We now finally seem to have gotten past the conversation about whether or not businesses should have their accounting in the cloud. We’ve established that security is good, convenience is good, scalability is good, mobility is good, and collaboration is good. Great. Let’s move forward.
Now the conversation I hear everywhere is… does this integrate with Xero? The implication being, if the tools integrate, sweet - that’s the app for me and end of the story. But it’s only just the beginning. There are so many more questions that need to be asked.
How Does the Integration Work?
Just because two tools integrate, it doesn’t necessarily mean that it does so smartly, cleanly, or the way you want it to. You need to lift the hood and check out how the systems talk to each other to figure that out.
The most common problem we run into when working with online retailers is how the apps pull in accounting detail transaction-by-transaction from shopping carts and/or cloud inventory systems. It makes our stomachs physically hurt every time we see the systems trying to push in each individual order.
Now, if you’re running a cute little online business with a dozen transactions a month, that’s fine. This kind of integration might make sense (depending on the information that’s flowing over and the reliability of the system). Shopify and Xero have built a great integration for this purpose. But if you’re building up your business and want any hope of scaling once you hit it big, this issue should concern you like it does us.
If you have an ecommerce business with thousands of transactions each month (like most of our clients), it will be a nightmare trying to reconcile each and every transaction. Nobody has time for that nonsense. Not only that, but the accounting system will quickly be crushed by the sheer volume of data flooding into it. I don’t care how tight your integration is, I don’t want to weed through hundreds of thousands of transactions in a year… assuming it didn’t break my system and cause it to permanently timeout in the process.
We are constantly evangelizing to our software vendors about the glory of integrating with Xero using batch summary invoices. I don’t know what accounting gods dictated that if a transaction occurs, it needs to be memorialized in the accounting system one detail at a time. Just gather up all the data from that day, total it up, summarize the details by sales, returns, fees, sales tax, etc. and push one invoice into the accounting system. If you can batch that data such that it ties to what ends up in the bank account (for easy bank reconciliations), all the better.
If you ever need the raw data, it still exists in the shopping cart or cloud inventory system. You don’t need to duplicate all the raw data from one database and transfer it into your accounting system. That just makes everyone’s life miserable.
Is There a Two-Way Integration?
In many cases, it’s not enough just to integrate. You want the two systems actively talking to each other on a regular basis.
What if a purchase order is pushed from your cloud inventory system to your accounting system? Does it push it over once and that’s it? What happens when the PO is closed because product is received? Does the accounting system or your cloud inventory system then ignore it so that one system is updated but the other is not? Lame.
If an invoice is created in your payables system and pushed to your accounting system, what happens when the invoice is marked as paid in the accounting system? Does it push that information back so the two systems stay in sync? If not, you’re just creating confusion and headaches, and it might be easier and faster to just not connect the systems at all.
Does It Help Your Accounting?
Some tools we’ve seen only integrate a part of the information but leave out important accounting items such as Tracking Categories.
So even if the information is pushed over in all its glory, you still have to go back and touch every transaction to update the information. Even if the tools “integrate,” you’re losing some of your efficiencies due to the lack of this functionality.
Does It Push Over Attachments?
Another way you lose some of your efficiencies is by using apps that push transactions back and forth but don’t push copies of the attachments along with them.
I wrote an article on this about a year ago, and it’s still a hot button issue for me. Different people have different access to different systems, with good reason, but everyone wants to see copies of the supporting documentation. It’s frustrating to have systems that talk to each other, but you still need to go back and manually attach files in each system. Nobody wants to waste their time doing that.
Is the App Always Evolving?
One of the biggest issues you should care about is whether or not your vendor cares about improving their product.
No tools come out of the gate perfect and fully functional. Like humans, the best ones are always trying to make themselves better. The best app providers not only seek constant feedback, but they listen and make improvements quickly and consistently over time.
We’ve worked with dozens of tools over the years, and the worst ones make what we call “lipstick changes.” Maybe they change the font, colors, or button shape on their app, but there is no real improvement in functionality. With the speed of developing cloud technology, these vendors should be scared for their survival. Even if they’re on top now, they will quickly and easily topple as soon as an innovative challenger enters the ring.
The best tools we work with are the ones who actively ask users questions about the challenges they face, work tirelessly to lead the pack, and make it their mission to solve real pain points. Hubdoc, Expensify, and Xero are fan favorites for this very reason.
Kick the Tires
When you’re looking at using a new tool, we recommend you take a close look at it to make sure it’s really going to do what you want it to do.
The first question is the most obvious, “Does it integrate with my accounting system?” Don’t let the discussion end there. Ask the hard and detailed questions. Explain what it is you’re trying to accomplish. Watch their workflow to see if it’s going to break the workflow you already have. Talk to the company about the product improvements they’ve made to date and the ones they have on the horizon.
Do what you can to make sure that you’re not just integrating but that you’re developing a healthy working partnership for your tools.