analysis.

·         Most SME’s do not keep their accounts up to date – they will for example finalise their data entry and their bank rec 2 or 3 months in arrears, so any reports they do run will be so old as to be more or less useless as a basis for making decisions.

I could add lots of other observations that suggest to me that Australian SMEs do not routinely use financial information to make business decisions to improve the performance of their business, but I would prefer to hear some views from other people.  What are your experiences in this area?  Do you routinely run the sort of reports and analysis I have outlined above?  If not why not?

One of the absolute joys of cloud accounting is having data that is always up to date.  This morning I logged into Xero a little after 9, and by 9.10 I had finalised the bank rec to September 30^th for one of my clients.

By 9.20 I had printed off and carefull reviewed the BAS reports (but there wasn’t much to check and nothing to change, we work with the client to ensure the transactions are recorded accurately when they are first entered).  By 9.30 I had emailed the report to the client prior to lodging it on line (which I will do shortly).

So here I am at 9.35 on the 1st of October, with the client’s September quarter BAS finalised, leaving me free to do something more interesting:  I am now going to run a range of management reports and forward those to the clients, along with some commentary on their business (just as soon as I finish writing this blog!)

Lodging the BAS – even when it’s done really promptly – doesn’t add value to the client’s business, but providing them accurate, timely information on which they can act to improve the performance of their business does.  This is why I became an accountant – not to “do compliance” but to help people improve their business. 

Big thanks to Xero for providing such a great tool for doing this.

So what happens if my internet access goes down?  This is a concern I often hear voiced with regard to cloud computing solutions, such as Xero & Paycycle.  But no one has ever asked me what happens if they get a power cut. 

I am writing this blog from a cafe 5 minutes walk from my office after – for the second time this year – my office experienced a power cut (this time it seems to cover a whole block of North Sydney).  But getting online was as easy as opening my laptop in a cafe in the next block.

Right now I can access all the data I have in the cloud: in the last few minutes I have logged into my Xero account, accessed a file a client left for me on Dropbox and have now uploaded this blog post to my website.  All whilst my office has no power – the only data I can’t access is on my office server!

So if you are worried about adopting hosted solutions because of concerns about internet access, maybe you are concerned about the wrong issue.  Based on my experience today locally stored data is harder to access, with something as simple as a power cut.

Cloud computing - what is it and why does it matter?

Cloud Computing is one of several names applied to software services provided through the internet to many different users (with slight variations in meaning this is also referred to as Software as a Service or SAAS, online computing and hosted computing amongst other names).  If you run a cloud computing application you do not need to install your own server, or load up the software locally, just open a web browser (Internet Explorer, Firefox, Safari, etc) and log into your account.

This technology has been around in various forms for many years, but over the past few years has really started to take off.  Some of the best recognised applications include Facebook, Google Documents and Microsoft Sharepoint and there are many more besides. 

Now we are seeing more applications being released aimed at the small business market, in areas such as accounting, payroll, business intelligence, CRM and many others.  The number of products – both in Australia and overseas – is growing rapidly.  In a forthcoming blog I will review a few of these products.

So why are cloud computing solutions particularly useful for small businesses? 

• There is no upfront cost for the software, just a monthly subscription which helps with cashflow.  
• You do not need to install a server or any other IT infrastructure, again a big saving in cost plus this is a much simpler solution for those small businesses without an in-house IT team.
• You are able to access your data from anywhere, which is a great solution for the small business owner who wants to log in from home, or for businesses that run virtual offices.
• The functionality offered by many of these applications for a small monthly cost rivals what you could get from desktop solutions costing 10s of thousands of dollars.
• The ability to invite other users in to your application can provide you high levels of on-demand support at a very low cost (for example from you bookkeeper or from your account).

Cloud accounting solutions are also not new, but only in the last couple of years have they started to take off in terms of number of users.  Xero and Saasu have been available in Australia for several years, and now have upwards of 22,000 and 12,000 customers respectively MYOB has just launched LiveAccounts and is expected to grow its customer base rapidly.  There are numerous other solutions available. 

And what about the downsides?  The most common question relates to security of data, but in a practical sense the security risks to an SME of having their data “in the cloud” is far lower than having it on PC or server in their office: the risk of unauthorised access is almost certainly lower (the usual provisos apply about safeguarding passwords), the risk of loss of data through fire, or theft is far lower.   

The take up of online solutions is expected to grow rapidly over the next few years: various studies by the Garner Group and others have predicted that 25% - 40% of new accounting systems will be cloud based within the next 2 years.  The ease of use, cost of ownership and ability to collaborate online make hosted solutions a vastly superior option for most small and medium businesses.

MYOB has today announced the launch of its long awaited LiveAccounts, the company's offering in the rapidly expanding cloud accounting space.  With Saasu and Xero as established players in the online space in Australia, and MYOB dominant as a provider of desktop solutions to SMEs, the next few months is shaping up to be very interesting indeed.

MYOB have positioned LiveAccounts as a product designed for "sole traders and very small businesses . . . suitable for micro businesses, start ups and those who are still running their accounts manually".  Does this mean that MYOB are aiming to avoid going head to head with Saasu & Xero, who's products are aimed at businesses from micro through to medium?  Maybe . . . or maybe MYOB are avoiding going head to head with their own desktop solutions.

And the question you all want answered - how does LiveAccounts stack up against the solutions already available?  Certainly MYOB have launched with a competitive price - having floated $35 per month as recently as May, the go live price is just $25 per month, cheaper than the cheapest Xero product (priced at $29) and identical to Saasu's "Pro" product (Saasu also have a free product, although this is limited to just 20 transactions per month). 

But how about the range of functions?  Too early to give a considered opinion, but I can see a very busy weekend coming up for me reviewing and comparing these products!  So check this blog in a few days (or still better subscribe to our RSS feed), I will put up a side by side comparison of these 3 (and maybe some other) products.

As always, we would love to receive your comments on this post.

After the success of the Inner West Small Business Expo a few weeks ago we have decided to attend another one, this time the Sydney Women's Network Expo at Castle Hills.  So if you want to see the cause of the buzz around Xero come along to the Expo and check out our stand.  We'll have a range of "show specials" - if you've been thinking about implementing Xero for your busines visiting our stand could be well worth your time.

Looking forward to seeing you all there!

If you want to see more of Xero right now, here is a neat video