Let’s face it, bookkeeping, for most business owners, is boring. People go into business because they are good at a particular skill or have a passion for something and see a market or a need, not because they like balancing books. This is why it is so vital to find the right software to help manage your accounts, giving you maximum results for minimum effort. So over the next few weeks, we’re going to undertake a review of some of the software packages available and how they can impact your business. First up, I’ve compiled a quick Xero Bookkeeping software review to look at one of the newer options available that are increasing in popularity. So let’s look at what features Xero has:
Cloud-Based Accounting Software
Xero is a cloud-based program. For those unfamiliar with the term ‘cloud’, this simply means that Xero is an online program and all of your data is stored on a ‘cloud’ or a remote server. For more detail see Wikipedia’s article on Cloud-based software: http://en.wikipedia.org/wiki/Cloud_computing
Some of the major benefits of using cloud-based software are:
- Remote access, anytime, from anywhere, by multiple registered users.
- Compatible with both Mac & PC
- Reduced risk of damage to and/or loss of the company file in transit or in the case of a computer meltdown
- File is always current, providing a more accurate snapshot of the business position/cash flow at any point in time
We at Darcy Bookkeeping & Business Services particularly like the cloud-based functioning of Xero as it allows us to better assist our clients to have a more hands-on approach to managing their accounts. We like that we can access the file to create reports and prepare and lodge the BAS while the client is able to continue to add in their invoices etc and the accountant can also be preparing the tax return, all simultaneously, without interruption to the maintenance of the company file. Another reason we like this feature is that if queries arise about transactions a simple phone call can be made and all parties can have the file open in front of them at the same time while discussing, making the process of answering specific questions much smoother.
Xero Bank Feeds
One of the most valuable features of Xero is the bank feed. Basically, you sync your Xero account with your bank account and the online nature of the program means that your bank account transactions are imported in real-time into your Xero file.
The benefits of this system are:
- Time & money saving due to reduced data entry required.
- Invoices are manually entered into the system as they are received or issued and then the program will match up payment amounts from the bank account. Then the person managing the file simply confirms which invoice the payment is for.
- Easier to complete bank reconciliation, making it more enticing for business owners to do it themselves, or alternatively reducing bookkeeping hours required = saving money in bookkeeping and accounting fees.
- Bank feeds also have the potential to reduce human error as the amount of human input is reduced, also saving time in locating said errors.
Xero Free Online Support
Xero offers free online support, which is great to know that you can access help online if you need it. The support is, however, email support only, rather than chat. Xero staff will try to get back to you within 24-48 hours, but if your question is complex then it may require further emails so can be slow in solving issues. They also do not offer telephone support, which is great on your phone bill, but if something pops up that you urgently need help their support systems may not suffice your needs.
Xero manages all of your payroll needs, including:
- Automatically calculating Superannuation contributions and entitlements for employees.
- Xero offers the ability to import payroll payment batches directly into internet banking ready to go out for regular pay runs, saving double entry of information and reducing the potential for errors in transposing data.
- Payslips and payment summaries become easy as Xero produces them with the click of a mouse. You can even copy the payment summaries to disk or USB and send them directly to the Taxation Office with ease, making a much-disliked task simple.
Creating invoices is easy in Xero, and the program has the capability to track receivables and produce customer statements along with other reports. Xero also has multi-currency options for those trading internationally, making currency conversions simple and reducing the workload for businesses that frequently buy or sell from overseas. Xero can also export invoices created for clients who also use Xero and automatically enters the invoice data into their file to await approval for payment. This reduces the risk of invoices being overlooked or being paid late due to not being entered into the client’s accounting systems.
One of the benefits of Xero is that the pricing differs based on the number of transactions per month in combination with the number of employees within the business. Many other systems offer similar pricing tiers, however, require a complete update of all files as the business grows. Not so with Xero. As your business grows beyond the capacity of the level of service you have access to, all that is required is to step up to the next tier of capacity and pay the extra subscription fees. The program will then allow the extra employee files to be activated or the extra transactions to be entered, making for a seamless transition from small to medium to large business.
Pricing for a Xero subscription ranges from $29 to $64 including GST. However, if you set up your subscription through a Xero partner like Darcy Bookkeeping and Business Services you have the option of subscribing to the $18 cash book which is suitable for micro-businesses. Further to this subscribing through a Xero partner may also enable you to receive your Xero subscription at a discounted rate if the Xero partner chooses to pass on the discount.
Xero also offers a free trial, which is limited by the number of transactions performed with the program. Once the business reaches the number of transactions allowed the trial period ends and a subscription is required to maintain the file.
Xero produces most standard reports easily, giving the viewer a realistic real-time impression of the state of the business. We have found, however, that the reporting capabilities in Xero are still very basic and do not really offer the ability to customise reports to suit beyond changing the dates. One way to bypass this limitation is by exporting the report to Microsoft Excel to manipulate the data. One great feature that Xero does have is the ability to publish reports so regardless of changes made to the Xero file you can look back at a later date and view the report as it was originally published.
Concluding our Xero review, we at Darcy Bookkeeping & Business Services find Xero to be relatively user-friendly and a great system for managing the accounts for most businesses. We like the cloud-based nature of the program and find that most of our clients using Xero have reduced fees associated with managing their accounts as opposed to those using the likes of MYOB or Quickbooks desktop accounting software. We do find that reporting capabilities are limited, but when traded off against the benefits of Xero we believe this is a positive net result in value for Xero subscribers.