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How to take your financial reporting into the cloud, with Xero

Who is this post for?

This post is for Xero Partners who are thinking of moving off their current financial statement software systems and into the cloud with Xero.

Topics that are covered are:

  • Xero Ledgers
  • Xero Report Templates
  • Financial Reporting
  • Financial Statements
  • Bulk loading
  • Conversion balances
  • Data migration
  • Xero Tax
  • Xero Workpapers
  • Xero HQ

Where do you stand?

So, you probably have some of your business customers on Xero. Some will be on MYOB, QuickBooks Online, some on MS Excel, some using G Suite / Google apps, some use paper, some download bank statement CSVs and some probably use some obscure software that not many others use. 

You take all the data from these sources and you import / enter it into your current financial reporting software. 

Then your produce your financials; happy days, to a point.

If that sounds like you, then you would be similar to all our clients.

Then at some point, you probably look at the breakdown of your client base and say either one or all of these:

"I have quite a few on Xero. Probably more than most other softwares."

"I have tried to use Xero's reports for end of year financial statements but they just don't work".

"If they do work, it took us way too long to get it to work".

"My annual renewal for my current financial statement software is due. Do I really want to pay for it when I can supposedly use Xero?"

So you start to investigate your options for moving to Xero for financial reporting.

If that sounds like you, then read on.

What are your options?

So where on earth does that leave you?

Two choices.

1 - Keep going doing what you are doing

  • Everything works, maybe not as well as it could, but it works
  • Leave your team uninterrupted, no productivity loss
  • Keep your service offering to your customers as it was

2 - Move to Xero for financial statements

  • Make the bold decision and go for it, into the unknown
  • Give your team a fresh and exciting challenge
  • Extend your service offerings to your customers

You are probably thinking, "Sounds great...but how?"

Read on.

How can you do this?

Taking the leap

So you decide to go for it.

You are moving to the cloud for your financial reporting.

You are probably crapping your pants and excited all at the same time. 

Your pants are getting a workout of extreme proportions.

The good thing is, you have a ton of resources to help you nail this.

Some free.

Some paid.

So what are the resources?

In a nutshell, you can do it yourself with help from Xero.

They have heaps of support options, with the ultimate onus on you.

Or you can outsource it to us.

I know what you are thinking. 

This post is going to try and lead you to buy from us. 

Yes, that is true, we want your business. 

But as many of my customers will attest, we are worth the investment. 

No one has asked for a refund.

No one has complained back to the person who referred them to us.

No one has complained about the price.

Check out our customer page; they all have Linkedin profiles so they can be contacted at anytime.

Let's look at doing it yourself first. 

Any Xero staff who read this will agree with everything I say here.

Option One - Do it yourself

Let's go with you doing it yourself, with some help from Xero. 

Now I used to do this at Xero, so I know the ins and outs. 

It works, it is just a matter of resource management. 

Probably the ultimate questions are:

  1. What does it cost me?
  2. How long will it take?
  3. What is my time worth?
  4. Who will do what?
  5. Is there risk of error?
  6. What benefits do I get in the end?
  7. And so son...

Here are some answers.

How much do you pay?

You don't pay anyone anything, including Xero (as at the time of this blog).

You will continue to pay for any Xero subscriptions that you use.

The cost is your time. 

You will have to pay for every single Xero organisation that is not already on Xero

For a better understanding of prices, speak to your Xero account manager. 

There is a directory of them here. Make sure you select your region at the bottom right.

What data do you migrate?

The next step is to migrate data from your current system to Xero. 

That could be done in two ways. 

1 - just add each Xero organisation as you go

2 - ask Xero to help you set them up in one batch

Xero can load up multiple organisations in one hit for you. 

Which is great if you have a lot; it will save you having to add them all one-by-one. 

If there are 200, think 5 minutes x 200...yeah, that's a long week.

Your job will be to compile that data into a Excel file.

They only need some basic "Non-transactional" or "Client information" data. This data can all be changed later if it is wrong. Things like "legal name" and "financial year end". 

The data that does NOT get loaded into your new Xero organisations is:

  1. Conversion balances
  2. Fixed assets
  3. Journals
  4. Bank transactions
  5. The unique chart of accounts per customer

That is your job. 

So how many new Xero organisations do you need?

We find that most of our customers really don't know how many Xero organisations they need. So they dive into their financial statements software and try to extract a list.

We find this is the wrong way, as it can be a painful process, as some customers have left, changed entity or closed down. It has too much history.

The best way to figure this number out is to export a list of lodged tax returns for the previous year from your tax software. (In Australia, you can also use the ATO portal list). Just remove the individual tax returns from that list.

That is usually the most accurate source of details about how many you need.

How do you set up a chart of accounts for your firm?

The Xero team will also help you design a master chart of accounts for your practice. 

Xero's chart of accounts framework is very powerful and unique. That uniqueness comes at a cost; your team needs to invest time in education to understand how it works. 

In your current system, the account code will determine where that account sits in the reports. 

Think about the last time you added an account in Xero. 

Did Xero auto-fill the account code like they do in your current system?

The answer to that is no...so how does the reporting work? You need to be educated and the Xero team will get you up to speed.

This chart of accounts needs to be added to each Xero organisation, as it must match your reports.

How do you set up your practice report templates?

Xero gives you a set of report templates which you use to produce financial statements.

They give you:

  1. Trust
  2. Company
  3. Partnership
  4. Sole Trader
  5. Not for profit

They provide a trading and non-trading version.

These reports are awesome, very easy to edit, flexible for naming and easy to customise per client.

You can build your own reports for different clients, such as livestock schedules and rental statements. 

You can also extend these "compliance financial statements" out to become monthly management style reports, so you can help your customers with budgeting (and maybe forecasting, if you decide to plug in a reporting app such as Spotlight, Profitsee, Futrli or Fathom.)

However, they do require some setting up first. 

Xero will help you with their consulting team. 

They also run webinars to help you.

But the onus lies on you to complete the job. 

You are the ultimate checklist.

How do you train your team?

So the final piece of the puzzle is to get everyone up to speed on all those end-of-year tasks.

You will need training on:

  • Fixed assets
  • Find and recode
  • Journals
  • Bank reconciliations
  • The difference between ad-hoc reports and report templates
  • And so on

Xero offers all this training via either webinar, videos, consulting team or help centre and support line.

What are the risks?

So ultimately, doing this yourself and working with Xero will get you there.

However, there are hidden risks that may untangle this and leave you wishing you had taken another path.

First, you won't know how long this will take. 

The answer to that depends on a range of factors such as,

  • How much energy will you put into this?
  • Will the consulting team be under the pump?
  • How do you feel being trained by someone else?
  • Will you make assumptions based on your experience?

...and so on.

Second, you may miss something along the way. 

You won't do this perfectly; it is your first time. 

Maybe doing this 5 or 6 times will make it better, but you do it once, maybe twice if it really gets screwed up.

The benefits

Let's say you get this right. 

Awesome!

Well done!

You can now:

  1. Produce financial statements from your browser
  2. Kill the export and import into another system workflow
  3. Integrate with Xero workpapers and Xero tax
  4. Integrate with other reporting apps
  5. Start to perform advisory services

Ultimately you should save time.

Maybe not in year 1, as your team grapples with this new system.

But once those harsh lessons are learned, you now have a springboard to launch your practice to the next phase. 

Summary

So doing this yourself is a great option.

Another good thing is that all those lessons learned accumulate to some powerful intellectual capital, especially for the project manager who managed this huge project.

Option two - Use us

So you want to know where we fit amongst all this?

Take a look at all the components from option one.

You have:

  1. Adding Xero organisations
  2. Customer data migration
  3. Chart of accounts 
  4. Report templates
  5. Training

We cover all except option 1 and 2. We can help with 2.

So what are the differences between what we do and what Xero does?

Essentially, we are a fixed labour cost. 

You won't need to estimate the time it takes to design the chart of accounts and report templates building. You get those problems solved for a fixed fee. Which is reassuring as you won't really know how long it takes to perform some of these tasks. We have a guide of around 50 hours.

However, you will need to spend 60 minutes with us for a scoping session.

Here are the questions we ask, we want to make sure there is limited "back and forward". 

Then some more time assessing and understanding our proposal, which could be 10 minutes or 3 hours depending on your practice and the decision making process.

What is our best practice for reports?

We have done quite a few of these projects now, so we have a fairly robust and quality service offering.

We can either provide you our "best practice" set of reports or you can ask us to replicate your current system, such as MYOB, Handiledger and Reckon APS.

With replicating, a trend has emerged. 

Those who try to replicate perfectly are often the ones who get bogged down in the "I can't" mindset. They often can't get to the next level of moving to advisory services because they are hanging on to things they can't let go of. Creatures of habit I guess.

What is missing from the reports and how do we deal with it?

Our reports will also capture the limitations of the reporting, such as the fact that you can't change things in settings that affect the reports. 

For example, when there is a individual trustee versus a corporate trustee, one director versus multiple directors, if the entity has primary production trading, or if it holds investment real estate. 

Extra reports are needed for that. Part of the service.

Take a look at a set of financials for a large trust, with multiple loan accounts, investments, 10 beneficiaries and a corporate trustee. If this is set up correctly from the start, it should take 5 minutes to complete it with the trust minutes or 2 minutes without.

How do we train you?

To meet the needs of today's modern learner of wanting it NOW, we have designed over 60 "How to" style video lectures that are designed t help you get through this transition.

We find that people can't wait for answers, solutions need to be immediate.

Because that's the thing right, as you do this, you are updating your internal processes and checklists based on the new system. 

Eventually you will say "How do I do X?"

And when you ask that question, you want that answer now, not later, not in a 45 minute webinar, you want it now.

Take a look at the course here.

You can see how everything is titled "How do I X". 

You can search the webpage using CTRL F. Search for something like "rental statement" or "trustee".

We can track each students progress. So we know who has done what.

An interesting trend has emerged about our customers. The ones who have completed say 0 - 15% of the training are the ones that email us and ask us questions about "How to use the reports".

Only for us to reply with statements such as "Chapter 2 - lecture 5" or "Chapter 1 - lecture 2"

We are not sure as to why some of our customers don't like being trained by us. 

What benefits do we deliver?

Time saving.

Here are our time saving benefits for you, 3 minutes.

Here is a video showing our typical time saving.

We have productivity measures in each chapter of our training.

We want you getting your monies worth. 

We don't want you designing internal processes based on assumptions or the wrong information.

You can read this guide to assess how long it takes to perform tasks.

In a nutshell:

  • You should take 2 minutes to go from reports tab to downloaded PDF
  • If you take around 5 minutes, we assume it is because you removed or added reports, and maybe grouped some income statement accounts
  • If you take over 10 minutes, something is seriously wrong

It is our job to unlock the time saving benefits.

Measure Yourself Up

The success of this project hangs on you.

We have seen a number of different cases and it all boils down to you and your goals.

The thing about goals is they need to be SMART. 

Measurables

We often assess our own work as we won't to make sure we are adding as much value as we can.

One is the "Performing Under Standard" assessment. 

Or "PUS" for short.

We look at one of the jobs we do and ask "Is this pus?"

If its is pus, we change it or pop it.

We also have the "Average Service Solution" assessment.

Or "ASS" for short.

We often ask ourselves, "Are we happy with this ass?". 

Finally, we use the "Seriously Ultimate Performance Enhanced Reporting".

Or "SUPER" for short.

We look at one of the jobs we do and ask "Is this super?"

If it is super, then we ask our customers if they agree.

Working with you and Xero

Do the Xero team work with us?

Of course they do.

We often get people referred to us from Xero staff. 

Usually those customers have just decided that "we would rather pay experts" or "we don't have time, can someone else do this".

The good thing is, we know the process at Xero, we can work with you and them to take sure everything flows and headaches are mitigated. 

Headaches will never be removed, we are not magicians but we are good.

Anyone who thinks that they can get through this without some form of headache, should just walk away now. 

Not going to happen, ever.

You are NOT ready.

So what is that fixed fee?

If you have made it this far, you are probably trying to figure out how much we charge. 

That always depends on factors such as:

  • Reporting requirements - do you need a ton of custom reports
  • Training - do you want us on site or are you happy with online
  • Practice size - will we need to support say 2 staff or 32?

The minimum price is around the $3,300 mark for the base set. This prices include 5 services:

  1. Master chart of accounts
  2. Report templates - compliance financial statements
  3. Training resources
  4. Online training of team
  5. Some support emails / phone calls

This does NOT include the data migration of conversion balances, fixed assets and other transaction type data. 

You can either go DIY or use:

  1. Zerobooks
  2. Upbooks


What else do we do?

The service you have just looked at is for "compliance financial statements".

Our next phase is to add in:

  • Tax planning reports
  • Income tax estimation reports
  • Other custom reports

Probably a good yardstick is to think "If it can be done in MS excel, then there is a good chance Entry Counts" can do it in Xero.

Stay tuned. 

What can you do from here?

Nothing.

Something.

Either way, you choose.

Make the comparison. 

Reach out.

Email us at - donnie@entrycounts.com

Cheers,

Donnie Buchanan



 

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