IT companies that are using Xero accounting vs IT companies that are not using the software show a marked benefit. Working in IT means that you are working in a field that is constantly evolving. Like all other industries, the IT field relies on accounting to enjoy success.
The Role of Accounting in the IT Sector
Proper accounting can make it much easier for IT to make decisions that lead to financial returns. Some key questions all IT companies have to ask include:
- Is the company creating value for its clients?
- Is the company generating as much value as it could?
- Is the company creating value using the least amount of resources possible?
IT companies must see the business through a perspective that allows them to identify financial strategies that work with their cost structures and meet their economic objectives.
Traditional means of accounting do not always allow an IT company to see themselves and their clients through this lens. For an IT company, having access to the right financial information at the right time is crucial for long-term success.
All businesses need to have access to excellent information in a timely manner, so what makes the IT field different? Technology is constantly changing. In the blink of an eye, the focus of an IT company can be disrupted. With technology, there is no set way of doing things. This means that business models for IT companies can change to meet their customers’ needs at that moment. An accounting method that is stagnant and does not incorporate the latest technology may inhibit an IT company from reacting to the transformations that are being seen in technology that could affect their bottom line.
To be proactive instead of being reactive, many IT companies have integrated accounting software. A popular brand of accounting software is Xero.
How Xero Helps IT Companies Thrive
Xero is comprehensive online accounting software designed to help small businesses thrive. IT companies are using this software to get a real-time view of their cash flow. As technology shifts and the IT company’s workflow shifts, so does their accounts receivable and accounts payable. Xero allows the accounting team of an IT company to login using whatever device they have at their disposal, be it a PC, mobile phone, tablet, or Mac, and see live updated financials.
Although IT technicians may be tech-savvy, this does not mean that everyone in an IT company has the same set of technical skills. Xero is intuitive. It is easy to identify pertinent information from a company’s financials in a way that could seem magical.
The Benefits of Using Xero Accounting vs IT companies That Don't
Invoicing is at the heart of what IT companies do. No invoicing means no money. Xero allows a business to send online invoices to customers that automatically update, so customers always have the latest invoice.
Multi-currency IT companies have customers around the globe. There are no barriers to where they can operate. This means that they may receive payment in multiple currencies. Xero can reconcile foreign currencies and offer up-to-date exchange rates hourly.
IT companies could have a large and expensive stock of inventory. Misplacing items or doubling up on ordering items means lost revenue. Xero addresses this by tracking inventory, sales, and purchases. This can greatly improve efficiency of the inventory as you can track what is being used and what is just taking up space.
Xero allows IT firms to create emails with custom purchase orders and then use these for bill payments. The software simplifies attaching source documents, including invoices, bills, and more. This can save a lot of time.
Implement Xero with the Help of Professionals
At Fusion CPA, we enjoy partnering with IT companies. We have seen the difference between IT companies using Xero accounting vs IT companies that don’t. Many businesses benefit when they use Xero as a part of their comprehensive approach to accounting.
Fusion CPA is a CFO advisory firm offering tax preparation, bookkeeping, financial planning, and financial advice to small to medium-sized businesses. We would be happy to discuss with you how using Xero with our financial services can help you. Click the button below to schedule a no-obligation consultation today.
This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.