Episode 56 – Kevin Smith
What is the Best Accounting Software for Construction Companies? Why Xero?
In the first episode of our, ‘What is the best accounting software for construction companies’ series of podcasts, Ciaran sits down with Kevin Smith from MI Solutions to discuss, why Xero is the best accounting software for construction companies.
Kevin Smith is the Managing Director of MI Solutions. MI Solutions Ltd was incorporated in 1999 providing business software sales, installation, training and support. They have moved from the early days of CDs and on-site installation to remote setup & training.
MI Solutions Ltd strives to ensure the systems it recommends are best of breed at the price range suitable for the client, but still managing to fulfil the company’s operational and reporting requirements.
To explore Xero for your construction company you can visit:
What size construction companies use Xero?
Where do you feel that cap is? That’s something that does come up a lot.
Well, actually, it’s not a cap on the value. It’s more cap on the transactions level. If you say, for instance, you’ve got… A client there actually asked me to come into a site and he had really good software, he just didn’t realize it. But he had five separate companies, he had a integration with a third-party piece of software as well. He was in the service and construction business, we’ll say, in the five different industries.
He had maybe three to 5,000 invoices a month and so on. He wanted me to put in Xero because he loved it. I say, “Guy, I think what you have…” What they had was actually better than what was Xero itself. They have entry level software, which is Xero, Sage, QuickBooks, and so on, which is good.
You have mid-range software, and then you have the NetSuites, which is very, very large. So, depending on where you hit, where you want, you can say, “Well, these guys want a bit more functionality and they want to be able to do A, B, C, or D.” As I say, you can’t get a van and use it like it’s a truck. You have to sort of pick the software that suits your particular business.
Is Xero compatible with a UK or Irish based construction company?
Given then Xero is, for people that don’t know, Xero was founded in New Zealand. I actually spent a lot of time in Australia, would have been one of the very early users on the Xero ourselves. We loved it. And one of the main reasons we loved it because we’d come from a trade background and traditionally speaking, accounting softwares were not nice looking tools for us coming from the trades. And then Xero came onto the market with it’s nice looking, easy to use. Suddenly, we could start to understand our accounts when you don’t come from that financial background.
But I suppose one of the questions would be, that was very easy for us, because we already in the Australia/New Zealand market. But given that Xero is a New Zealand founded company, how compatible is it to the UK and Ireland?
Well accounts are accounts. Across the board, accounts are accounts. So if you go to any country and you mention the word invoice, bill, payment, or bank, they’ll all understand what they are. And although they are Australian initially based and a large portion of their users are there, they have 500,000 users in the UK at the moment plus, and that was in the last count. And they’ve 2.7 million subscribers worldwide. So it’s not as if it’s a small entity and the UK system, they’ve out passed Sage in the UK at the moment, because of the number of users that they have.
So accounts are accounts, so I wouldn’t worry about that end of it. There is a little bit needed on the configuration of items. Like for instance, in Ireland here, people wouldn’t understand that there isn’t goods for resale, not for resale that we need to do reporting on all these sort of issues, typical accounting stuff. But if you come to the end of the year and you don’t set up your VAT or your information correctly, your accountants can’t use your information.
I’ve had numerous cases where I’ve had to wipe and start systems again, where people said, “I’ve used an Excel sheet. I must know how to use an accounts system.” And they put it in and they come along and they said, “Well, we used to be able to color this in in Excel.” And I says, “Well, it doesn’t work that way here.”
So you need to configure it correctly for where you are. So I’d have clients in the US, Cayman Islands, Italy, Spain, France, UK, a large amount and Ireland. So the same systems are used generally across the board. I know they have a separate system for UK, because it sets up for our HMRC and it works really well with that. But I would say to you is, it all depends on how it’s configured and set up. As the fellow says, you can send a shovel to any industry and they’ll still be able to use it, but you need to show a man how to use it.
How do Irish companies deal with RCT in Xero?
One of those configuration points then would be, obviously you’ve got a CIS module in the UK, RCT. They do the CIS module quite well for UK, but in the Irish then RCT, how are customers dealing with that?
Yeah we see we’re the second cousins at the moment to the UK, when it comes to a sell on this. CIS works really well there and the connection to HMRC is excellent and I have clients use it. In Ireland here it’s just a matter of setting up their system correctly. We set up a subcontractors group within suppliers, so we can pull the subcontractors out of that particular list. And then we set up an RCT liability account.
So in other words, we’ll have a liability account sitting there. So what happens is, a guy gives you an invoice for a thousand euros, we write 800 of it off, and we do the other 20% goes to RCT liability. And then at the end of the month, we print out a report of the IRCT liability that needs to be paid at the end of that particular period. So it gives you a breakdown of all the RCT requirements.