One on One: Xero
One on One is a series of reviews. Instead of a long-winded breakdown, I give you a quick summary along with one positive and one negative.
So far my One on One reviews have covered 2 of the 5 main bookkeeping apps I use. Today we're going to do a quick review of Xero.
If you follow this industry at all you've heard about Xero. I don't think it's any secret Xero has their sights set on being the company who overtakes Intuit. I mentioned in a previous post that Intuit just announced that QuickBooks Online just surpassed 1,000,000 users. Xero has the silver medal with over 500,000 users. It's no surprise. They have created a very powerful service that offers a lot of power with a large directory of compatible 3rd party add-ons.
Name: Xero
Description: Xero is a full featured bookkeeping service based out of New Zealand. Founded in 2006, it has grown to become the second largest cloud-based accounting software. From the software I've used in my business it comes the closest to replicating the features and power that Intuit has in its offerings. Payroll is still quite basic and not available everywhere. It also doesn't do time tracking so I usually use it with FreshBooks. However, Xero does connect with a wide range of 3rd party offerings to fill in the gaps where it lacks features. You can connect your bank accounts, send out and receive payments on invoices, and track everything your accountant would need from you. The only major feature it's still lacking is inventory, so this is still not suited for any businesses that need inventory management.
Cost: There are 3 price tiers, from $20-40/month. The first tier is quite limited (send 5 invoices per month) and the top tier only adds multi-currency support. Most people will be using the $30/month plan.
One Positive: Bank rules, hands down. Some software will do a fairly good job of learning how to categorize your downloaded bank transactions. This lets you get through bank reconciliations a bit quicker than a fully manual process. Xero takes this 3 steps further with bank rules. You can create simple or complex rules to automatically handle the transactions as they come into Xero. For example:
If the vendor = Staples, then mark this as Office Supplies. That's a really simple example. Take a look at the screenshot below to give you an idea of what you can do. Combine this with Cash Coding, which lets you accept multiple transactions at once, and you can really fly through those bank recs each month.
One Negative: Reporting. I just can't find a lot of good to say about most of these bookkeeping services when it comes to reporting. Why is this so tricky? The list of reports is a bit bigger than others, but you can't do much in the way of customizing them. I don't have a problem spending the time to create a custom report of my own, but I'm not given the tools I need to make this happen. Xero is tracking the data, so there's a database that contains all the data points I need. Why not give us the ability to dig into our data and report it the way we want?
Final Thoughts: Xero is pretty darn good as an all-around bookkeeping solution. Other services do certain things better. FreshBooks does invoicing better. ADP is much better for payroll. But if you need something to handle your entire business and your business is a bit more complex than what Wave can handle, Xero is a great solution.
