Euroasia: Language, Culture and Travel

In recent months, visits to our blog has increased measurably, with lots of people looking for reviews of Xero and comparisons between Xero and MYOB.  My initial post on MYOB vs Xero – A comparison, explaining the reasons why Euroasia swapped from 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 list.

Regular readers will be somewhat surprised that a blog on culture and language would have a post on accounting as the most popular entry. I’m interested in this topic not just because I think Xero has a great product, but I’m also happy to see a New Zealand company doing so well. I’ve enjoyed playing around with Xero, looking at reports and checking out their website. Xero has given me some design ideas for the soon-to-be-launched new Euroasia website.

When I first wrote about Xero in March 2009, Xero had 6000 users, having doubled in the preceding 6 months. At last count, they had over 12000 users, doubling again in the last 6 months. How could this be? For starters Xero is very attentive to client needs.  For example, just look at their Twitter posts from today.

Xero is not insecure about their product. Check out the re-tweet here from a fan who is offering to help with both MYOB and Xero. I was quite surprised to see that Xero twittered this on to their fanbase.

In my last post, I complained about some of the drawbacks of Xero and some suggestions for improvement. I was surprised to see in their September update the specific feature requests I suggested.  This includes customisation of user roles and a name field for contacts.  The customisation of user roles is a step in the right direction, but administrators are still not allowed to customise access rights for individual users (MYOB does this). I hope this is addressed soon. The budgeting function can also be improved to make it a more useful tool for businesses that do more planning/forecasting.

I’m still waiting for my bank to link up my credit card accounts to the live feed. The daily live feed of bank entries is one of the top reasons why Xero is such a great proposition. But Xero is sometimes held back by banks who do not have the same sense of urgency in implementing changes that save customers’ time/money. So users still have to import credit card statements into Xero ala MYOB. So don’t think by implementing Xero you get away from 100% of the dirty work.

I have previously blogged on the drawbacks of MYOB. There are also drawbacks to Xero. For example, anyone that handles a lot of stock will find MYOB a better proposition. So in summary do your research before jumping in.

Xero went live today with their new pricing plans. Euroasia is on the “medium” plan at NZ$49/month, which works well for us. And because we’re an existing customer, we can always activate multi-currency when we need it without having to pay for the “large” plan at NZ$64/month.

For freelancers / property investors who process less than 5 AR and 5 AP invoices per month, the “small” plan would be ideal for you at NZ$29/month.

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 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.

So 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.

Businesses 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 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.

A 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.

The 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]