A Small Business Guide to using Xero Accounting Software

With ever more reliable fixed and mobile high speed internet connections more and more of us are choosing to store our data from the cloud, allowing us to effectively access our businesses whenever and wherever we are. Our financial accounts are no exception, with the last few years witnessing a massive surge in new cloud accounting software hitting the market.

Cloud accounting tools have come a long way in terms of functionality and have developed to such a degree that many accountancy firms now accessing and processing their client’s accounts with them. The popularity of these tools is perhaps no surprise. The ability for your accountant to see your financial accounts and budgets in real time can offer up huge benefits in costs and time after all.

Of all the cloud accounting packages out there, Xero is one of the most popular with accountants. Accountancy firms may even refer to themselves as Xero accountants by becoming an official certified partner through the company’s training program.

In this article I want to give a rundown of the Xero Cloud Accounting platform, starting with the program’s features:

Xero Features

• Browser based, meaning it can be used by accountants and bookkeepers without the need for downloading software.

• Includes traditional features including general ledgers, chart of accounts, VAT returns and aged accounts receivable.

• More complex accounting features are available such as fixed assets, stock control and calculating depreciation.

• The Xero mobile app is available for Android and IOS and supports finger print identification on compatible devices. The app also connects direct to your phone’s camera allowing you to take pictures and associate them with invoices or bills.

• Online invoicing with the ability to send an unlimited number of invoices with the standard or premium price plans (see below).

• Automatic bank reconciliation can match bank transactions to those in the Xero ledger. This can be further automated by the creation of custom bank rules. Finally the bank rec tool allows you to leave notes for your accountant so he/she can advise where to code payments or credits you’re unsure about.

• The ability to upload any file to the Xero cloud and associate it with a particular invoice, purchase order or other record. This can be done via the mobile app and the files shared with other Xero users.

• A Real Time Information HMRC compliant UK Payroll feature is in development.

• User friendly dashboard interface.

• Allows up to a massive 100GB of storage.

Xero Pricing

One of the attractive things about Xero is the pricing. At the time of writing, the starter package is just £4.50 per month at the time or writing (with a promo code featured on the website).

This will only allow you to create and send 5 invoices so you’ll probably want to go for the standard package for £10 a month, which offers unlimited invoicing and purchase orders.

At £12.50 a month the premium plan offers everything the standard does plus multi-currency accounting.

All plans come with a 30 day free trial and support unlimited users.

Reviews of Xero 

ZDNet said of “one of the easiest online accounting systems we’ve tried” with the 2014 version of the software they tested being as “likeable as ever and remain[ing] top of the heap when it comes to cloud-based accounting.”

– 9/10

TopTenReviews.com said “Xero provides efficient, simple-to-use accounting tools that provide attractive, professional invoices with online payment links. It is simple to use and does not require formal accounting knowledge to manage day-to-day business tasks.”

– 8.5/10

Merchant Maverick said “For many small businesses, Xero is a fantastic cloud-based accounting solution”, finding the “feature selection excellent and Xero’s claim of providing ‘beautiful accounting’ accurate”.

– 4.5/5

Individual user’s reviews are also positive with G2 Crowd’s 42 reviewers giving an average 4.3/5 rating and SoftwareAdvice.com’s 23 reviewers giving an average 3.9/5 rating.

Whilst we at AK Tax think Xero is the best cloud accounting on the market today, there are plenty of other options out there. For a full breakdown of five of the best, read my recent roundup of cloud accounting software in ITProPortal.com.

About the Author: Andy Hyland has been a qualified accountant for fifteen years and is the owner and director of Medway Accountancy Firm, AK Tax. He has spent much of his professional career advising small business owners and has written extensively on finance related subjects.