Xero Review: Beautiful Accounting Software?
Our Xero review is based on us using it for ourselves and many of our clients for several years almost every day. We work with any online accounting software that our clients choose, so we’re not affiliated or biased towards any, so our Xero review is completely objective.
We think Xero Accounting lives up to its tagline – beautiful accounting software. Everything is clearly laid out, it runs smoothly, and it’s easy to use. Xero have made it as pleasurable as it can get to log in every day to update your accounts. The easier this is, the more likely you are to do it and not get behind with things which would make it more of a chore. Read through our Xero review to find out why what exactly makes it so good, and also a few things that aren’t so good.
Xero Review: Signing up
Xero offer free trials and introductory offers. Our clients can also get a 15% discount off of the Xero fees.
Xero offer a Starter package at a very competitive £9pcm which gives you full use of everything except multi-currency and payroll, but restricts you to 5 invoices, 5 bills and 20 bank transactions. Ideal for contractors.
Next up is their Standard package at a slightly pricey £20pcm (£17pcm after our discount), but you’d need to compare the added cost to the extra time you’d save using Xero. The Standard package removes the restrictions on the Starter package.
Finally, the Premium package is £25pcm, but only seems to offer multi-currency as an extra. This is disappointing considering other software like the free Wave accounting (which we also work with a lot) has multi-currency as standard.
Payroll can be added on at £5pcm for up to a certain number of employees then £1 per extra employee.
Xero Review: Setting up
Where other software launches you straight in, Xero reviews your signup details then takes you step by step through the settings tailored for you, so that you don’t miss anything. This is a great feature and a lot of our clients have done this perfectly well without any of our help.
Unfortunately, at the time of this Xero review, it doesn’t offer a choice of tailored sets or charts of accounts. These differ quite a lot depending on whether you are a company, partnership or sole trader. So a few self-starters may end up with a few accounts missing and a few that are not relevant. However, a chart of accounts can be imported, and that’s what we do when setting up our clients on Xero for free. This makes sure the relevant accounts are available such as dividends instead of drawings for companies.
Xero Review: Bank accounts
Recording bank transactions on Xero is easy and almost a pleasure! You can link Xero to almost any bank account to create a bank feed. This is done either via a third party service called Yodlee, or directly with your bank. Once linked, your bank transactions can be imported with just a click of the refresh button. Then you just need to click on Reconcile in Xero review and ‘reconcile’ each transaction by either matching it to an invoice or creating a new income, expense or transfer.
We love the way each transaction is boxed rather than in a line. On the left is what was imported from the bank, and on the right is another box for how you want to record that transaction. Xero reviews the details of the transaction and suggests what to do with it. If you’re happy with how the transaction will be recorded, click OK in the middle and the two boxes sweep away and the next two move up. As smooth and as beautiful as it can get!
As well as importing your bank transactions, you can also save time reconciling your transactions. As mentioned, Xero reviews the details and remembers what you did with the same or similar transaction last time, and suggests the same treatment. Also, you can set up rules which identify characteristics of a transaction then treats it however you set up the rule. Ultimately, with enough rules you end up just clicking OK against every transaction because Xero knows exactly what to do with each one. So you’ve updated the accounts potentially without typing a single letter or number – a pleasure!
If you have a lot of transactions to reconcile, Xero does have a ‘cash coding’ method. This gives you a more traditional list of transactions which can be reordered by description to make it easier to bulk-reconcile similar transactions.
In theory, the traditional bank reconciliation is a thing of the past with Xero. Only the bank transactions are entered against into bank account via the free bank feed, so there should be no difference. You get a nice big green tick to confirm that you’ve reconciled all transactions and the balance on Xero agrees to the bank balance. A minor problem with this is if you use a sales collection service linked to your sales invoices. If your customer follows the link to pay your sales invoice via GoCardless for example, this shows as a bank receipt at that point even though it may take a week to reach your bank account. So you have a bank difference for that week.
In summary, the bank section in Xero makes it easier to update your accounts little and often. So if you’re like us, you end up doing it every day for a few minutes rather than every month for a couple of hours.
Xero Review: Sales invoicing
Starting with Quotes, you can set up template quotes as draft then copy the draft quote each time you need to use that template. You can also set up template emails to use to send out the quote to potential customers. So it takes just a couple of minutes to enter details of a new contact, then click a few buttons to email them a quote. That quote can then be converted into a sales invoice to save you entering the details again.
Sales invoices can be emailed or printed in batches. They can be set to repeat and emailed automatically. Reminders can be set up to automatically chase unpaid invoices. There is also a Xero to Xero facility, so that a sales invoice raised in one Xero automatically appears as a bill in the other Xero. You can also send out statements to all of your customers in one go. This can’t be automated but there are free add-ons such as Satago that can automatically send statements every month.
Xero Review: Purchases or Bills
Purchase billing is quite similar to sales invoicing and works just as well.
Xero Review: Inventory
You can set up as many stock or service lines as you need, then allocate a cost price, sales price and quantity. Xero reviews all sales and purchases for the stock item then updates the quantity for you.
Xero Review: Expense claims
Xero Review: Fixed assets and depreciation
Once you’ve set up your fixed asset categories, everytime a bill or expense is reconciled to a fixed asset account, Xero reviews the account and reminds you to set it up in fixed assets. Then you just have to click ‘Run Depreciation’ then Xero calculates the depreciation for you and puts it in the correct place.
Xero Review: Payroll
Again, there is a fair amount of setting up to do here, but once you’ve done that the routine payroll admin is quick and easy. If nothing has changed, it takes two clicks to run and post a payrun. Then another two clicks to email a payslip to each employee.
Xero Review: Reports
The Xero Reviews and Reports on your accounts are the best we’ve seen. They can be tailored to your specific requirements for the layout, period and detail. Then they can be published and stored on Xero for future reference.
Xero Review: VAT
Calculating and submitting your VAT returns on Xero also couldn’t be easier. Xero reviews your settings for whether you are cash or accrual based, standard or flat rate, monthly quarterly or annually, then adjusts the VAT report accordingly. Also, Xero reviews the previously submitted period for any changes and brings those amendments into the current period. Then you just have to enter your HMRC ID and password to submit the VAT return to HMRC without leaving Xero, unlike most other software packages.
Xero Review: Conclusion
Xero is so easy to use, and packs in so many features and options, that we simply have to recommend it to all of our clients. Otherwise we wouldn’t be doing our job. It comes at a cost, but unless you have lots of spare time and don’t need to save any, it will be worth it. Take a look for yourself by signing up for a free trial from the Xero Accounting website.
Xero Review: How we can help you with Xero Accounting
We are Xero Accounting specialists, using all of its features every day. So we help our clients use it throughout the year by securely logging into your account from where we are. Also, if we subscribe to Xero for you as your accountant, we can get you 15% off of the Xero fees. By using Xero Accounting (or any online accounting), you will also benefit from our low monthly fixed fees. We have a range of online accounting services which can be tailored to your specific needs.