There’s no doubt that accounting is getting smarter in the 21st century as vast amounts of information, transactions and complex business processes move into the cloud to further trim workplace efficiency.
More importantly however is the arrival of a platform called an API that has accounting software giants like MYOB and Xero implementing their own versions of this highly versatile tool. An API is a digital foundation which allows accounting software clients to transform their business into a gateway to the world market by building custom apps or add-ons on top of the proprietary accounting software.
Confused? We feel your pain. Think of it like Facebook as the Xero or MYOB. A user uses Facebook to conduct their everyday business – chat to friends, message friends, share posts, stalk exes, etc. If the user wants to grow this connectivity further, they have the option of creating their own pages, apps, sponsored content, and games on the Facebook platform to interact with people of the same interests or even their favourite brands. The API then is the Application Programming Interface that allows the user to do this.
Riley James, Developer Relations at Xero explains that on a technical level, an API allows data to be viewed, created and modified by an external application. An API can also allow actions to be triggered from an external application.
This can include anything from having your contacts added to Xero when they are created within your CRM, to sending a thank you email to a customer who pays an invoice early. On the more operational level, it can have your POS system export the day’s transactions to Xero ready for reconciliation when the funds are deposited in the bank. Time management an issue? A time tracking application on the API can calculate the time spent on a job and create an invoice within Xero when you’re ready to collect payment.
This all sounds like a huge leap in the right direction in theory, but how effective is the Xero API in actual startup practice when it comes to business growth potential?
David New, Managing Director at ReceiptBank tells us that there is no question that Xero’s API platform has been integral in contributing towards Receipt Bank’s growth.
“As our first accounting software partner in Australia, Xero’s open API has continuously resulted in new possibilities emerging for Receipt Bank which we have always tried to embrace,” he said.
“Typically it has allowed for tighter integration and the ability to provide additional product features.”It is these additional product features that seem to make an API a viable application for building on a client base and user experience.
What are some of these features? James says that there are now over 300 add-on cloud-based software applications that can be seamlessly integrated with Xero. Applications that claim to deliver all the business software functions one might expect: point of sale, CRM, job management, inventory and tools such as advanced reporting and benchmarking.
“This provides great choice for the business owner. We are about linking all the stakeholders in a business and streamlining the workflow to make small businesses very efficient,” he explained.
“As these companies rebuild their products for the cloud, they’re reaching out to Xero to leverage our accounting solution rather than rebuilding their own general ledger. They are focusing their resources on the features that their customers get value from.”
Emma Petroulas from Nudge Accounting utilises both MYOB and Xero Live Accounts. She agrees with most of Jame’s claims but adds that her one gripe with the software is Xero payroll. “Many of our small business clients have found it difficult to use Xero payroll,” she says.
“Setting up payroll in Xero is easy when clients have staff who are on annual salaries, but when our clients have lots of casual staff working different shifts or irregular hours, they find it hard to navigate their way around the different payroll calendars.”
In saying this, Petroulas says that they still use Xero and “love it”.
Further to Petroulas’ point is how this API technology is being used to direct the growth of a business. When a client knows their numbers, they can make the best decisions for their business. Nudge Accounting says that they use Xero to process clients’ numbers each month, which means that they have almost real time financials at their fingertips.
“The thing about numbers is that they don’t lie,” she says. “What we generally find with startups is that they tend to overstate the financial health of their business, but when they have their numbers in front of them it forces them to make some difficult decisions.”
This is a vital tool in the startup environment and could very well prove an early indicator for founders that things are going pear-shaped long before that ‘closing down’ sign rears its head. Based on the numbers in a management report, clients can recognise inefficiencies in their business and improve many parts of their operations process.
“Using the tracking function in Xero, they have also been able to isolate and understand the most profitable product lines of their business, and change their strategic direction based on this,” adds Petroulas.
“In terms of APIs, there are loads in Xero and we have found that in most cases our clients have found an API which suits what they are after. From time tracking to quotation add-ons, they’re all saving time for our clients.”
As business changes, the methods of growing must also follow suit. For the moment, Xero’s APIs is helping to accelerate this growth albeit without the complacency and sluggishness of traditional accounting and marketing practices.
Disclosure: Emma Petroulas is part of Shoe String Media Group’s advisory board.
Image: Xero API product manager Tony Rule. Source: Xero.com.