Xero is cloud-based accounting software designed with different business management tools. With regards to handling invoices and payroll services, accounting for cash flow, generating reports and many other aspects, Xero creates an all in one package for the business.
Nevertheless, like most software application, there are risks to using Xero that businesses should be aware of.
Alan Boal, a certified Xero advisor with years of experience in helping businesses optimize their accounting systems, often highlights common pitfalls that users face when using the platform.
By understanding these challenges and learning how to avoid them, your business can maximize the benefits of this accounting system and streamline your accounting processes.
Table of Contents
Pitfall 1: Failing to update the software periodically
Software enhancements are crucial because they fix problems, enhance defenses, and add capabilities.
Thus, when businesses do not update Xero often, they are exposed to have problems that may include errors or incompatibility with the software.
To prevent such a problem, businesses should allow the automatic update on their Xero or update manually.
Pitfall 2: Poor Password Management
Since Xero is an online software program, the client’s accounts have to be safe and shielded. Organizations need to ensure that password length and complexity is well created by users.
Moreover, the two-factor authentication has to be enabled every time as the application of the second factor significantly increases the level of protection.
According to experts, “strong password management is extremely important to eliminate the access to financial information by unauthorized individuals.”
Pitfall 3: Not taking advantage of Xero’s Integrations
Xero is easy to integrate with other third-party software applications in areas such as inventories, payments, customer relations, and more.
If you ignore integrations, you can miss on probable ways to save time and have the process performed more efficiently.
For instance, linking Xero to a payroll system helps to enable payments for employees and filing of tax returns.
To overcome this issue, you should try to get familiar with available Xero integration and use those that are most suitable for your business. Time-saving and operational improvement opportunities are worth investigating.
Pitfall 4: Not running regular backups
Performing periodic backup of Xero data is valuable during a data loss or data corruption. It helps to regain information without much strain.
If desired, the automatic Xero backups should be enabled, or one needs to back up the Xero on a daily basis at least. If backup planning is ignored your financial information or anything else lost can lead to costly downtime.
Pitfall 5: Ignoring features of Xero reporting
Xero provides a number of high performing features in its reporting tools, which can give insight into the financial position of your business. Unfortunately, some businesses overlook these features restricting its optimal use.
Using working reports can help you to monitor your business performance, notice certain trends and patterns, and define strategies based on the obtained data.
To counter this, you should spend time to understand the reporting options and use them to track your company’s financial status.
Xero is an efficient accounting tool with numerous characteristics and advantages for different companies. Still, it is crucial for businesses to know Xero’s pitfalls, which may hinder a comfortable use and performance.
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