Xero Review – is it the best way to manage your business accounts?
Xero is an online accounting software platform, perfectly suited to small or medium-sized businesses. Whether you are a retailer, manufacturer or a startup, Xero can help you take control of your finances and say goodbye to those hours spent poring over paperwork trying to balance the books.
Founded in 2006 Xero now employs over 2,500 people and has 1.8m business subscribers. Xero accounting software is constantly innovating to keep up with the changing world of finance and financial accounting, making life easier for small medium-sized businesses.
How does Xero work?
Connect to your bank accounts
The first thing to do once registered is to decide on a start date and set up the direct bank feeds from your bank, credit card or PayPal account. This process is simple taking only a few minutes for all of your business transactions to be securely imported each day.
Customise the Xero dashboard
The Xero dashboard is the main hub of the whole Xero accounting software. The Xero dashboard can be customised to show the key areas that are of primary importance to your business
You can add or subtract any of the following sections in the dashboard.
- Total cashflow or Total cash in and out - cash flowing in and out of your business
- Account Watchlist - you can highlight any account in the watchlist that you want to keep an eye on e.g. sales or general expenses
- Bank Accounts - you can show all or just some of your bank accounts
- Invoices owed to you - summary of the invoices owing to you, and how long they've been outstanding based on the due dates of sales invoices you've sent to your customers
- Bills you need to pay - A graphical snapshot of the bills you need to pay, and when you need to pay them
- Expense Claims - keep track of all expense claims
- Business performance graphs - if any business performance reports are favourited they will show in the main dashboard
This is the heart of the Xero accounting software where you can reconcile all the transaction in your various bank accounts in minutes.
Once your bank account feeds have been set up, all transactions will appear under the various bank account headings with the name of the source company/individual already showing. You can now reconcile these transactions by either matching them to existing transactions (payments received or invoices sent) or creating a new transaction.
As you reconcile each transaction, it can be allocated to an account. Once done, you can note the tax rate and provide a more detailed description if required. Once all transactions have been reconciled Xero will show a message to this effect under each bank account heading.
Create invoices with attachments, if required, then email them to customers and keep track of due dates and payments. Once created, you can edit and update invoices at any time, ensuring details are correct and up to date. You can easily adjust the amount due, record a price adjustment or alternatively create a credit note.
Creating quotes in Xero accounting software is quick and easy, providing customers with your organisation’s terms of business and full quote details. Attachments can be added easily to provide further details. You can now obtain a report showing all the quotes issued and get an idea of potential income.
How can Xero help me run my business?
Whilst Xero is fantastic for the day to day managing of receipts and payments, its real strength is in the reports it produces to help you understand and manage your business.
Once you have your bank feeds working and have reconciled your transactions you are ready to explore all of the reports available to you.
The following reports are just a snapshot of those available:
- Profit & Loss
- Balance Sheet
- Cash Summary
- Account transactions
- Budget Manager
- Statement of Cash Flows
All the reports in the Xero accounting software have a fully customisable feature, enabling you to run a report in seconds for whatever period you need. All reports are printable and can be exported to either Excel, PDF or Google Sheets.
You can also provide your accountant access to Xero giving them the ability to prepare your accounts and returns with minimal involvement from you.
How does Xero accounting software compare with competitors
|Accounting Software Comparison||Xero||Sage||Intuit Quick Books||Zoho Books||FreeAgent|
|Monthly cost||£12 + VAT||£13.20 + VAT||£18.00 + VAT||£16 + VAT||£19 + VAT|
|Calculate and submit VAT returns||Yes||Yes||Essential & Plus accounts only||Yes||Yes|
|Self-assessment||No||No||Self-employed plan only||No||Sole Trader & Limited Company plans only|
|Multi-currency support||Premium plan only||Accounting plan only||Essential & Plus accounts only||Yes||Yes|
|Importing & exporting data capabilities||Yes||Yes||Yes||Yes||Yes|
|Payroll||Optional extra||Optional extra||Optional extra||Optional extra (third party integration)||Included in the price|
|Inventory management||Yes||Yes||Plus plan only||Professional plan only||No|
What support is offered for Xero accounting software?
Xero has a comprehensive set of support features including FAQ's, video tutorials and online customer support, however it does not currently have a chat function or the ability to speak to somebody on the phone. This means that trying to solve a query can take a few days.
Does Xero accounting software support Making Tax Digital (MTD)?
HMRC's ambition is to become one of the most digitally advanced tax administrations in the world. 'Making Tax Digital' (MTD) is making fundamental changes to the way the tax system works transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
Many VAT-registered businesses with a taxable turnover above the VAT threshold are now required to use MTD to keep records digitally and use software to submit their VAT Returns.
Xero is fully compliant with the Making Tax Digital programme.
Xero accounting software is an easy-to-use, flexible accountancy package that can grow with your business. Keeping up to date with transactions on a daily basis takes minutes and the suite of reports available can give you valuable insight into your business.
Giving your accountant access to your accounts through Xero can speed up the preparation of reports and tax submissions thus reducing the cost of their services.
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