Xero Review from MerchantMaverick (Merchant Accounts, POS Software, Shopping Carts)

Katherine Miller for Merchant Maverick writes: 

Merchant Maverick's Rating: (4.5 out of 5)
Overview:

Headquartered in New Zealand, Xero is a cloud-based bookkeeping/accounting solution tailored to the needs of small to mid-size businesses. Features include account management, billing, invoices, expense reporting, and payroll (U.S. version in development). Xero also integrates with over 200 other applications which facilitate nearly all aspects of business operation, including inventory management, CRM, and POS.

Rod Drury (CEO) founded the company in 2006. He also serves on the board of TradeMe (New Zealand's largest auction site), and in addition to establishing Xero, he has founded Context Connect and Glazier Systems (now Intergen). His numerous accolades include the NZ Hi-Tech "Entrepreneur of the Year" award (twice), Honorary Fellow of the Institute of IT Professionals, and induction into the NZ Hi-Tech Hall of Fame. Like its founder, Xero has garnered its share of awards over the years, including Australia's National iAward for Payroll in 2013, Hi-Tech Company of the Year at the 2013 NZ Hi-Tech Awards, and Webby Awards in 2009 and 2010. Xero is a publicly traded company with a staff of over 300. They support over 100,000 business clients and nearly 5,000 accounting firms.

Xero was an early entrant in the rapidly growing field of cloud-based accounting solutions, and they work hard to stay ahead of the curve with product updates every 3-6 weeks. A "Feature Request" and voting system in their community forums allows the company to develop the software in accordance with user requests. Currently in development are payroll support for the U.S., a purchase order feature, and a new reporting framework.

Xero advertises their service as "beautiful accounting" and it's an apropos slogan. With clean, generally intuitive interfaces, Xero is an excellent solution for many small businesses' accounting needs, offering a wealth of features while providing more simplicity and personalized service than most locally installed programs. Read the full review to learn more about whether Xero could be a good fit for your business.

Date Established:

July 2006.

Location:

Global HQ in Wellington, New Zealand; offices in Australia, UK, and the US.

Domain Name(s):

www.xero.com

Pricing:

You can try the full version of Xero free for up to 180 days, no credit card required. During this time, you can process up to 5 sales invoices, 5 bills, and reconcile up to 50 bank statement lines. You can also enter an unlimited number of historical invoices and bills. After the trial, Xero offers 3 pricing tiers. There are no contracts; you pay monthly and you can cancel the service at any time. The price includes updates as they are released, usually every 3-6 weeks. There is a 25% discount for non-profits.

• Small: $19/month. - Recommended for freelancers or small property investors, this subscription allows you to process up to 5 invoices and 5 bills each month, and to reconcile up to 20 bank statement lines.
• Medium: $29/month. - Suitable for most small businesses, this subscription allows you to process hundreds of invoices and bills each month, and to reconcile hundreds of bank statement lines per week.
• Large: $39/month. - Similar to the Medium subscription, but adds the ability to process multiple currencies.

Web-Hosted or Locally Installed:

Web-hosted. No downloads or installation required.

Hardware and Software Requirements:

Since Xero is cloud-based software, it is compatible with any OS (Mac, Windows, or Linux), so long as you have internet access. Xero also has a mobile app for iPhone, Android, and Blackberry.

Specific Size of Business:

Xero is tailored to small businesses. You can grant access to an unlimited number of users, both within and outside of your company. You can also adjust settings to customize each user's level of access.

Ease of Use:

I found Xero's interface clean, well-organized, and wonderfully easy to navigate.

• Setup - When you first sign up for an account, you'll be prompted to set up your company through a series of fairly self-explanatory screens, each with its own easily accessible help section. There are also a series of "Getting Started" videos which, while some are slightly out of date, provide good, concise advice as to setting up your business with Xero. You have the option to save and quit at any point during setup.
• Organization - Once set up, navigating is a pleasure. The dashboard offers a quick overview of accounts, and it is easy to see items that need attention (overdue bills, for instance) at a glance. In addition to the dashboard, there are tabs for Accounts, Reports, Adviser, Contacts, and Settings. Each provides access to a variety of drop-down options, and they're organized pretty intuitively. Usually, I found things in the first place I thought to look.
• Instructions and Guidance - Xero provides a "Getting Started" text box at the top of some pages which provides handy tips; it's easily hidden once you've mastered the content. How much you need to read instructions in order to use the software will likely depend upon your accounting knowledge and the complexity of the tasks you are attempting. I had no problem setting up accounts, invoices, or expense reports, but I did find myself referring to the help section routinely for more complicated tasks.
• Problems - There are a few minor annoyances. The detector for duplicate imported entries in bank accounts is a little lax for my taste; it did not raise the possibility of a duplicate when the dates and amounts of a transaction were a perfect match, apparently because one of the transactions was missing the name of the payee. Depending on your bank, you may need to make some adjustments to csv files before they will import correctly, and when I first imported a qif file, all payees showed up blank (not a problem on the next import, so I'm not certain what happened there and it may well have been user error). However, these are very minor concerns, on the whole.

Customer Service and Support:

I will confess, Xero's lack of phone support was an initial concern for me, and I still think they'd do better to offer it. I was, however, pleasantly surprised at their responsiveness to e-mail. In my tests, response times generally varied from 15 to 40 minutes. The one time I used the Contact Form instead of e-mail, the response took 6 hrs; whether this was because they route those requests differently or because the question took longer to resolve, I don't know. Overall, I was quite impressed with the quality of support. Representatives were concise, polite, knowledgeable, and always addressed my concerns directly - no copy/paste responses here.

Customer service support is available 24/7/365 and is included in the monthly fee. Here are the support resources Xero offers:

• E-mail - Contact Xero at support@xero.com.
• Contact Form - An option to use the online contact form will appear every time you search Help.
• Social Media - Xero generally responds to questions on theirFacebook, LinkedIn, and Google+ pages within 24 hours, as well as maintaining an active Twitter feed.
• Online Help Center - A comprehensive selection of detailed instructions, FAQ, and video tutorials.
• Training and Events - A small selection of pre-recorded and live webinars tailored to business owners and to accountants.
• Getting Started - Tips in a text box at the top of pages which may require some initial instruction. Can easily be toggled on/off using the Help drop-down menu.
• Community Forums - Discuss problems and solutions with other Xero users; also includes an area for feature requests.

Negative Reviews and Complaints:

Scouring the net for complaints about Xero was an arduous process; there's just not a lot out there. The only time Xero appears on ComplaintBoards is when people say they're switching to it. Of the very few critical remarks I located, here are the most common themes:

• iPhone/iPad App - This is the only area where I saw a significant number of complaints. Repeated comments from users who love Xero on the desktop but hate the app. Limited functionality was by far the most common concern. The current version of the software has only 2 of 5 stars based on reviews in the iTunes app store. I did not notice corresponding criticism from the Google app store.
• Lack of Phone Support - While the overwhelming majority of users seem to be happy with Xero's support, there are some who complain about overly long resolution times and lack of accessibility by phone. The worst case I saw was a forum post from a business owner who had brought up a support issue 20 days ago and was not receiving adequate updates as to progress on the issue. The issue was resolved within 24 hours of his post, accompanied by an apology from Xero.
• Automated Bank Feeds and Yodlee - Xero offers automated bank feeds, which is a tremendously convenient feature. However, they do so through Yodlee, and using Yodlee may break your bank's T&C. This becomes a problem if Yodlee's data is ever compromised, because neither your bank nor Yodlee will insure you against loss in that case - and Xero doesn't post any kind of warning about this when you go to set up automatic feeds. To be fair, so far as I know this is currently an issue with every company that offers live feeds. And if you want to avoid it entirely, you can always download statements manually. Check with your bank if you have questions.
• Lack of Minor, Basic Features - Another complaint from a few users was the lack of some basic features, like the ability to send a receipt to a customer after they pay an invoice and specific support for cash accounts. (In Xero, cash accounts have to be set up as bank accounts.)

Positive Reviews and Testimonials:

A lot of people love Xero. It has a 4/5 star rating on Google Apps and positive reviews all over the net, as well as the expected raves on Xero's customer testimonials page. The most common accolades are as follows:

• Ease of Use - Users find Xero extremely intuitive in layout and design. A lot of people call the software "fun" and say that it has taken the pain out of accounting.
• Time Saving - Xero has a number of features which customers praise as time savers, including automatic bank feeds, billing, invoicing, and options for group invoices.
• Customer Support - Nearly every comment I've seen regarding Xero's customer support is positive. Users find support well-informed, responsive, and polite. My own experience with them was excellent.
• Feature Set - Most users love Xero's feature set, as well as their responsiveness to new feature requests. The frequent update schedule has also triggered several positive comments.

Here's what a few people are saying:

Xero has really cut my accounting time by 80%. It gives me goosebumps thinking about all that extra time I have. - Bridget Labus, Co-Founder of Sixth Course

The essence of a great accounting system is not to make simple things complicated, but to make complicated things simple. Xero have achieved this! - Nathan Stewart, Founder and CEO Alkemi

With Xero, I'm actually enjoying doing the books for my business, and because I'm doing the reconciliation almost everyday, my month-end is a very simple. - Jesse Bennett-Chamberlain

And from Google app users:

The best accounting app. Period. And I tried them all. Xero is more powerful then any other online accounting app I've seen, but still easy to use. A rare combination. - Floris van Onna

It sounds crazy but Xero is actually a pleasure to use. Not something you'd associate with accounting software! - Joshua Farmer

Features:

Xero offers a comprehensive feature set well beyond many cloud-based accounting systems. Here are some of Xero's key features (for the full list, clickhere):

• Dashboard - An overview of accounts and upcoming accounts payable and receivable. Extremely well-organized; easy to take in the important information at a glance.
• Invoicing - For invoice design, you can simply upload your logo to Xero's templates or you can custom design your own. You can include direct payment options for Paypal and credit cards, allowing your buyer to pay immediately by clicking the link on the invoice. Automatic invoicing is also supported, if you have customers who you bill monthly or weekly. Tracking options allow you to keep tabs on invoices and see when they've been opened, as well as keeping an eye on any that are overdue.
• Bank Reconciliation - Live bank feeds make balancing accounts incredibly easy. The categorization feature sorts each entry by type (you may need to enter it the first time; afterwards the type will appear automatically on subsequent transactions). For tax time, this is invaluable.
• Accounts Payable - Suppliers can send invoices directly into your Xero accounts payable section. Offers an interactive timeline with a batch payment option. You can also set automatic payments for recurring bills.
• Payroll - (Coming soon for US.) Includes automated tax calculations, employee access to paystubs, direct deposit, and electronic tax filing.
• Reporting - Xero has over 40 report options available, from basic profit/loss to foreign currency gains and losses. All reports can be exported to Excel, Google Docs, or a pdf. You can also use Xero to create 1099s.
• Expense Reports - A well-executed time saver. Employees can enter their expense reports and receipts into the system (access settings allow you to confine each employee's view to the data they have entered). You can then review and approve employee expenses and receipts; it's easy to see when there are new reports awaiting your approval.
• Inventory - Xero supports basic inventory management; for more advanced features, you can integrate an add-on such asUnleashed, Stitch Labs, or OrderHarmony.
• Contacts - Option for group invoicing; you can also track each client's transaction history and analyze your client list by spending and payments. Contact entries are automatically created each time you enter a new name on an invoice; you can also import your existing client list.
• Fixed Asset Depreciation - Automatic tracking; enter the initial purchase and depreciation rate and software tracks it for you. Saves some time when tax time rolls around.
• Multi-Currency - If you do business internationally, multi-currency support will be a crucial feature. Exchange rates are updated every hour; you can invoice and set reports in any currency.

Integrations and Add-Ons:

Xero offers automatic bank feeds through Yodlee, as well as Paypalintegration. Over 200 add-ons are available for Xero. Some of the most notable and popular are:

• Vend - Cloud-based, HTML5 point of sale software Read our review here.
• Shopify - Online store creation and shopping cart solution. Read our review here.
• WorkflowMax - A project management tool, owned by Xero.
• Unleashed - An inventory management tool.
• Salesforce (through OneSaaS) - Customer relationship management software.
• Receipt Bank - No more data entry from receipts.

Security:

You aren't likely to find much to beat Xero's security. They take pride in noting that their software has never been breached. All user data is SSL encrypted, and servers are protected from both electronic and physical access by any unauthorized personnel. They also undergo routine third-party security audits and penetrative testing.

Customer data is backed up daily to an off-site location.

For complete details on Xero's security measures, click here.

Final Verdict:

For many small businesses, Xero is a fantastic cloud-based accounting solution. It offers a good midpoint between comprehensive installation-based software (much of which is more than most small businesses really need) and bare-bones cloud-based accounting software. I found the feature selection excellent and Xero's claim of providing "beautiful accounting" accurate. As for whether the convenience and functionality are worth the price tag ... that's something that will vary according with the needs of each business.

Xero's upcoming payroll feature looks very exciting, and I am encouraged by their routine update schedule, as well as the fact that they take customer input into account when adding new features. If you're considering whether Xero might be a good match for your business, I'd suggest taking it for a test run yourself with their free trial.