Review of Xero Accounting software

Introduction

I've recently implemented Xero accounting at a client, migrating from a larger legacy system.  This article is a review of our experience which I hope will be useful for anyone considering the same move.

The software was developed in New Zealand, but now has 200,000 users around the world.  The UK version seems perfectly adapted, and I didn't detect any kiwi flavour at all.

Getting started

It couldn't be easier to get started.  You go to xero.com, create a free account and you immediately have your own demo company on which you can try out the software to your heart's content.  Once you're ready to go live, you give Xero your credit card details, register your company and follow the very clear wizards for getting things set up.  Migrating data from a legacy system is always a challenge, but Xero makes it as easy as it can be.

Look & Feel

Xero has a very clean appearance with screens displayed in calming blue, cream & white.  Their slogan is 'beautiful accounting software'.  I can only say it hasn't started to grate yet.

Ease of use & help screens.

When you sign in, you get a dashboard showing key information on cash, customers and suppliers.  I didn't find this particularly useful, but it can be customised.

You can quickly find your way around, although the menu structure isn't always completely intuitive.  For example, the main thing a lot of users will want to do is to enter a purchase invoice.  To do this, you have to click 'Accounts > Purchases' & you're then presented with a subsidiary dashboard screen.  It's not immediately obvious that '+New' is the button you need.

That is a quibble.  Once you've gone through the menus a few times, everything becomes very easy.   And the screens where the work is done are extremely clear and user friendly.

Customer & supplier master data is held in a single 'Contacts' area, which is unusual.  Contacts are all stored by name rather than having account numbers.  I can imagine this causing difficulty if you have contacts with similar names - perhaps branches of the same company.

However, Xero scores very highly on user help.  Most screens contain a brief explanation of what to do.  These explanations can be hidden once you are familiar.  The more detailed on-line help manual is the clearest and most comprehensive I have ever seen, well written and fully searchable.  There's only been one occasion when I wasn't able to find what I needed.  A quick email to the support desk got me an answer within an hour.

Functionality

Xero covers all of the basics - general, sales and purchase ledgers plus cash book.  There is a good range of standard reports included.  Also available, although not used by us to date, are modules for payroll, expenses and fixed assets.  Xero doesn't have the ability to handle stock control, sales orders or purchase orders.   However, there is a wide range of addons which are endorsed by Xero and claim to be fully compatible with it.  These can also be used to add features such as point of sale and CRM.

Bank statements can be loaded into the system very easily and Xero suggests matches with open transactions in a way that simplifies the reconciliation process.

More generally, practically any kind of data can be uploaded or downloaded.  There are lots of time saving tools that keep re-keying to a minimum.

If you want to use cost centres, or introduce any other dimension of analysis into your accounts, there is a feature Xero call 'Tracking'.  Any transaction can have a tracking code attached to it and there are reports available to analyse by these codes.  This feature could benefit from stronger controls.  There are no warning messages if you forget to enter a tracking code where there should be one.

A big plus for Xero is that they actively encourage feedback and, based on user feedback, they are constantly making improvements to the software.  These improvements are added automatically at no additional charge.  That's very different from the model we are used to where every few years you have to pay for a massive disruptive upgrade.

There's a lively online forum for Xero users.

Forms design

It's very quick and easy to design your own forms such as sales invoices and remittance advices.  These look professional and incorporate all of the right details, including logos.

Security & performance

Adding users is very easy with a quick exchange of emails. There are only 2 levels of security and it's not possible to fine tune the screens than any particular user can access.  We ended up having to give everyone the highest level of security.  Because the system is online, you can give access to an accountant or external adviser without having to disturb day to day operations.

There's a very clear audit trail.  You can see who's been in the system and for how long.

The software is in the cloud, so can be accessed from anywhere with an internet connection.  Very helpful if you love working from home.  Our broadband's not the fastest, but I never experienced any unacceptable delays in response times, suggesting the software is well engineered.  We haven't experienced any system downtime at all.  The security measures explained on Xero's website are high grade.  I wasn't able to find anyone critical of Xero's performance in this area.

Cost of ownership

Xero are aiming to grow a huge market share by pricing themselves very competitively.  They charge just £24 per company per month for use of the software, reduced to £19 if you don't need to account in foreign currency.  This covers any number of users and unlimited access to support and help.

Conclusion

The key criterion in any software decision is that the software meets the detailed business needs.  Assuming Xero fits the bill, then it's a superb choice because of its ease of use, security and low cost.  It's easy to see why so many people are switching to it.  I'm happy to join them and to recommend the product very strongly.