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Xero – my personal epiphany

Last week I had an epiphany. I attended the annual Xero road show in Sydney and came away a happy Xero-ite! To explain – I have been using the product for a couple of years but without being totally committed to a Xero journey. Now, I think the software solution is more than clever marketing to accountants, that it is starting to live up its promise of being ‘beautiful accounting software’ and will increasingly become a product of choice for the smaller end of the small business market.

I don’t have an accounting or bookkeeping practice so I only need to evaluate the software from the perspective of the end user, I don’t need to consider pratice management integration, so whilst the concept of single ledger may be invaluable to accountants in practice, it is not a priority for the end user. So my journey to becoming a committed Xero-ite is based on the end user experience. Three main factors have influenced me:

  1. First and foremost, due to the significant enhancements that have been delivered over the past couple of years, the product has reached a more mature level with regards to functionality (and more is scheduled for release later this year). This now makes Xero a viable alternative for an increasing number of businesses.
  2. Secondly the company has a dynamic culture (the uniform at the road show was a black t-shirt with the Xero logo and jeans or Xero-blue trousers) and is relatively flat in structure which enables it to respond more quickly and readily to change in the marketplace than some of its competitors which are more structured.
  3. Lastly, although Xero is not an Australian company, it has a 40,000-strong customer base in Australia (I am not sure what is the percentage of total customers worldwide) and therefore has a vested interest in ensuring the software remains both compliant with statutory requirements and is responsive to Australian business processes. Their staff are on the ground here, and keeping their fingers on the pulses of small businesses, bookkeepers and accountants.

These factors combined have helped to sway me into the Xero camp. But from a feature perspective – what are the main pluses of Xero?

For me the number one feature is Bank Rules, where you define conditions to enable Xero to automatically suggest account and GST coding of imported bank statement transactions. This can hugely speed up and increase consistency of cash transaction recording. The more comprehensive the rules, the better the quality in the coding. Only Financial Advisers have access to the other helpful piece of functionality here which is Cash Coding – I guess there is potential for massive error if not used correctly.

I also love the Employee Portal where employees can print pay slips and payment summaries, lodge leave requests and view details. There are plans to extend the portal this year to include lodging tax file numbers.

Being an internet based product with public APIs, Xero can readily connect to add-on software to enhance the range of functionality. Currently there are some 150 add-on solutions available meaning that however non-standard your business model, there is a chance there will be an add-on to cover the gap. (This is where true business efficiencies and return on investment can be obtained – automating and integrating all the business processes,)

Xero puts out new releases every 6-8 weeks which are seamlessly deployed to all users – you just wake up in the morning and the changes are there. This is a win-win solution – clients don’t have to wait and be bombarded with an annual release with a host of new features at one time, and for Xero, it is easier to manage an incremental deployment.

My last question – will Xero continue to deliver? Following is a list of enhancements we can expect to see this year:

  • A tidy up of the somewhat confusing GST tax codes.
  • Basic Inventory  (maybe late this year or early next).
  • Purchase Orders.
  • Quotes.
  • Electronic lodgment of tax file numbers.
  • New reporting engine enabling more flexible report customization.
  • Improved bank reconciliation interface.

A reasonable list in my estimation.

So I am confessing to a personal Xero conversion, but no – I won’t be recommending it to all clients. It is an ideal solution for some, but not all, business models. I will continue to keep a range of solutions in my tool box.

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