This cloud-based accounting firm is helping SMEs plant the seeds for better financial management

Business owners and managers often find themselves overwhelmed with the many different aspects of managing a business, with accounting and finances being of the most critical. The management decisions they make have significant impacts on profits, cash flow and the financial health of the company.

Yet, competency in this area does not come naturally to many.

For example, local social media agency Duo Studio still employed an archaic approach to bookkeeping. The firm was still sending physical receipts to the firm's accountants by courier, resulting in multiple outstanding and overdue invoices,with some at least three to four months old before they were processed. These delays greatly impacted the firm's cash flow.

Looking to leverage digital solutions to run her business more efficiently, Duo founder Stephanie Phua engaged Harvest Accounting, a cloud-based accounting firm. The first order of business was to follow up on Duo's overdue invoices. Then, Harvest designed a workflow using cloud-based accounting platform Xero's automatic invoice reminders to streamline the company's collection process.

Since Harvest took over Duo's accounts, invoices are now paid within 21 to 30 days, down from 90 to 120 days, improving the company's cash flow and freeing up valuable hours and funds that can be put to better use.

Through tracking categories, Harvest segmented Duo's Profit & Loss (P&L) by service lines and clients. This allowed Ms Phua to analyse the profitability of each service when compared to the cost of providing them. It also helped her to optimise her business' structure and to grow the better-performing divisions.

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These days, Duo's finances run like clockwork. Invoices from suppliers go straight into Xero, then all Ms Phua needs to do is log into her online banking portal to clear the month's finances and disburse payments accordingly.

"It's effortless," Ms Phua says. "I now have more time to manage and grow the business rather than being bogged down by endless paperwork."

"With the ever-changing business environment, SMEs are seeing the importance of digitalising their operations and getting access to timely financial data, so that they have the insights and resources to be agile and act fast when the need arises," notes Harvest co-founder Mr Matthew Phua.

"However, they often don't know where to start, and lack the know-how and resources to pursue digitalisation. This is where the value of engaging a cloud accounting expert like Harvest comes in."

Since its establishment four years ago, Harvest Accounting, a Productivity Solutions Grant (PSG) pre-approved vendor, has partnered with many SMEs, helping them to digitalise their accounting operations and improve business efficiencies.

Along with standard-fare compliance work such as the preparation of annual financial statements and tax services offered, the company also provides the majority of its clients with monthly accounting services on the Xero platform. Having up-to-date accounts is a huge value-add that gives clients timely information for better decision making and improved cash flow monitoring, compared to only having accounts prepared once a year, according to fellow co-founder Mr Bryan Zhao.

With Harvest's tech stack combined with Xero's additional functionality of over 1,000 ecosystem apps, it aims to provide "effortless accounting" to clients. Instead of having to maintain spreadsheets, stacks of bills or receipts and paper bank statements, Harvest's clients submit documents either by taking photos of them or using a specialised inbox via the business expense tracker app Dext, which integrates directly with Xero - no data entry is required. From there, Harvest has all the information it needs to prepare accounts, manage payments, and even take care of staff expense claims.

Through Xero, Harvest and its clients maintain and access the same information on a single platform, providing greater financial transparency for both parties in addition to increasing productivity and collaboration.

"With monthly accounting, there are frequent check-ins and conversations, bringing Harvest closer to the client," notes Mr Phua. Processing client accounts regularly allows Harvest to provide data-driven value adds. For instance, by using reporting add-ons to create reports with graphs, clients are able to visualise their performance data and spot trends more easily than through a typical P&L statement. Plugged into Xero, Harvest can also import and synchronise historical information with cash flow forecasting prediction software Futrli. This gives a real-time look at the months ahead, making sure SMEs have a better understanding of their business and future cash flow to fund their operations and growth.

Through their close and seamless collaboration with clients, Harvest is also able to provide operational finance services such as supplier payment runs and employee expense claim automation.

"Our firm is not solely focused on providing accounting services. We also play an important advisory role by reviewing operational workflows and identifying suitable add-ons and solutions from Xero's ecosystem of connected apps, to make life easier for our clients. Our clients turn to us for advice on a wide range of topics to streamline their business efficiencies, such as how they can accept online payments, how to make overseas payments with the best rates, or how to better manage their inventory," says Mr Zhao.

One such client is online furniture store HipVan. Prior to working with Harvest, HipVan maintained its accounts on Microsoft Excel, storing information in multiple spreadsheets. "With the information spread over so many sources, drilling down into the numbers or comparing different periods was extremely time-consuming," notes Mr Phua.

Since Harvest took over the reins, all of HipVan's accounting information is now stored in one ledger on the cloud, accessible from anywhere. It now only takes a couple of mouse clicks to create different P&Ls, for example, month on month variance, or Year-to-Date for the last three years.

Having all of its payables in one system like Xero is also beneficial to HipVan, since it is now able to better track stock purchase orders, deposits up front, and final payments on receipt of goods. Once a week, Harvest processes all supplier invoices using Xero, with indications on items that have to be paid immediately and those that have longer payment terms, allowing the company to better manage their cash flow.

In spite of its young age, Harvest has quickly risen through the ranks of the Xero partner programme. In 2019, it was Xero's Emerging Partner of the Year and became a Xero Gold Champion Partner just a year later, setting its sights on further accomplishments ahead.

On why the company favours Xero, Mr Zhao says the cloud accounting software is user friendly and intuitive, even for non-accountants. It also provides various levels of access to provide a secure accounting experience. As Xero is cloud-based, it allows Harvest to work seamlessly with its clients. For example, while clients issue their sales invoices to their customers, the Harvest team can work on recording expenses and reconciling the bank account simultaneously.

Mr Zhao also likes that Xero supports a wide range of clients, from newly incorporated start-ups to larger businesses. Another advantage is that the software can be customised to fit a client's specific needs. There are many apps that can be integrated with Xero to provide more functionality. For example, by integrating a Shopify-based e-commerce website with an inventory app, Xero allows the sales data and stock levels to be updated and synced in real-time, as soon as an order is placed.

With Xero's direct bank feeds in Singapore, companies' transaction data will be automatically imported into Xero every morning, dramatically reducing manual data-entry for accountants and bookkeepers. Xero's GST capability also means that businesses are able to prepare their GST F5 returns easily based on IRAS requirements, noted Mr Zhao.

As it enters its fifth year, Harvest plans to continue educating and supporting SMEs in unlocking the full benefits of cloud accounting.

Says Mr Phua: "Every month, new apps and upgrades bring new functionalities to this space. We aim to deliver more value to our clients as Xero ecosystem experts, and to recommend game changing solutions for clients looking to get as much information from their financial data as possible, or become more time efficient through automation."

For more information about Xero, click here.