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Road testing Xero’s integrated Payroll

Xero announced that the payroll from Paycycle would be integrated with its core product by the end of May and with a few days to spare they have delivered. So how does it stack up? Pretty well is my initial response, but to flesh that out a little more:

A couple of exciting features – it has a self-serve employee portal so employees can go in and request leave, print payslips, review leave balances etc, plus it will automate payments to superannuation funds if you are subscribed to the Large version (it’s worth paying the extra $180 per year to get this feature)

Much of the rest is pretty standard, it’s hard to get wildly excited about payroll systems, you notice the pain but just accept the gain. Some nice touches are, it’s easy to add your company logo to print on payslips, great to be able to specify the mapping to the GL and good to be able to track leave balances, both hours and amounts.

There were a couple of areas where I fell over through lack of familiarity – when you set up the employee you nominate what Xero terms the ordinary earnings rate which is their normal pay and also their superannuation fund. On another tab – ie the Pay Template you then specify how much they earn and how much super they receive – so these must have already been set against the employee. It took me a while to work out what I was doing wrong there but then it was plain sailing with the rest of the set up.

I then went in to process some pays. OK this was pretty easy too but I did find some holes.

  1. You have to add any leave taken by an employee on the employee record before you start the payrun, you can’t add it in to the payrun, so if you forget to record an employee’s leave taken, you would need to delete and restart the pay run – could be a bit of a pain. 
  2. When you start a payrun, it is in Draft mode and then when completed you Post it. Until it is posted you can’t start up another payrun, may cause minor difficulties if you are paying weekly and monthly at the same time.
  3. When pay run is complete, you Post it. However this is a bit of a misnomer because it doesn’t update the general ledger, you have to Create a draft invoice that goes to Accounts Payable which you then have to Approve and then Pay to see the transactions in the ledger – some extra unnecessary steps.
  4. Once a payroll has been Posted, Draft Invoice created, Approved and Paid, you can revert it to draft mode, make changes and re Post, Create draft invoice, Approve and Pay resulting in duplicate transactions in the ledger (although not in Payroll) which would need careful monitoring.You can after reverting the pay run also Delete it – this does remove the ledger postings.
  5. It is also very easy to Post, create , Draft Invoice, Approve and Pay a pay run multiple times which I thought was a concern. Xero has advised they are looking into this.

Other Plus features for this product include:

  1. Management and reporting on Leave Balances .
  2. Tax Tables will be automatically updated, a welcome relief from the painful MYOB and QuickBooks process of downloading and applying.
  3. Payment Summaries are also provided and according to the Help everything apart from Reportable Fringe Benefits is included – you need to Edit the Payment Summary to add this.

If you are using the existing Payrun functionality in Xero – you have to re-enter your employee data, it is not brought across, but if you were using Paycycle in its standalone form, you can populate an Excel template with employee details and send to Xero for automatic upload.

Overall – it is a welcome addition to the core product, but the integration could do with a bit more of a tidy up.


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