One of the benefits of cloud accounting software is that you can store images of receipts and other documents alongside the relevant transactions. It’s a big step towards the paperless office. But what is the best way to record those documents?
Xero users have two options. They can use an add-on program such as Receipt Bank to extract key information from supplier invoices and bills and insert it into Xero, or they can use Xero’s own document management system, Xero Files, instead.
When Xero Files were introduced in October I expected some clients would forgo using Receipt Bank and start relying on Xero Files in their bookkeeping process.
In fact the two software products are complementary. While Xero Files can be used as a bookkeeping tool, Receipt Bank clearly outperforms once the volume of transactions gets greater than about fifty per month. On the other hand there are several neat tricks to Xero Files that can make your clients’ businesses more efficient.
Receipt Bank
Functions in Receipt Bank not replicated by Xero Files include:
- Automatic data extraction
- Refinements in the reconciliation process
- Multiple user management
As you know, Receipt Bank is a paid application but the features above get exponentially more useful as the volume of transactions in the business increases. Visually, the process of Receipt Bank running in a business can be summarised by the diagram below.
There are several features of Receipt Bank that I find particularly appealing from a process point of view. One of them is the multi-user feature. When set up properly, it allows you to separate out items submitted by a particular user.
In some cases these users are the ones that have their own credit cards (think a business with three directors). If you have 500 items submitted per month, it becomes substantially easier to reconcile each card of 75-100 items separately rather than tackling 500 items at the same time.
Another useful feature in Receipt Bank is the ability to view the electronic document and code it to the right account from within the app. Provided your internet connection is snappy, coding alongside the digital image is substantially quicker as compared to multiple clicks process within Xero’s web app (you can only code expense claims in Xero’s mobile app). Receipt Bank also allows you to automatically code receipts from particular suppliers.
Some useful tips for implementing Receipt Bank for your clients:
- Try to separate the means of collection for credit card receipt and supplier invoices. To some degree it can be achieved by installing Receipt Bank app on a client’s phone for credit card receipts and setting up an email address that auto forwards suppliers’ invoices. This way you will be able to chase down a needed invoice quickly or ask suppliers to send their invoices directly for processing. Optionally you can setup an out-of-office response that would acknowledge receipt of an invoice and provide instructions in case any questions arise.
- Auto forward email should not be used for communication with suppliers, as any attachments generated in such discussion would be forwarded to Receipt Bank. It is also important to make sure that the auto forward email is not forwarding emails from Receipt Bank, as this setup creates a closed loop, with Receipt Bank sending acknowledgements and the email forwarding these back to Receipt Bank.
- Train your clients in using the phone app and show them how to submit invoices via email. If not properly explained, clients will think that Receipt Bank is magic and able to process anything, as such, they will send Excel files, odd confirmation emails and poor quality photos.
- Adding descriptions on the phone app is not very intuitive. By showing clients how to do it you will save a lot of time during credit card reconciliation.
Xero Files
Functions in Xero Files not replicated by Receipt Bank include the ability to handle non-financial information.
Receipt Bank excels in processing receipts and purchase invoices and converting them into pre-filled bills in Xero. While Xero Files allows you to create bills from an image, all the data must be entered manually. This can work for smaller businesses, but it becomes cumbersome at higher volumes without the automation and ability to manage multiple streams of user data. Xero Files’ ability to handle non-financial information becomes handy in several cases.
Conceptually, Xero Files is an email inbox within Xero, as illustrated by the diagram below.
There are several cool things you may want to try to help your clients run their business.
- Adding additional documents to online invoices, such as sketches of work to be performed. Obviously this feature is not relevant for every client, but a catering business can attach an agreed menu and a design agency can include a conceptual sketch. If this invoice is sent from Xero and viewed online, the documents attached can be downloaded by the customer. Coupled with Xero’s ability to issue invoices on the go, it gives a very professional look.
- Xero Files allows your clients to submit attachments via email. The headline and body of the email can be viewed within Xero. This feature can be used in several ways. For example, some of our clients can send information required for monthly journals directly into Xero where it can be found, copied and actioned by any one of our accountants. Be mindful of access permissions for other staff when implementing this process.
- Another useful feature, though not commonly used in small business, is adding images of fixed assets to the fixed assets register. Attaching a serial number and asset image to the accounting record can be very useful in the long term. And with Xero Touch iOS app, fixed assets can be photographed in minutes.
Tools like Receipt Bank and features like Xero Files allow accountants to find efficiencies in clients’ businesses and, with little creativity, allow us to bring substantial value.
How do you use Receipt Bank or Xero files to help your clients?
