Elegant Accounting

First things first. We have to move to as an automated, digital, cloud based, accounts system as possible. So we're embracing the Xero revolution. Whether our clients use Xero or not, we will prepare their accounts on one of the Xero platforms. The reason? It's simple. It's more efficient and therefore it's cheaper - in the long run, once we've swallowed the training downtime, the conversion downtime and the paperless processes downtime.  

Second things second - well, at exactly the same time actually - we're moving our own practice accounting from Sage 50 to Xero, including payroll.  We're doing it this week via move-my-books. Some of us have bad experiences of data conversion and we're interested to see if this solution is really as simple as the Xero converted community say it is!

We couldn't contemplate any of this if we didn't have support from Xero themselves. Our account manager, Leigh Stallard, is working alongside us and so far the experience has been refreshingly easy. 

Expect more posts over the next six months as we embrace the cloud, and bring you more - relevant, cost effective, engaging ideas and services - elegant accounting.

We couldn't contemplate any of this if we didn't have support from Xero themselves.  Our account manager, Leigh Stallard, is working alongside us and so far the experience has been refreshingly easy.  Expect more posts over the next six months as we embrace the cloud, and bring you more - relevant, cost effective, engaging ideas and services - elegant accounting.

We started our practice accounts conversation to Xero from Sage via www.movemybooks.co.uk on 10 March.  The previous blog, below, mentions we were sceptical about a smooth data conversion, let's see if our worries were justified. 

Movemybooks set our expectations at a three day turnaround and they exceeded that for two of our companies by delivering the reformatted data to migrate to Xero in under 24 hours. The third company in our Group, the parent company with the most transactions, took longer but still under three days and we were kept informed of progress via email update. So far so good.

We were sent an email for each company to transfer the subscription to us...and then hit a hitch. One we should have foreseen earlier, with the benefit of 20:20 hindsight.

Up to this point the designated Xero Principal in our practice had been a member of staff. If we took on the practice subscriptions with the staff member as Principal they would be able to see all the Group accounts. We're progressive, but we're not there quite yet with this level of transparency! (Note to author - should we maybe look at this?)

So a call to Leigh Stallard, our Xero account manger, was required. He understood the issue, provided the solution, and with the aid of his tech support team transferred the Xero Principal contact to the right person within our organisation. With that wrinkle ironed out, we could see the data for our three trading Group companies in Xero.

The next part of the conversion process is to check the converted Sage data in Xero in "read only" mode, if we messed with the data at this stage we'd lose the conversion and have to start again. The data looked OK. We realised some of our Sage ledger nominal codes looked screwy in the Xero format, but given that we can build our own reports in Xero we weren't unduly concerned. So we said OK and the data became "live", the Xero subscriptions were handed to us and we were good to go.

So the lesson here is to ensure you have your ducks-in-a-row with regards to your Xero subscriptions before converting Sage data, but the inconvenience of this small hiccough was minor in the larger scheme of what we're trying to achieve. And in fact the speed at which Xero and movemybooks worked to help us only served to add confidence in their service levels and willingness to truly partner with us.

Receipt Bank

To add to the experience we've signed up to Receipt Bank (www.receipt-bank.com) and the first batch of paper receipts were scanned in on 17 March. It was interesting watching the optical imaging software cope easily with a dinner receipt from Framptons in Ringwood for £69.45 and then completely struggle with a handwritten London taxi receipt for £10 as it picked up the number 249562 on the receipt (a Charity number from the sponsor of the receipt pad used by the cabbie!) and so was determined to show the taxi charge as £249,562! We left the software trying to wrap its head round this obvious error overnight. And guess what? By morning it had sorted the anomaly and correctly picked up the hand written £10 charge. So now we have to give the receipts some rules and then transfer them into Xero. This is tomorrow's job, and we'll keep you posted on our progress and experience of our internal elegant accounting.

We imagine any business that experiments with change, especially change in IT, will experience teething problems. So this update contains a few of our observations to help those of you who've committed to making lasting changes to how you run your business.

If you've read our earlier items, see below, you'll know that we moved our internal finance systems from Sage to Xero and we were, and still are extremely, pleased with this decision (the ease at which the transfer of data was managed by MoveMyBooks and Xero, was exceptional!).

Testing of add-ones to Xero though have been harder to integrate as quickly and as smoothly. We're using Receipt Bank and Trip Catcher combined for all supplier invoices and expense claims (well actually just the Directors expense claims, so far, to make sure it works before rolling out to staff expense claims). Receipt Bank is a "learning" bit of software and so it pays to invest in the time and effort at the beginning. Giving "rules" to regular occurring expenses from the same supplier means that going forward these are captured more quickly and posted automatically to the right headings in Xero. However, this process, when compared to the old way of doing things has slowed up the basic accounting and made us a little nervous of when data is captured, as Receipt Bank upload and process data overnight. We're sure though that the time invested will come good.

We're not the only one experiencing teething problems. Xero's much lauded Payroll function didn't work for us at all and we had to quickly retract to Sage Payroll mid-way through 29 April. There has been lots of chat in the Xero community about what didn't work, here are our observations:

1. Can only capture hourly rate – i.e. can't show a monthly salary – must be hourly rate x number of hours worked. This looks odd on the payslip.
2. Can't amend payrun once submitted. i.e no roll back facility or amended FPS. If it is wrong it has to stay wrong!
3. Once started draft payrun, it's doesn't seem to remember what data has been inputted, therefore difficult to check if it is correct before you click post.
4. Can't seem to view a report of total net pay. You have to add up each employee on the summary report - time consuming and dull.
5. Doesn't seem to split gross pay to different departments. Organisation settings are generic coding for Gross pay, net pay, PAYE & NIC.
6. Deductions can only be coded to a Balance Liability code. Not, for example to offset an overhead cost for an employees contribution.
7. Does not calculate SSP. Only has the facility to enter an amount, and again using hours x hourly rate which does not look correct.
8. Difficult to actually see the posting journal. Not easily visible, so you have to look at each account to view posting.

Xero have had enormous feedback on the inadequacies of their Payroll and are working 24/7 to get things right, which is great. However, the lesson here for users is not to assume your new software is going to work, first time, just the way you want it. Run the new software alongside the old, to test for differences or bugs, until you're happy.

Xero's success is based on being nimble, quick to adapt, and actually listening to its users. To keep users on-side any new bit of kit has to work and work well right from the off, perhaps the lesson for Xero is to always ensure a Beta phase is adopted. This worked well for Receipt Bank with their recent dash-board changes, you could flick between old and new to get used to the new functions before committing. Whilst accepting that Xero Payroll didn't exist before March this year, so a Beta phase may have been harder to install, the premise is the same: let your users test before they use!

Our MD, Sophie White, counted how many times she was tempted to press print last week. On day one the five bar gate count showed a massive 55 potential “prints” some running to multiple pages. Each print seemed essential, and the temptation to actually send the instruction to the printer was extremely hard to resist. As the week progressed the urge to print reduced and by day 5 a mere 10 items were actually printed and, as a result, fewer trees have sacrificed their oxygen producing potential.

It could be that the observed experiment produces an unscientific result. In this case, the urge to print might have been unnaturally dampened by the very act of consciously thinking about not printing. In this instance, at least, the observed experiment produces the right result!

As office workers who are so used to the printed letter, spreadsheet, invoice, receipt, email, must be at the vanguard of new thinking. Embracing digital technology, to produce cloud-based accounts, fails completely if every piece of data that forms the backup to those digital entries are meticulously printed then placed in a file and then filed away in a cupboard. HMRC require businesses to keep records for seven years, so paper records are moved to off-site storage and then diligently incinerated at the end of year seven. Those trees become ashes dumped in a landfill adding to our societies’ collective carbon footprint.

Stop. And think. Before you print.

HMRC agreed in 2013 that digital records were acceptable to demonstrate contemporaneous record keeping for income and expenses. Using cloud-based accountancy systems allows us to attach a PDF or JPEG of the receipt of the particular data entry. One click and you can pull up a picture of the receipt alongside the accounts entry for the same figure. So insist that your suppliers email their invoices to you. Don't print them out, keep them electronically and attach them to each relevant accountancy entry in your cloud accountancy software.

No more printing. No more wastage. No more storage costs. No more people-hours spent laboriously moving paper around and around the world. Elegant Accounting at work.

How many times a day do you hear evidence of “IT Clunk” in your office?

Here’s an example:

Sophie: “Ahhgggrrr – that error message has come up again! Aimee please can you help?”
Aimee: “What does it say?”
Sophie: “It says, and I kid you not, “unexpected hypercube in the body tag”!”
Aimee: “Oh, that one! Yes, that’s nasty. You don’t ever want an unexpected hypercube, especially not in your body-tag. I’ll put in a call to our IT support.”

Here’s another:

Michelle: “Lewis, have you found that Sage doesn’t always talk properly to your machine? I can’t pull through last’s year’s data on this client, but it was fine on another one yesterday?”
Lewis: “Ah yes, but what you need to do is this…wait I’ll come over and show you.”
A few clicks later…
Michelle: “Thanks that’s great, but why did it happen in the first place?”
Lewis: “It just does from time to time, has a mind of its own! Anyway, that’s the work around.”

And another:

Chris: “Why has my printer defaulted to “HP LaserJet?
Aimee: “I can show you how get it back to the right default, it’s easy.”
Chris: “Yes, I can get it back too, but why does my PC do this? We don’t even have an HP LaserJet for it to default to!
Rose: “It’s IT it’s not meant to be easy it’s meant to bug you!”

All the above are examples of what we call IT Clunk, or clunky IT. Technology is supposed to make life easier, quicker, and ultimately more productive. In reality we all spend a significant proportion of our working days fighting the machines and the resultant downtime costs businesses real money.

Our newly appointed Non-Executive Director Paul Thackeray is guiding our IT support supplier ITSB Ltd to undertake a full audit of our IT systems – watch this space for an update on or findings of every day IT Clunk and the solutions we implement. Maybe you’ll benefit from our experience.