Xero is perhaps one of the most popular accounting software solutions available today. Trusted by millions of small- and medium-sized enterprises worldwide, it is known for optimizing financial processes from transaction tracking and cash flow reporting to inventory and payroll management. Plus, with its automation options and easy-to-use interface, users can devote their time to more attention-demanding concerns. However, as with any other SaaS product, it does have its shortcomings, especially for those who handle larger teams and customer bases.
This article will take a closer look at some of the most useful features of this platform. We’ll point out the benefits of these features and also mention some of the caveats along the way. By presenting both the pros and cons of Xero, you can make an informed decision whether this solution is a good fit for your business needs.
Many small business owners often start with Excel spreadsheets to manage finances. But as your business grows, this solution will not be enough to handle all your transactions for various reasons. Not only because Excel spreadsheets can be prone to errors and time-consuming, but also due to other concerns such as security, fraud, and the need to collaborate with other professionals or vendors.
Fortunately, developments in cloud technology now offer SMEs, accountants, and bookkeepers a more efficient and secure way to accomplish everyday accounting tasks. Projections show us just how things are shifting to cloud-based accounting. For one, experts project that the global cloud accounting market share will increase by up to $5.65 billion by 2028. This is not difficult to imagine as 78% of SMBs will rely exclusively on cloud accounting software by 2020. Also, 58% of large companies are already using cloud accounting, while 67% of accountants said they prefer using cloud-based accounting platforms and tools.
Source: AccoutancyAge/Accounting Today/Ace Cloud HostingDesigned by
Moreover, the benefits of cloud-based accounting software such as AP automation are encouraging more businesses to incorporate it into their workflows. For example, with traditional spreadsheets, it’s almost impossible to keep track of changes made to the document. This means it’s susceptible to fraud because information can be easily replaced. Also, it’s hard to know who made changes to the document.
With the audit trail capabilities of cloud-based accounting software, you can see the document’s history. You’ll be able to see the changes made to each transaction. If you want to check an invoice, for instance, you’ll be able to check who created it, when it was created, who approved it, who sent it and the date it was sent, and other notes included in the document.
One such software that can do this is Xero. However, like other accounting solutions, it is not a one-size-fits-all platform. As such, it is best to weigh the pros and cons of Xero to determine whether it is the right tool for your operations.
Xero is a cloud-based accounting software packed with features and tools to simplify daily accounting tasks. Small business owners can better manage their financial affairs using features such as bill payment, expense claims, payroll management, and inventory management. It’s also easy to create customized quotes and invoices right on the platform. You can then send these invoices to clients and accept payments online.
Furthermore, Xero simplifies employee expense claims using tools such as data capture for receipts and documents. Employees can submit expenses on the go, while business owners can approve claims promptly. Also, you or your finance staff can monitor employee spending through the app’s analytics tools.
Meanwhile, accountants and bookkeepers can use Xero to keep their practice a step ahead. The app allows you to automate tasks, collaborate with staff, and access client’s records anytime. Xero serves as a single place where accounting professionals can manage their workflows, request documents, and stay on top of tasks, jobs, invoicing, among others.
Another benefit of using Xero is that it makes compliance easier using templates and automation. You can manage your compliance workflows, including customized work programs, client queries, and work papers. With these modern features, you can run a smarter and faster accounting practice.
Detailed Xero Review
Detailed Xero Review
Xero’s mobile app for Android and iPhone/iPad allows you to stay connected to your business anytime and from any location. You’ll have the ease of managing crucial processes in your business while on the move. Plus, you can access essential tools and features straight from the app for those moments when you have to send urgent quote requests to clients or check your business spending to make an informed decision about your expenditure.
Moreover, since Xero is cloud-based, users can access the platform on any web browser on a laptop or desktop. This provides more flexibility, unlike software that can only be deployed on-premise. Using the app’s intuitive dashboard, you can get superb data visualization of key accounting metrics for your business. Get visibility of all your outstanding invoices, bills to pay, bank account balances, cash flow, and much more right from the dashboard.
Inventory management is another feature you can access on the go. You can keep track of your stock items in real-time and see which ones are selling best and which ones are not. You can look up the number of items on hand and their total value at any time. Also, you can save the details of items you always buy or sell. It’s easy to add items to a quote, invoice, or purchase order.
On the other hand, if you’re looking for a payroll management solution, Xero is also an excellent choice. It’s integrated with Gusto payroll so it’s easier to calculate pay and deductions. Through this integration, you can save on admin work and simplify compliance with automated payroll filings, 1099s, W-2s, and direct deposit payments. You can also send out automated payday emails as well as set multiple pay schedules and pay rates. Lastly, since it can be accessed on mobile, flexible payroll filing is possible
A thing to note though when using both the mobile app and desktop versions—some users have mentioned experiencing present rules they use on the desktop not entirely working on the mobile app. Just like with any software, there might be some technical glitches or bugs you need to report. Good thing is that Xero offers a variety of technical support via email, live chat, and tickets through their online portal.
Xero makes it easy for you to create quotes, track projects, and send invoices to clients all in one place. The track projects feature allows you to create as many projects as you want and estimate time and costs to build budgets in just a few minutes. Once you start a project, you can even track your time on the app itself. The built-in start-stop timer and location-based tracking help you seamlessly link job costs to projects.
There’s no need to create a separate invoice for your projects since you can turn quotes on Xero into customized invoices. You can add your tracked time to an invoice and send it directly to your client. Xero also integrates with top payment gateways so you can quickly receive online payments. Keeping track of your project costs is also easy because you can add bills and deposits to a job. All changes on a job will also be reflected on the app, so your invoices will always be up to date.
Moreover, you can use reporting features to see which projects are profitable and which ones are not. Knowing which projects make money can help you gain insights and improve your quotes for succeeding projects. A word of caution when creating quotes: some users reported that it can be tough to manage large volumes of quotes on the platform. So, it’s best to also be mindful when creating quotes and make sure their numbers are still manageable for you, especially if you’re a one-man business.
It can be hard to keep track of your financials when you have to put all your bank transactions manually into your books. Xero addresses this problem with its fast and secure bank connections.
You can connect your bank account to Xero and set up automatic bank feeds so your bank transactions flow smoothly into Xero. This makes it easy to keep your accounts up to date and monitor cash flow. You can also categorize daily transactions so you’re better organized and avoid backlogs from piling up. Plus, you can set up multiple feeds with multiple banks, which is great if you need to track several accounts.
Furthermore, you can sleep soundly at night knowing that all your financial data in Xero is secure. Every transaction is encrypted, so your business is also protected from would-be invaders.
A thing to keep in mind about bank feeds is that there are cases wherein delays with direct feeds may be experienced. As such, some users might not immediately see updated bank statements. In this situation, you can refer to Xero’s blog updates on bank feeds or get help from Xero’s technical support staff.
Data security should be your utmost concern when it comes to financial transactions. You get this with Xero’s multi-factor authentication (MFA). MFA combines your username and password with an authentication app on your mobile device. This second layer of security makes sure that your information is protected every time you log into your account.
Aside from MFA, Xero also implements a multiple-approval model, which minimizes the risk of financial fraud. All transactions are encrypted with the same level of security used by banks.
Moreover, if you share your financial data with accountants, bookkeepers, or other advisors, Xero’s a secure platform to use. That’s because it records all actions performed on a job or document. These include users, dates, transactions, and manual notes. This can be a very useful feature, for example, if you would like to gain more control of specific aspects of your business such as sales processes and purchase orders. Since you can see each transaction’s details, it will be easier to categorize them and check for discrepancies.
With today’s globalized and connected world, it’s crucial to have accounting software with multi-currency features like Xero. You can send invoices, quotes, and purchase orders without worrying about converting to your client’s local currency. You can pay and get paid in 160 currencies and get up-to-date exchange rates for instant currency conversions.
Another benefit of multi-currency features is that Xero converts your international transactions for you. This is ideal if you do business with international suppliers or sell your products globally. You can monitor how currency markets impact your cash flow and transactions abroad. Plus, you can even view all your accounting reports in your preferred currency.
Xero also allows you to set a default currency for your specific contact or client. This means when you receive bills, send invoices, or send purchase orders, they will always be in the right currency for your specific contact. Transactions can run more smoothly since you don’t need to figure out exchange rates and conversions.
Financial reporting is one of the most helpful features of Xero for business owners and accounting professionals. Standard reports like balance sheets, cash flow, and income statements are now easier to accomplish. You can view and share reports whenever you need and collaborate with your accountants or bookkeepers.
With filters and customizable settings, you can drill down into the details of accounting reports and budgets for any period and measure specific key metrics for your business. You can add, remove, or reorder rows and columns in a report with a simple drop-and-drag function. It’s also easy to add details to a report such as formulas, notes, and links to report schedules. Additionally, if you want to see how different business areas are performing, you can add tracking categories to do just that.
When it comes to additional analysis, Xero can produce reports with specifics like expenses per contact, sales per item, and aged payables, among others. For accountants, reporting tools such as the Business Performance tool can help track equity ratio debts and net value per sale. Meanwhile, the Management Reports tool can be used to show a company’s profitability based on ROI and cash flow observations.
Xero already has some of the most sought-after reporting and analytics tools, though some users might still feel that these are limited. For deeper analytics, there are dedicated business analytics solutions that can address these requirements.
The features we highlighted are just some of the ways Xero can significantly change the way you do your accounting and financial processes. Aside from the features we discussed above, there are still so many more that deserve your attention and review. These include bill payments, expenses claims, payroll management, and sales tax computations/returns. It can also be used to make inventory management more efficient. Overall, Xero is built for small business owners, accountants, and bookkeepers. It’s top-notch accounting software that’s loaded with automation, reporting, and integration features that are designed to help you simplify accounting and finance-related tasks and run your business smoothly.
There are some areas of improvement as we mentioned throughout this article. These are mostly a variety of technical issues when using the app based on user feedback. The good thing about Xero is that it offers a complete range of support channels—email, tickets, live chat, and training—so, you and other users of the platform will certainly receive the expert support you need if ever you encounter issues when using the app.
If you think Xero is the answer to your accounting and business needs, we recommend that you take advantage of its 30-day free trial. By doing so, you can truly get a better idea of its features and how they can benefit your business. If you want to know more about accounting software, check out our accounting trends articles. You’ll learn the latest trends on cloud-based accounting and the role of AI in the accounting industry.
FinancesOnline is available for free for all business professionals interested in an efficient way to find top-notch SaaS solutions. We are able to keep our service free of charge thanks to cooperation with some of the vendors, who are willing to pay us for traffic and sales opportunities provided by our website. Please note, that FinancesOnline lists all vendors, we’re not limited only to the ones that pay us, and all software providers have an equal opportunity to get featured in our rankings and comparisons, win awards, gather user reviews, all in our effort to give you reliable advice that will enable you to make well-informed purchase decisions.