If you run a busy agency then you’ll know how important it is to have access to up to the minute information and the heart of that is a great accounting package.
One of the best-known packages is Xero and the good news is that there are a lot of agencies out there using it.
So is Xero good for agencies? And what makes it so helpful?
In this article, we’re looking at Xero and pulling out the best features that make it superb for any agency to use.
Read on for;
- What is Xero?
- How large is your business?
- Project accounting
- Mobile and device support
- Reporting for agencies
- Integrations and extensions
What is Xero?
Xero is the market leader in bookkeeping and accounting software for small and medium-sized businesses.
It’s a Software as a Service (SaaS) service, meaning that you don’t need to install a massive program and you don’t need to invest in servers and special IT kit to use it.
If you have a browser then you are good to go.
Xero is used by some of the best-known agencies out there so if you take the plunge you’ll be in good company.
How large is your business?
One of the striking things about the agency sector is that it is made of companies that range from a single freelancer to multi-brand, multi-company global enterprises.
The way that you use your accounting system and the demands you make of it will no doubt be different depending on your particular situation.
For example, an SEO agency may only ever bill their clients on a retainer basis, whilst a video production firm may choose to price by project.
This means that agencies need to have a system that is flexible enough to cope with all of the different requirements that they may have.
If you are a freelancer who bills only a few times a month and doesn’t have a great deal of need for reporting then you’ll appreciate the pricing that makes a very capable system affordable for you.
However, if you are a business that has a wide variety of different channels and services then you’ll love the project accounting, reporting and flexible analysis tools.
You can even use Xero for very large businesses with multi-entity group structures but if you have a turnover of more than £100m, we’d suggest that you are better off investing in one of the enterprise-grade offerings out there like SAP or Oracle.
The good news is that if you already use another package such as QuickBooks or Freeagent then making the switch is a doddle.
Billing is one of the most important aspects of running an agency.
You need to know that you are able to send out accurate client accounts and manage the payment process easily otherwise it could end up being a nightmare.
Billing in Xero is simple. You can set standard services with standard prices or you can use hourly or daily rate based charging.
If you want to bill by project then that is simple and for those times that you do ad hoc work that is a little outside the box then ad hoc charging is simple.
And if you are a full-service agency then you’ll be pleased to know that you can use a mix and match approach to billing, using day rates on some and hourly on others. In fact, the possibilities are endless.
There’s no point sending out invoices if clients don’t pay so Xero has an excellent credit control capability that covers reminders, statements and template letters so that you can collect what you are owed with the minimum of fuss.
If you bill clients for costs that you have incurred on Social Media or through platforms then the integrations available mean that you can automatically import information and then use that as a basis for invoicing.
Project accounting can be a great way to bill your customers and gives you some certainty about your future fees.
But if you are charging for work done and then recharging other costs then it can become a little unwieldy.
Xero gives you the ability to set up a project for a client, add in hours worked, assign costs to the project and code invoices from suppliers so that they are automatically included.
This means that it is a simple matter to produce an invoice that includes your fees and any recharged costs accurately reflected.
The time tracking app allows you and your staff to accurately record hours spent on projects from the simple app or on your desktop.
Xero time tracking
The reporting within Xero means that you can run profitability by project reports which will show how many hours you have spent and what costs you have incurred against the fees you have charged.
Xero is so user friendly and has so many time-saving features that you’d think it wouldn’t need any automation but actually, standardising your processes and using workflows can actually save you a huge amount of time.
Streamline your billing process, reduce the effort needed in accounts payable or simplify your reporting, all within Xero.
You can also automate the information flow from and to things like CRM systems, billing platforms and supplier payments.
Bank integrations mean that information flows directly into the system and rules allow automated matching of standard transactions.
Xero bank integration
And if you want actions within Xero to trigger other processes in external systems then integration and workflow apps like Zapier are perfect for the job.
Automation can streamline your business, make it more efficient and leave you more time to spend on the things that matter.
Mobile and device support
If you find yourself out at clients a great deal then it can be difficult to know what is going on at all times.
Xero is fully compatible with mobile devices so you can run reports, send invoices or pay bills on your tablet on the train or your laptop in the client’s reception.
The free Xero app also allows you to take a photo of a receipt and input that as an expense and makes managing staff expenses simple.
Reporting for agencies
There’s no point having all of this great information in your accounting system if you can’t access it and this is where we think that Xero really scores well.
Reporting is very user-friendly and super quick with a large set of standard template reports that make understanding what is going on a doddle.
If you need something a little more tailored then it is a simple matter to customise reports to your own requirements.
For busier agencies with many account managers, the reporting function can show profitability by employee or service line, by project or brand.
For very advanced users integration with powerful third-party apps will take your reporting to the next level.
Integrations and extensions
If you go back into the mists of time then it was very difficult for accounting systems to connect efficiently and securely to other systems.
This meant that software developers would constantly try and make their offerings with a bit of everything in. That’s fine except what it meant was that you got accounting software that was OK at everything and great at nothing.
Xero has concentrated on providing its core offering of a great accounting and bookkeeping system and then matching this with super connectivity meaning that it is a simple matter to connect to other, best in class apps on the market.
Why does this matter to an agency?
Well if you want a timesheet app, a time-tracking app or want to have free information flows from Xero to your CRM then you can.
There are a huge number of integrations on the Xero Marketplace from billing to payments, from HR to reporting, meaning that you should be able to find exactly the one you need for your particular firm.
Is Xero any good for agencies?
Well, we’d say a resounding “Yes”!
The user-friendly nature of the solution, together with the flexible price points means it is great for smaller agencies that are investing in their first accounting and bookkeeping system.
The powerful reporting and project accounting help larger agencies cope with the huge volume of varied transactions that they come across.
And automation, integrations and data analysis means that companies of all sizes can understand exactly what is happening at the touch of a button.
We’d heartily recommend the flexibility and agility of Xero for any agency looking to take their accounting to the next level.
Want to find out how Xero can help?
We genuinely believe that Xero is the top system out there for agencies, so much so that we became Xero registered partners.
This means that we have the knowledge and experience to help you with your digital accounting needs.
If you would like to understand how Xero can help with your particular pain points then why not Contact us now and let’s have a chat about what you need?