N
otwithstanding a net loss of
$NZ82.5 million ($76 million) in
2016 and a share price that has
plunged by more than 50% from its March
2014 peak of $42.10, Xero has arguably been
at the vanguard of cloud-based accounting
solutions for a decade. From a standing
start in 2006, it has gained 1 million sub-
scribers worldwide. In comparison, its
competitor MYOB, which launched over
25 years ago, services around 1.2 million
businesses in Australia and New Zealand.Fee structure
Xero is far from the cheapest service. If
you’re seeking an entry-level accounting
solution, Xero’s Starter plan costs $25 a
month. This enables a small business or
start-up to send customers five invoices
or quotes a month, enter five bills and rec-
oncile 20 bank transactions. It allows for
a payroll of one person. MYOB’s Starter
plan also costs $25 a month, while the best
price for a start-up business is Reckon One,
which has a $5 monthly subscription.
For those who’ve been in business a bit
longer, the most popular plan offered by
Xero is Premium 5. For $60 a month, a
business can send unlimited invoices and
quotes. There’s also unlimited bill entry,A Xero package takes the tedium out of doing the bookwork
Make it easy on yourself
MALL BUSINESSAnthony O’Brien
bank reconciliations and payroll for up to
five employees.Foreign currencies
For a global business, Xero can convert all
foreign currency transactions into Austral-
ian dollars (or your local currency) in real
time. Because it updates exchange rates
hourly, you know almost immediately when
currency fluctuations are impacting you.Simplicity
A big drawcard is how easy it is to use Xero.
“It’s very intuitive,” says Tony Haworth,
senior partner at AAP Finance Brokers.
“As an owner of a growing SMB, for me it’s
the perfect tool because it makes account-
ing and bookkeeping easier. It also has the
capacity to adapt to growth, which means I
don’t need to look for a different accounting
solution as my business expands.”
Haworth appreciates being able to cus-
tomise the dashboard to suit his needs, as
well as Xero’s invoicing and billing features
and real-time profit and loss reporting. “I
can easily see our financial accounts very
quickly,” he says. “I’m also a user of the ‘dis-
cuss’ button that allows me to leave notes for
my accountant about a specific transaction.”
Accountant Katarina Vencel, who hasa number of small business clients, also
gives Xero a tick for ease of use, especially
for SMBs that have decided to switch from
MYOB. She has experience at helping cli-
ents move from MYOB to Xero, and to its
competitor Intuit. “I was trying to bring one
client onto Intuit, and they had quite a lot of
transactions and it wasn’t easy. But bringing
data from MYOB to Xero is seamless.”Time and cost savings
Xero transformed Haworth’s tedious
monthly meetings with a bookkeeper into a
fairly easy daily routine that takes minutes.
Financial transactions from credit cards,
banks and PayPal accounts are automat-
ically imported into Xero and linked to
corresponding invoices and bills. “I just
have to hit ‘OK’ after checking that Xero
matched the right transaction, and it gets
reconciled,” says Haworth. “I’ve also found
it simple to make custom rules for transac-
tions like payments to staff and payroll.”
Online invoicing is another excellent
feature of the cloud accounting age.
Instead of sending a bill in the mail or an
email attachment, you send a link to a live
invoice online that shows payment status
and history. If you take debit or credit card
payments, your client can pay you then and
there. “I get to see when my invoice arrives
in a client’s inbox and when they open it.
And if they don’t pay by the due date, Xero
sends them a reminder,” says Gary
Reynolds, of IT firm Touch Technology.
Using a cloud-based package has enabled
Reynolds to reduce his business’s total
accounting costs. “I pay less for book-
keeping, which enables me to reinvest the
savings into other business activities. And
since ditching my unwieldy accounting
desktop system and switching to a cloud-
based service, I can focus more on my cli-
ents and less on the grind of bookkeeping.”Anthony O’Brien is a small business and
personal finance writer with 20-plus years’
experience in the communication industry.SM