You don’t need an accountant

Or how small businesses can simplify their finance process

Expensify, Receipt Bank and Xero integrates together to give financial clarity

It happens way too often: entrepreneurs don’t keep track of their business’ finances, leading to a significant lack of visibility of costs and burn rate, plus a huge backlog that eventually needs to be cleared (a messy and costly process).

The good news is that just a few steps will get you a long way, and you don’t even need to shoulder the cost of hiring an accountant.

While the following tips are also applicable for larger companies, it’s solo entrepreneurs, startups and small teams that will benefit the most. This article focuses on the costs side of business. There are ways to optimize the revenue side too, but keeping track of where your money goes is a great start for all companies.

Ready?
We’re gonna use Xero, Receipt Bank and Expensify. The total cost is around US$60 per month for a solo entrepreneur and less than US$100 per month for a team of ten (If that’s still too much for you to pay to gain proper insight into your business financials, you may have other problems to solve). Why Xero? I tried other services but always came back to this one for its simplicity.

The following tips will give you a clear picture of your figures while demanding just a few minutes of your time every week or month. Also, be realistic, if you’re working with an outside accountant, you will still spend these few minutes (maybe more) liaising with them. The point is to use this time to do the work that is needed (and gain greater insight into your situation) instead of wasting time duplicating tasks.

1. Keep track of purchases paid by the company

Someone in the company: “Hey, the company just bought this, here is the invoice for our records and payment processing.”
Bookkeeper living in the 19th century: “Lucky me, I can practice my typing skills by reproducing these invoice details in our accounting software!”

1.1 Purchases with receipts received by email

Receipt Bank is your friend. The process is:

1. You receive a purchase receipt by email, with or without an attachment.
2. You forward it to Receipt Bank.
   Make sure you make your Receipt Bank forwarding email, such as mycompany@receiptbank.me, a contact so that your autocomplete suggests it for you. You can even give your Receipt Bank email to your suppliers so that invoices are sent there directly, or set automatic forwarding filters.
3. Receipt Bank analyses the receipt.
   Yep, there is nothing for you to do as most receipts will be perfectly analysed by Receipt Bank.
4. You review the receipt on Receipt Bank.
   Most of the time, Receipt Bank gets it right, identifying the supplier, the amount, etc. Classifications and appropriate accounting files are remembered for receipts from the same suppliers, so the process becomes even smoother over time. There is a nice web interface showing the receipt itself and the parsing process presented side-by-side, allowing to update whatever should be updated.
   Once your familiar with it, you can even set Receipt Bank to skip the review process, and publish directly to Xero.

Receipt Bank manages both receipts with and without an attachment (such as Uber email receipts).

1.2 Purchases with no email receipts

Use the Receipt Bank mobile app to photograph a receipt, and then follow the steps described above.

2. Expenses paid by staff

Operations manager of a 19th century company: “Dear staff, it’s time to claim back all the coffees you paid on behalf of the company this month. Please prepare the expense report in the format that we invented 37 years ago for prompt reimbursement.”

Staff: “Damn, it’s the end of the month again, and I’m gonna spend hours looking for these f****** receipts. They’re probably lost in the washing machine.”

The good news is that you don’t need to punish your staff with an archaic personal expenses process. Instead, introduce them to your new friend, Expensify, a mobile app (on both Android and iOS) that allows staff to take pictures of their receipts and to generate personal expenses reports.

Your staff can do their expense reports on the go

It’s true, now staff can simply take a picture (the creative ones will take selfies) of their receipts before inadvertently chucking them in the soapy washing machine. Then, Expensify will generate beautiful expense reports for reimbursement, and later on will pass the report to Xero for it to be accounted for.

You might think that saving your staff from the misery of creating personal expense reports would cost a bomb. But no, it’s just US$5 a month (much cheaper than the health costs associated with the trauma of expense reports work).

Bonus

Bonus 1. Reconcile with bank statements

Unfortunately for Singaporean and most Southeast Asian businesses, Xero is not yet able to offer an automated bank feed (it seems that MAS regulation currently makes this impossible in Singapore). Banks for which a feed is being developed are listed on https://www.xero.com/blog/bank-feed-status/

However, Paypal transactions can be imported automatically through a feed with a proper template. Manual imports from banks take less than four minutes. Have a look at the OCBC2Xero template. Other banks will be included soon.

OCBC2Xero: the manual, but easy, way to import OCBC transactions into Xero

As most transactions should have been inputted beforehand through the previous steps, reconciliation is usually a breeze. Xero identifies transactions and sorts them automatically. It unfortunately does not recognise when transactions are not in the same currency: for these, three clicks are needed instead of one.

Bonus 2. Implement a batch payment process

A process for a small team might be:

1. The office manager or team assistant is responsible for inputting the receipts in Xero (through Receipt Bank as seen above) and submitting them for approval.
2. The CEO or COO then reviews the ‘awaiting approval’ list every once in a while, approving expenses which are to be paid.
3. The person responsible for banking goes through the list of ‘awaiting payments’ to process them (using checks or bank transfers).

Define the period in which you want this process to be executed. Once a week, twice a month or once a month are common choices that give visibility to all parties (now, should a supplier ask for payment, you can easily explain the payment schedule so they do not bother you in the meantime).

Bonus 3. Get the process out of your mind

Now that the different steps to managing your accounts have been outlined, the last thing you want is to have to remember them all. So go for your task management software of choice and create recurring tasks.

I forward my receipts to Receipt Bank as they arrive in my inbox, and I use Asana to remind me to check Receipt Bank every few days, and to guide me on what to do in Xero.

My Asana recurring task with some tips on how to execute the task: link to the site, classification of accounts, etc.

Bonus 4. Track sales with repeating invoices and integrations

Companies that regularly work with the same clients should set repeating invoices. Based on your confidence in the invoices that will be issued in future months, and internal processes, you can set these to be saved as drafts or approved automatically.

Saving repeating invoices as drafts allow you to review them before they impact your P&L and become receivables on your balance sheet.

Example of settings for a Repeating Invoice in Xero

For subscription businesses, have a look at the Xero add-ons, there are several Stripe to Xero integrations. A lot of online software also offers integrations, such as Shopify or the Singapore-based inventory management software TradeGecko.

What should I do with my accountant then?

Well, now that you covered the basics, a professional should be useful to regards to improving a company’s chart of accounts (the listing of all accounts) to optimise company reporting and tax, ensure transactions are recorded in line with accounting standards and to issue annual accounts and tax computations, for example.

Find an accountant who loves using Xero (Xero maintains a list here).

I hope you enjoy putting this process in place in your company and getting clear financials as a result.

Thank you

Thanks a lot to Steve Feiner (A Better Florist), Amy Salehin (TradeGecko), Laura Allen (Gone Adventurin), and other entrepreneurs who helped writing this article.

About the author:
Florian Cornu is based in Singapore. Although not an accountant, Florian did the finances for Flocations (which he co-founded), the accounts of which were managed on Xero, and got audited without issue until the company was acquired. Florian helps entrepreneurs to understand their data and succeed in financial planning (including implementing financial reporting process) through the consulting firm We are CxO.
The author loves Xero so much that he even became an investor in the company.