xero-certifiedadvisor-logo-rgbThe path our own firm took to being Xero cloud accounting converts was circuitous.

I first read about Xero two years ago, noted it was something to watch, along with Kashoo, FreshBooks, Wave, QuickBooks Online, and Zoho Books, and went back to business as usual on QuickBooks. But I still read surveys and reviews on the cloud products out there, just in case near-perfect accounting software came into being. Since a client started using QuickBooks online back in early 2000, I hadn’t been too enamored with any online accounting systems-they were just too simplistic and exceedingly hard to navigate, even for a CPA. Plus, they catered it appeared to the very small generic business, not those with over $1 million in revenues.

Fast forward to the 2013 VetPartners Mid-Year Meeting in Kansas City. Kelly Baltzell, CEO of the Beyond Indigo Group, ran over to me to discuss the new cloud accounting package Xero. “My accountant is using it, I love it, and I wanted to know if you are using it for your clients too?” Clearly embarrassed by not being an early adopter (Kelly is much cooler than I, so naturally she would be in tune with it), I stammered that I had heard about it and was waiting to get on until I had heard some good user experiences. “You have to start using it!” That’s all I needed.

The rest is history. We converted our own firm’s accounting to Xero in the fall of 2013 and client conversions happened soon thereafter with our goal of being a 100% Xero firm. Our website and marketing packages were redesigned by a Xero partner in New Zealand, and we became uber Xero- friendly, to the point that Michael Carter of Practice Paradox in Wellington, New Zealand is talking about McGaunn & Schwadron’s integrated use of the cloud, Xero and our industry specialization at Xerocon 2014 in Sydney, Australia this week.

Xero provides a host of automated processes designed to help veterinary practice owners by:

  • a)      Enabling veterinary practice financial data to be populated in Xero with minimal effort
  • b)      Making the reconciliation process much faster and cleaner as bank data is shown against checkbook or credit card data, allowing for a “paperless” reconciliation function, and
  • c)      Sharing seamlessly with over 300 add-on cloud programs to round out

The change to Xero is not free from operational and generational glitches, though. My partner Alan Schwadron, CPA is not a huge fan of Xero because all of the traditional accounting reports that he is used to creating in QuickBooks are not in Xero. I tell him that Xero is for the user, not the accountant. So there is a new mindset change that needs to be adopted when using the program. Two examples:

  1. Die-hard QuickBooks desktop users may be unsettled by the lack of a proper check register, and home pages don’t look like anything they are used to. QuickBooks attempts to throw the kitchen sink at you by adding every icon known to woman to handle any task on its home page. But QuickBooks is not used by veterinarians for the patient revenue cycle of invoicing, payment collection, and managing accounts receivable. That function is ably handled by Cornerstone, Avimark, Impromed, VIA, Stringsoft, or BeeFree, etc. QuickBooks is really used for recording bank deposits, cash disbursements and various expenses incurred through bank and credit card accounts. Xero automates the process much more than QuickBooks in those basic functions, and by using Xero “bank rules” globally, the system learns what accounts to code transactions based on a variety of your pre-determined rules. The Xero “Dashboard” primarily displays bank and credit card accounts both numerically and graphically, really all you need to control the proper recording of most financial activity. As CPAs, we feel that the more icons there are present, the more potential you have to place data where it doesn’t belong. So Xero gives you just enough to get the job done.
  2. Check writing is a cumbersome task in Xero unless you have the logistics figured out. I did not know when I converted to Xero that the check writing functionality was rudimentary and required an add-on partner to complete the task. Why you may ask? Businesses in New Zealand and Australia do not write checks as much as it seems that US and Canadian businesses do. So there is more online bill pay and credit card usage, which lends well to the automated download of disbursement data to Xero. Does it require a mindset shift to think like a Gen Y practice owner? Absolutely yes. Can you still write checks? Yes, the Xero add-on Checkeeper now lets you print on blank check stock, as well as pay bills that were entered into Xero (they just show up in Checkeeper like magic). Checkeeper check templates may not be perfect if you plan on using pre-printed checks (hence the new blank check stock feature), but if you can successfully navigate the setup phase, it works well. And the now subscription site will hopefully have helpful changes.

Once veterinary practice owners embrace the cutting-edge results that Xero offers, they will be converts. I like the fact that client data can export to programs that are informative and easy to use. Dashboard programs like Spotlight and Fathom are great resources, and Xero has both a proprietary payroll system and other outside vendors like ZenPayroll, ADP and SurePayroll that it works with to eliminate manual data entry.

Once you start using Xero, you’ll find more ways to make it more efficient, and you’ll probably even look at the data in it more than before.

Mark J. McGaunn, CPA/PFS, CFP® leads the veterinary/dental/financial planning divisions at McGaunn & Schwadron, CPA’s, LLC and can be reached via mark@mcgaunnschwadron.com or (781) 489-6651.