Possibly the largest software conference in the UK was held last week – XeroCon at Excel. There were several “coming soon” announcements from Xero related to products in development or at beta stage. This included mileage claims as part of expenses and short-term cash flow forecasting.
Perhaps the most interesting though was the announcement of a linkup with TransferWise to be able to initiate payments from within the product. This is really the “missing link” to a complete system, facilitated by the “open banking” regulations.
This will still be a few months until it is fully available though (March 2020 was intimated), although it is one of the products in beta now.
It has been possible, for some time, to produce payment files and upload to a bank for payment or initiate payment through third party products such as CreDec, who were also exhibiting at XeroCon. The existing process with CreDec involved exporting a payment file from the accounts or payroll software and uploading it to the Credec platform for approval prior to initiating the payment.
However, CreDec appears to have perhaps “stolen a march” on the Xero Payments via TransferWise by having a system already in place integrating real-time payments capabilities through Xero. This will allow small and medium-sized businesses (and their accountants) to bypass the traditional bank routines and initiate payments from directly within the accounting platform.
This “Virtual Account service” closes the gap between banking and accounting payments. The Xero integration is the first cloud accounting product to be linked, and others are also planned. The existing business bank account is used throughout-no new accounts are required.
The integration supports single and batch payments, automatic scheduling of pending payments for approval, and automatic transmission of transaction data back into the accounting platform for reconciliation, reporting and analytics.
The payments integration will allow the “bookkeeping service” offered by accountants and bookkeepers to be taken to a whole new level again and makes the whole payments process much more seamless, efficient and automated, with significant time savings envisaged. The words “game changer” come to mind, in much the same way as bank feeds revolutionised the accounting processes a few years ago.
No doubt there will still be those that will stick to the very old-fashioned cheque payments! Whilst cheque imaging does make it easier to process cheques, the use of such payments continues to decline year by year. In 2008, 1,324 million cheques were used to make payments, falling to 342 million in 2018 and expected to decline even further to just 135 million by 2028 – but who knows what other technologies might come along in the meantime?
Do you anticipate using payments via accounting software in the near future? And will you be advising/encouraging your clients to do so too?