In business since 2006, Xero is a cloud accounting tool that was made with small businesses in mind. Xero works to connect small businesses with their suppliers and customers and gives an instant snapshot of their financial status.
What is it?
Xero is a web-based accounting solution you can use on any device that connects to the internet. Instead of focusing on one critical area, Xero covers the bulk of the accounting sphere. You’ll get accounts payable tools that include everything from accounts payable and receivable to expense tracking and inventory management.
Businesses of all sizes can view their real-time cash flow status, incoming transactions, and upcoming bills. Bank transactions can be synced to your account and automatically coded. And, the online bill pay features help you manage to spend based on cash flow.
This all-in-one solution promises to improve vendor relations, keep stock at optimal levels, and make sure your clients are paying on time.
If you’re not getting everything you need from Xero, there are plenty of add-ons with Vend, Bill.com, ADP, and more. Xero offers unlimited user support and integration with a variety of systems, including ADP, Bill.com, and Vend. The solution comes with 30-days free trial period for product testing and feature evaluation.
Xero’s plans come with full functionality–aside from payroll, which only comes with the top two pricing levels.
Here’s a look at some of the key benefits, features, and more associated with Xero.
Track the full picture of your business. Xero’s tracking feature allows you to break things down by project or department, providing a snapshot of what’s working and what’s not.
The company recently released custom columns, which now allow you to compare up to 36 columns in one report. So, you can view things like gross profit, trading revenue, whatever you prefer.
You can also run comparisons and calculations–think actuals versus budget or actuals versus projected income. Set goals and measure your performance. This high level of reporting is one of the most impressive features we found when looking at the tool.
Xero opts to use tracks instead of department codes. This allows them to present your accounts in a transparent, visual manner–and report on different departments separately.
This feature is a real lifesaver for the disorganized. The feature takes your analog filing cabinet and puts it in the cloud. This way, you have access to all your important documents, no matter where you are. And, if you’re concerned about compliance, it’s a non-issue.
Xero keeps all of your records secure and accessible. As such, digging around for lost paperwork and trying to solve problems with customers and suppliers can be done in short order.
Xero Files allows you to store contracts, price sheets, and reports in a digital library–and individual documents may be uploaded to a particular transaction, contact note, or project.
And it works for more than just storage. You can attach information like quotes or terms and conditions and send them along via email.
Xero for Accounts Payable
Adding bills to Xero is a lot like creating invoices. Quickly set up recurring bills and POs (you can later convert POs into bills with a few clicks).
If you’re working with suppliers who use Xero, too, you can save the invoice as a draft bill, and they’ll be able to access the document. Other functions include the ability to add attachments and pay by the batch.
Multi-Currency Accounting (Premium 10 Only)
Xero puts multi-currency accounting front and center. You can calculate gains and losses in real time. Foreign currency transactions are converted into the local currency automatically, so you get a sense of how international sales are impacting your cash flow.
Xero’s smart categorization keeps track of past transaction categories and automatically applies them to new documents.
It’s not entirely automatic. You do still have to click on each transaction to submit your approval. Smaller businesses likely won’t have any significant bones to pick here, but if you’ve got tons of expenses, it might feel a bit tedious.
Live bank feeds can be set up for automatic uploads. Or, you can choose to import statements manually. You’ll still need to connect Xero to your bank account if you opt for the latter.
While Xero comes with a long list of essential benefits associated with its use, there are some drawbacks. Customer service is all done online–which may rub some folks the wrong way. Some users also feel that the tool is a little hard to get used to, so it’s smart to take advantage of all of the resources at your disposal.
Unlike some of the other products we’ve looked at Xero has a full suite of accounts payable tools in the mix. Here’s a look at those AP options, plus some other stuff, too:
View Bills That Are Due
Your purchases dashboard provides a quick view of your upcoming bills and purchase orders. This constant reminder will help you stay on top of cash flow emergencies, and you’ll remember to pay on time—thereby building better relationships with suppliers.
Xero is one of the better accounting tools for contact management. You can quickly add the essential contact details, sure. But beyond the usual name, email, phone number, you can also include sales tax and discounts. Plus, you can sort your contacts according to contact groups and smart lists.
The smart lists are unique in that; they allow you to target specific groups of contacts. It’s a marketing tool that will enable you to send discounts to a select group of customers. Alternatively, you can use your lists to submit invoices in bulk or make an announcement.
Receive and Store Bills Online
Email bills and documents straight to your Xero file cabinet. The idea is, you can view everything in your central accounting hub and pay bills quickly from any location—mobile or desktop.
Repeat and Replicate Bills
Save time and be more efficient. This feature lets you to set up recurring payments, so remembering to pay your regular bills is a thing of the past.
Bundle bills together and schedule payments all in one go. We like this feature–simple as it is–as it allows you to schedule all your payments at once quickly.
Tax Forms & Support
Xero lets you fill out and store tax forms like W2s and 1099s right there in the cloud. Additionally, there’s an automatic asset depreciation feature that takes the guesswork out of what your machinery is worth.
Then, there’s the sales tax side of the equation. You can plug in a default sales tax for purchases, customers, and sales. The tool also supports compound and combined taxes.
For further tax management help, Xero partners with Avalara, which automatically calculates sales tax by location and differentiates between inclusive and exclusive tax.
This feature is an excellent companion to the other accounts payable functions. Xero’s inventory management tracks best-sellers, profits, and available stock. Here, you can use these insights to inform your next purchasing moves and how to price your items for the best possible ROI.
Using Xero’s inventory management system also lets you look at stock levels, so you can place an order if needed.
The tracking software is a real boon for independent retailers and wholesalers. You’ll save time on data entry and can create invoices, purchase orders, quotes, and bills more efficiently. Get started by entering item numbers and descriptions. The set-up process may take some time, but ultimately, you’ll see fewer errors.
Finally, you can attach documents to your records, add photos, and upload supplier contracts. We like how straightforward Xero has made it keep all of these records in one central hub. You’re not running around looking for documents or spending your days counting supplies in the warehouse.
There are three pricing levels for Xero. All generally come with the same features—with a few exceptions. Xero is a good value for small businesses because all of its plans include nearly every feature. This includes accounts payable and inventory management tools, which are frequently only available in top-tier plans. Each plan supports an unlimited number of users, and payroll comes with the mid- and top-tier plans; these features usually cost extra.
Starter, $9 a month
The Starter plan doesn’t allow for much use. You can enter five bills a month, send five invoice or quotes and reconcile 20 bank transactions. This plan might work for a someone with a smaller side hustle or who doesn’t send many invoices. Maybe someone who works on a few large projects at a time. In any case, it’s probably better to upgrade if you need something with just more everything.
Standard, $30 a month
The standard plan probably makes the most sense for the small business. You can send invoices in unlimited quantities. You can reconcile your bank account with no limits and enter as many bills as you need.
Premium 10, $70 a month
The Premium 10 feature is very similar to the Standard plan, but it allows for users to enter transactions in multiple currencies. The main selling point is the payroll support for up to 10 employees.
The Starter and the Standard do not come with payroll, but that shouldn’t be an issue. While the Pro level currently supports US payroll, they are discontinuing the service on December 31, 2018. Instead, they’re partnering with a third-party tool, Gusto, a full-scale payroll solution.
Integration with 700+ Apps
We won’t list them all, but Xero’s add-on catalog is seriously huge. The software links up to Zapier, Stripe, PayPal, Vend, Shopify, and a ton of others. The integrations make it easier to automate a lot of the stuff that happens on the backend—invoicing, paying bills, communicating, and updating inventory.
The fact that Xero lives in the cloud makes this an accessible solution for most people with a recent computer. Log in on any device—mobile phone, iPad, computer and access your financials.
Secure SSL Encryption
One of the better companies concerning security. Xero offers 24/7 data monitoring, daily backups across redundant servers, security audits, encryption, and two-step authentication. Pretty good, no?
Customer service is purely digital. You won’t be able to talk to someone over the phone at all. Still, Xero has made sure that someone is available electronically 24/7. While the no phone policy may be a turn off for some customers, most people don’t like talking on the phone these days, anyway.
Plus, they mention that they’ll get back to you within 24 hours. While that may mean you’re out of luck if you have a real accounting emergency, they do have a live chat you can use to get in touch with someone.
We like that they offer different content/advice for various industries—as not everyone uses accounting software in the same manner. For example, someone running an e-commerce store is going to have different needs than someone running a tech startup or a private practice.
Other resources include:
A community forum is a place for users to help each other out—Reddit style. Here, you can discuss pro tips and troubleshoot problems with other users.
One of Xero’s main strengths is their robust guide library. These guys have covered all of their bases. There are small business guides, accounting basics, and more. And, it’s all actionable, helpful information.
Podcasts—If videos aren’t your thing, take in the Xero podcasts while you handle your mundane tasks. Podcasts include CEO talks, digital strategy, and other business-minded topics.
The blog offers a range of high-quality content, designed to help users better understand accounting best practices and get the most out of their software. The blog covers topics like digitizing your taxes, use cases, and general business advice.
Xero’s online training center. This portal includes occasional webinar events as well as courses for a deeper dive into the software.
Xero is a pretty impressive piece of software. This tool is ideal for those users who wish to handle their accounts payable tasks, as well as billing customers, receiving products, and whatever else related to accounting.
Across the web, customers are saying that Xero is better than other tools like QuickBooks—and it’s easy to see why. They haven’t left out accounts payable—Like FreshBooks or Sage Business Cloud. They’re easy to use, and if there’s ever a question, it’s easy to find a video, article, or blog post to steer you in the right direction.