Xero - Any Room for Improvement?


Established in 2006, Xero is the New Zealand accounting software that has taken the Australian small business market by storm. Loved faithfully by its users it is a modern cloud software that has knocked off the long standing competitors such as quickbooks and MYOB.

But is it all roses or is there still room for improvement within Xero?

It is good looking, in fact, their marketing tell you it is “beautiful accounting software”. It is cloud based which has huge advantages and it has tremendous integration with 3rd party apps. This means that you can connect your Xero to other systems such as your CRM, website, shopify account and the two talk to each other and share information in what is usually a fairly seamless process. It supports a wide range of payment gateways, can track inventory and provides responsive quoting allowing the client to accept or reject a quote or leave comments. For a very small business that is operating personal expenses out of their business account, Xero makes it very easy to separate out these expenses, and this can even be done from your mobile phone.

Bank transactions are automatically imported, and Xero matches them to existing invoices or bills. The reporting is easy and user friendly and allows businesses to have full access to management reporting on profit and loss, expenses and performance against budget with the click of a button.

Any room for improvement?

If your business processes orders over the counter or accepts cash transactions, then this isn’t as simple. You enter payments as an invoice, but then have to approve the invoice which can be confusing and often unnecessary. Once you have entered the details the invoices closes, so you can’t automatically print, you need to go back into the invoice to print it.

Cash is also difficult to handle. You can enter the cash as Receive Money, but then the paperwork prints as a ‘receipt’ rather than a ‘tax invoice’. It also looks for you to nominate a bank account for the cash to be in rather than an option of holding cash. While it might be very modern, it forgets that many small businesses still need to deal with cash and Xero just isn’t designed to handle this.

Setting up payroll can also be a challenge as it doesn’t guide you through the right process. You may need professional help when setting up Xero payroll. However once set up it works well.

Xero isn’t perfect, but no software package ever is!  It comes at a fairly hefty price tag. Cost starts at $25 a month for very limited access, up to $60 a month for 5 employees on payroll, automatic super payments and unlimited transactions. Normally your Gold/Platinum Xero Partners (such as your accountant) can get discounts on the standard rates so it is worth exploring these options.  Always consider what your business needs and whether Xero is the best product to meet those needs.

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About Author

Kelly Morgan
Kelly Morgan

Kelly Morgan has over 32 years’ experience as a Chartered Accountant and is the Managing Partner of Azure Group heading up the Business Accounting, Technology & International divisions. Kelly is passionate about working with business owners. By working closely with her clients, Kelly helps them to maximise the opportunities in their business and assist them to achieve their goals.

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