Xero review – 3 months post-implementation

I wrote an entry on Xero vs MYOB 3 months ago explaining why our business changed over to Xero, which brought heaps of traffic to the Euroasia blog. Perhaps it had something to do with Computerworld linking to us…

In this entry, I will discuss our experience with Xero over the last few months, and some of the improvements that could be made to the system to make it work better for SMEs. I googled Xero reviews prior to implementing the system, and found that the reviews out there are invariably written by computer geeks, who by and large were mesmerised with the interface/design as well as how solid the systems architecture is.  As for me, I’m only interested in using the system to keep track of key business measures and how much time our organisation saves on accounting tasks.

It doesn’t matter how sophisticated or cool the system is, as long as it generates superior ROI, it’s all that matters. I won’t go into the details as to why Xero is better than MYOB, as that has been covered already.

I’m biased. I prefer to operate in the clouds, and if possible do all my work within the browser. This is a key reason why Xero appealed to me. Upon deciding to go with Xero, I hired Penny Smith from Penny’s Worth to help with the implementation.  The implementation was straightforward, and Penny gave me some key instructions on getting the opening entries  right so that the balance sheet is aligned. In fact, you can set up an adviser to access your system remotely, without having to pay for them to come to your office. Another key advantage ordering cialis online of using Xero.  Penny can get it all set up for you remotely.  I met her at a Xero function a year ago, when Hamish Carter talked about the virtues of Xero. It’s a smart move for Xero to have Hamish Carter on-board, as he’s funny, and not a beanie or a geek. I recall the businesspeople in the room seemed to like his style, a welcome departure from the overly technical approach of the usual accountants or programmers.

dashboardSo far, Xero has worked really well. In terms of measurements of key metrics, I think the dashboard is pretty good. It gives you a bird’s eye view of your financial standing, updated every day by automatic feeds that comes through from our bank. My advice is that you should get the bank feed set up first, as it takes about 2 weeks to get this approved. Once the bank feeds start coming through, reconciliation is easy.

The reports are excellent. You can customise what you want, and basically come up with professional-looking management accounts that in the past you would have to pay an accountant hundreds of dollars a month to produce. You can also access your reports anytime, whereas if you’re reliant on someone else producing reports, you won’t be looking at data in a timely manner. This is especially critical in recessionary times, when managers are spending more time looking at key metrics on a regular basis.

accounts receivableBusinesses spend a lot of time monitoring debtors, which is why I’m glad to see that the debtors interface is really good. You can even specify expected payment date (which is often after the invoice due date) and make notes on when customers are expected to pay. You can also keep a log of calls made to keep better track of debtors. Specifying an expected payment date is a good business discipline, because it forces you to think about cashflow as opposed to just billings. The more time businesspeople spend on ensuring the debtors are up to date, the more accurate the cashflow projections and more importantly, this translates into real cashflow.

I also like the fact that Xero is pretty responsive. Don’t forget that the monthly fee of $49 + GST includes customer support, and from my experience they have been pretty good with responding to my few support requests. They have also recently introduced multi-currency, which is a great feature.

2 weeks ago, Xero went down for about an hour. Of course, it is a business nightmare to have the accounting system go down. One of the reasons I said I liked Xero is because it’s reliable. NBR said that “One of the drawbacks of cloud computing was dramatically illustrated…” by this outage. Did I change my mind because of this problem? No. For the simple reason that the same thing could also happen to MYOB. If our server failed, we would also lose MYOB, and would have to spend time manually restoring an old version, and pray and hope that we remembered to back up before the server died. All up, I’m sure it would take

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more than an hour to get everything up and running. I’m confident that on balance, we’re much better off having our data hosted by Xero than on one of our desktops.

However, our Xero implementation wasn’t without hitches. We had some dramas at the end of the 1-month trial period.  I forgot to confirm payment details prior to the end of the trial period, and as I was away when the trial period ended, I received some frantic messages from a colleague who couldn’t access the system to raise an important invoice that had to go out ASAP.  If you intend to stick with Xero after the trial, do get your credit card payments set up beforehand. I thought Xero could have sent reminder emails in the days leading up to trial expiry so that users can get it all set up should they wish to continue with Xero and not just cut off access abruptly.

On that note, I will talk about the things than Xero can improve on.

permissionsA major problem for companies that employ staff with different functions is that you need to be able to specify user permissions so that staff members with different roles can access different parts of Xero.  In our case, we need to give access to a customer-facing employee so that he can raise  invoices, approve them and send them out to clients. However, this person doesn’t need to have access to bank reconciliations or details of all financial reports. At the moment, there are basically 2 key access levels. “Employee” can only raise drafts of invoices, which have to be approved by a higher-level “Standard” user. “Standard” can do pretty much everything including bank recs, editing settings, accessing financial reports, except to publish reports, which can only be done by the “Financial Adviser”. I asked Xero today when they plan to allow customisation of permissions. They replied promptly: “We are certainly looking to provide more options in terms of user permissions, particularly the employee role.  We are yet to schedule this development.” This is not a feature that one-man bands require, but certainly if Xero wants to target companies with staff in different functions, then it’s pretty critical. Otherwise managers will have to waste time approving invoices, letting staff know through an email and the staff member will have to login again to send the invoice out. Very inefficient way of doing things. At least MYOB allows you to customise every conceivable permutation of user permissions.

edit contactsThe other problem we have is that we can’t specify the name of a contact person for a company. In the name field, all you can do is to enter the name of the company. But often invoices are addressed to specific people within the company. We should be able to specify the name of the invoice recipient.

You see a snapshot of activity over recent months when you click on a contact, which is useful. But what would be great is a “news feed” of notes and other activities for that client. eg. when you sent invoices to that client.

There are numerous other things that Xero can do, which would be useful for SMEs. But this post is long enough as it is…

On an overall basis, Xero is a great system, with the pros outweighing the cons, and I would definitely recommend this product over MYOB (or for that matter any system that locks you to a desktop) any day. And the best part is they keep improving the product, so it can only get better, which is why the value proposition can only get more compelling for users.

Last year, in response to my question “Is there any reason why we shouldn’t switch to Xero?”, my accounts assistant responded “well, you’re stuck if they decide to up prices”. On that note, I hope Xero sticks to current pricing and do not squeeze us clients simply because they know how inherently sticky these systems are.

[UPDATE 12 October 09: MYOB vs Xero 6 months post-implementation]

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About The Author

Kenneth is Director of Euroasia. He is passionate about languages and cultures.

18 Comments

  1. Rod Drury says:

    Thanks for the review.

    Your suggestions are really valuable and most of those items are in progress. Over the last 6 months we’ve been ticking off the big items. Multi-currency, Fixed Assets etc. They have meant we haven’t been able to get through all the smaller tweaks we’d like but you’ll see a lot of those knocked off over the next few releases.

    I think we’ve demonstrated our model is not to up prices but to deliver more and more value. It would be dumb for us to charge customers more for what they already have. Rather, as you may have seen with multi-currency, which is a big feature that only a %age of companies need, we have offered it ‘free for life’ to existing customers. We believe in rewarding loyalty – those that have worked around some of the rough edges while we’ve been building.

    Sorry you did not have a good experience around expiry. We do send out emails but are aware we can handle that better so are putting in improvements.

    It’s only 2 years since our IPO and accounting is a big area so the team is delighted to get a review like this, but also reminded of how much we still need to do.

    Thanks

    Rod

  2. Sarah Miller says:

    I have been following the Xero story for a while now, it is always interesting because of Xero’s high level of disclosure and openness.

    The most interesting part of this review as it is not by as Euroasia describes as “Computer Geeks” (innovators)

    From the sound of this blog post, it is coming from an early-adopter. Xero’s stage in the technology adoption lifecycle model is beginning to move on & it will be interesting to see if the rate of growth of Xero compounds as a result of this.

  3. Ken Leong says:

    @Rod thanks, comforting to know that the Xero model is “not to up prices but to deliver more and more value”. Re: expiry, maybe what you can do is to give existing users with lots of data loaded and recent logins 2 weeks grace to set up a new payment method. Say, if my credit card expires or I have to cancel my card because it was stolen while I’m away overseas at least my colleagues can use the system for 2 weeks, and a message pops up on the screen reminding you to set up a payment. Overall your team is doing an excellent job! It’s great to be on board.

    @Sarah Xero’s high level of openness was illustrated recently when the guys came out clean with reasons behind the outage and kept clients informed of progress via blog/twitter.

  4. An interested party says:

    I realy find this discussion so pathetic as it entirely based around whether Zero is better than MYOB particularly as most of the features mentioned have been in MYOB for years. Do you realy think that a company with 70% market share is going to suimply fall ove because a few people from NZ think that their busines goal is to bring MYOB down instead of actually focussing on delivering for clients.

    To be good you actually have to be good not just denigrate the opposition. MYOB is the leader in australia because they have delivered for clients for a very long time and some will always want the newest technology and myob will be there two nas they already are with BBO.

    Zero are going to have to be a hell of alot better than not myob to succeed and the features left out just reflect the natural newness of the product which will have its own journey to succeed rather than just trying to bring MYOB down.

    If twitter is the measure of business success then we are all in trouble.

  5. Ken Leong says:

    The Xero guys are pretty amazing. This morning’s release of Xero contained the specific feature requests suggested in this blog entry ie. user roles and a name field for contacts. I couldn’t believe it when I logged into Xero this morning and looked at the changelog. Maybe it’s just because I haven’t seen this level of responsiveness before.

  6. @Rod Drury
    I am really keen on the concept of ‘cloud’ computing since I started using Evernote a few months ago. I particularly like the concept of easy downloading of bank statements (I currently use MYOB M-Powered services), BUT not being able to build product and hold stock is a deal breaker for us currently. I looked at ‘Unleashed’ who have some modules you can add to Xeno, but it basically doubles the cost and it’s not a proprietary add-on.
    Any update on whether or when you will be adding these features?

  7. Ken Leong says:

    @Oscar de Vries
    Rod is unlikely to reply to you here. Just give Xero a call and ask them to discuss their roadmap with you.
    Agreed re Evernote. I have this on my iphone and it’s a great tool.

  8. Gaza Hofman says:

    just woundering on what are the drawbacks of the xero software compared to the drawbacks of myob?

  9. Ed says:

    We’re thinking about using Xero.com for a small online US LLC doing business in multiple currencies such as CAD and CNY, JPY in the future. Is Xero a good system for running a US business? I didn’t find many customers, partners, advisors on the site running US shops.

  10. tarch says:

    I have been monitoring Xero for quite some time…well over a year. My US based architectural firm is looking to move its accounting to the clouds. We currently utilize Freshbooks for our invoicing and could not be happier. However, our use of Quickbooks for bookkeeping bogs down the whole process. I have looked into Xero, IAC-EZ, Clarity Accounting, Outright and Quickbooks Online. I would love to jump on the Xero bandwagon…it looks fantastic, provides double ledger entry and is a great replacement for Quickbooks. However, the integration of Freshbooks just is not there with Xero. On the other hand, IAC-EZ, Clarity Accounting and Outright do provide fantastic integration…but fall short for our needs of a more robust system and detailed reporting. And Quickbooks Online seems like a dinosaur in the clouds. So, we are back to waiting to find the perfect solution.

  11. Ken Leong says:

    @tarch hey you would be pleased to know that what you’re wanting is in fact coming this Friday. So here’s your reason to sign up for Xero. I imagine more and more American companies will sign up over time.

    This is the message I saw when I logged in to Xero this morning:

    Friday the 13th will be lucky for some as we’re releasing some new features to Xero this Friday morning (13 Nov 2009).

    There is a lot in this release – Freshbooks integration, automatic emailing of repeating invoices, a new cash coding screen for financial advisors, variable GST & lots more. During this release Xero will be unavailable for about 2 hours from 5am NZT (click here to see what time that is for you).

    We apologise for any inconvenience this outage may cause.

  12. David Barton says:

    @tarch
    Hi. If you are still serious about moving to Xero and you would like some assistance, please contact me as we specialise in converting clients to Xero and integrating other cloud applications into Xero – Cheers, Dave Barton

  13. Alejandro says:

    I just wished their “multi-currency” feature wasn’t tied to “Large enterprices”
    We are a very small business (3 employees) in costa rica, and we deal all the time with multiple currencies.
    We certainly think the $39 fee is too much.
    I think if they had just one plan with all the features, say $20/month, their sales and adoption rates would skyrocket. Also they would be on par (or near to) with competing services.

  14. [...] MYOB to Xero is now our most popular blog entry for 2009. My follow-up post in July 2009 on our experience with implementing Xero is number 10 on the [...]

  15. Brock Donald says:

    Xero is a fantastic product. Simple, cost effective and easy to use. We (connect2field) integrate with Xero, and find our customers are so happy with the integration.
    @ Rod well done with a great product. We look forward to working with you guys for a long time to come.
    BD

  16. LMuller says:

    To be truly successful a company needs great customer service, which at least from my experience Xero does not.

  17. Melvina says:

    It’s exhausting to seek out knowledgeable individuals on this topic, but you sound like
    you already know what you’re speaking about! Thanks

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