Xero has released two significant product updates. First, it has completed the work to bring Hubdoc onto its platform. It has also launched Xero Tax in the UK. Anna Curzon, Chief Product Officer at Xero commented: “Xero first created single-ledger double-entry accounting through the cloud. Now we are moving beyond that into the future, providing customers high-integrity data through Hubdoc, giving our customers the ability to see insights in real-time, as well as contributing to an integrated experience for completing end-to-end tax and compliance work with Xero Tax. These are critical elements in helping us to create a seamless workflow for accountants and bookkeepers.”
Hubdoc fully integrated
Xero bought Hubdoc in 2018 for around US$70 million. This announcement is a key milestone for the integration of that acquisition. While Hubdoc was integrated with Xero as a partner application it will now be included as standard in the Xero business edition. This means support for single sign-on and direct access to the document collection and management software.
This is an important step for Xero as it moves towards frictionless accounting for small businesses. Hubdoc brings intelligent automation to the platform with the ability to ingest and understand bills and receipts. This automation reduces manual data entry, which saves times and reduces errors. Importantly, it can also reduce processing times later on bank reconciliation.
Setting up Hubdoc from within Xero is fairly straightforward although a subscriber needs to do it. Once it is setup, users can import documents manually or via email. Hubdoc understands all the relevant Xero data such as chart of accounts, bank accounts and tax rates. It will also convert the documents for ingestion into Xero.
It can make a significant difference to businesses. Nathan Watt of Watson & Watts commented: “Hubdoc is our go to system at Watson & Watt for fetching source documents and automating the vast majority of bookkeeping entries. It’s a massive time saver and keeps everything nice and tidy.”
Xero Tax comes to the UK
Xero Tax enables Accountants and Bookkeepers to help prepare and file end of year accounts directly with HMRC and Companies House. The product collects customer data from their Xero organisation. It then converts this into statutory reports using XBRL. Xero can then submit these files to Companies House and HMRC. The system will initially support two sets of reports:
- Statutory account using FRS105 (for micro entities) and FRS 102 1a for small companies.
- CT600 Corporation tax return.
The integration sees the technology from Instafile, another 2018 acquisition embedded within Xero. The products will launch at the end of March in time for the end of the current tax year.
The reports are automated but also allow accountants to review and adjust as necessary. Benefits include:
- Fixed asset integration: Generate capital allowance calculations directly from Xero’s Fixed Asset Register to save time and reduce errors.
- Xero hotlinks: Surface account transactions from within the accounts production workflow with a single click to easily identify where corrections may be required.
- Multi-user review: Collaborate in the preparation and reviewing of filings and easily pass the work between users.
- E-signing: Clients can approve their filings from anywhere, anytime with the e-signing capability.
- Tax post back to Xero
- Custom document styling
Will Xero Tax make a difference?
This is the first phase of this project. Xero is also working on a self-assessment tax module. It hopes to make this available for the tax year ending 2021. Xero is also working with HMRC on a solution for Making Tax Digital for Income Tax. It already supports Making Tax Digital for VAT.
Xero Tax is available to accountants and bookkeepers free of charge on the Xero partner program.
Simon Armstrong, Senior Manager at Menzies LLP commented: “Xero Tax has the potential to have significant impact on the workflows and efficiencies of accountants, and is a big step in the automation and streamlining of the compliance services an accountant can offer. This should benefit business owners in that their accountant has more time to focus on providing insight, advice and guidance – effectively creating more value.
“If Xero Tax works as seamlessly and intuitively as we have come to expect from Xero products, and is utilised in the right way by accountants, then the time savings and efficiencies are potentially very significant. This will all depend on the workflows and processes employed alongside Xero Tax – this is not a stand-alone magic solution.”
Enterprise Times: What does this mean
These are two significant product updates from Xero. There will be many customers currently not using Hubdoc with Xero. For some customers, it is already included as a benefit of using Xero, they should check. For prospects it is an addition that makes the uplift to business edition worth considering the ROI. Implementation is straightforward but planning how to use it is important. For organisations still dealing with a lot of paperwork this could make a significant difference.
Accountants often already have tax preparation software. Making Xero Tax available in the UK could reduce their reliance on that software. While the tax returns do not support the full FRS102 it may be adequate for many of their customers. As Armstrong notes this new feature needs some consideration before assuming it does everything that is needed.