An Introduction to Xero

Online Accounting

Xero is online accounting software renowned for its attractive interface. Like other online software packages, it allows you to access your account through your web browser and manage your financials from anywhere, using the cloud. Where it stands apart from its competitors is in its design, which is created to be intuitive and is regularly updated based on input from current and past users.

While Xero staff may have an idea of what their customers want before launch, according to Philip Fierlinger, head of design, they need that feedback to make the product ideal. “It’s a hugely iterative process,” Fierlinger says. He also mentioned that the software is made to be “Web-first,” meaning everything is done with the end user in mind, as he or she would see the interface through a laptop, tablet, or Smartphone.

Xero is based in New Zealand, with offices and distribution in Australia, the UK and the United States as well. Rod Drury and Hamish Edwards founders of the software company, Aftermail, began assembling a team to create what was to become Xero in 2006. They used Drury’s software development experience and Edwards’s accounting know how to ease the burden of the “horrible accounting process.”

Xero to hero is essentially what happened, as business took off quickly, thanks in part to a large marketing budget but also to positive word of mouth. In 2007, growth was so extensive that Xero earned a listing on the New Zealand Stock Exchange after only one year in business. It is listed under ticker symbol XRO.

Xero is growing! In the last year Xero’s business customers have grown from 36,000 to 78,000, revenue from NZD$9million to NZD$19million and staff employed rose from 113 to 194. Xero is used by 16,000 business customers in Australia, up from 6,000 customers this time last year. In March 2012, Xero raised NZD$15.6m through its Share Purchase Plan, bringing the total capital raised in recent months to NZD$35.6m. “In Australia and the UK, Xero is emerging as a leading challenger by winning market share from the incumbents and introducing a new generation of businesses to accounting,” said Drury.

The founders’ goals are to reach a global market of small businesses and to constantly adapt. Right now, a software update is released every three to six weeks, free to users. Updates are automatic when you log into the system. User input is accepted and encouraged.

Xero allows members of an accounting or management team to collaborate on financials remotely from anywhere in the world. This includes bringing in external bookkeepers and accountants for assistance. Each member of the team can have full or restricted access to maintain information security and integrity. The software works on Mac, Windows and Linux systems and has the extra convenience of being available as a mobile app.

Users can access updated financial data in real time to facilitate the accounting process. There is no need to send information through other electronic means; everything can be accessed through a secure login. Once you log in to the system, you can see your cash flow and import and code transactions with over 500 banks around the world, using credit cards, PayPal and currency from over 160 different countries. All major Australian banks have integration with Xero and transactions update automatically using current exchange rates.

The first iteration of Xero did not include an inventory system. Luckily, a simple inventory system was added in an update, and it is available in the current software. Additional features are available. (See the Add-On list.)

Xero’s invoice capabilities allow you to track your sale and supply of goods and services. You can design an invoice template branded to your organization, including different layouts for different customers and transaction types. After you invoice, Xero charts out who owes what and when and predict your cash flow based on when payments should come in. Customers or clients can pay you directly through the Xero system if you choose to set up the functionality.

Initially Xero didn’t provide payroll either. Last July, the company acquired Paycycle to provide this service to customers. An integrated payroll system is set to go live in May 2012. Automatic superannuation payments will be available on the Large plan. Xero has also acquired Max Solutions, maker of internet-based job, time, and invoice management software, Workflow Max.

One drawback of Xero is that it doesn’t allow you to keep offline copies of your data. This can be a turnoff for those who don’t want their financial data locked in by vendors. With the access and security that Xero offers its users, this does not create a significant problem for most.

While you can already use Xero with over 90 applications, you can have even more features through Xero’s partnerships with outside developers. The following functionality can be added in mere minutes:
*Advanced Inventory – Manage the more complex needs that come with having a larger staff or expensive work machinery.
*Customer Relationship Management – Track your sales, presentations and bids to keep project proposal information up to date.
*Job Tracking – Keep on top of your current and past projects, human resources, and time spent.
*E-Commerce – Get everything you need to sell your goods and services over the Web and manage your customers’ activities.
*Point of Sale – Designed for a brick and mortar retail business, track cash and credit sales onsite.
*Payment – Facilitate your client invoice system with PayPal or Debtor Daddy.
*Time Tracking – Manage invoices for hourly employees and timesheets for all employees. Generate bills to clients for employee time.
*Custom Integration – Find a developer to help you with your unique company needs.

All of Xero’s data is stored in the United States using multiple redundant servers, which are guarded 24/7, and located at tier-one data centers. The servers are managed by Rackspace Hosting. Data is backed up every ten minutes. The content delivery network allows for the distance between the server and end user and negates any speed issues that could come up due to geographic distance. Xero has never had a breach of its security.

Xero is suited for small to medium-sized businesses. Its pricing is related to company size. All pricing includes a free trial and the ability to cancel anytime. Unlimited users are allowed, as is unlimited customer support. The limitations come into play in the number of invoices you can send and the number of bank statements you can reconcile per month. Monthly pricing is as follows, listed in Australian dollars. Up-to-date pricing is available at

*Small Package (Ideal for freelancers and 1 employee): $29. Send five invoices and receive five invoices. Reconcile up to 20 bank statement lines.
*Medium Package (for up to 20 employees): $49. Send and receive unlimited invoices. Unlimited Bank Reconciliations.
*Large Package (for medium sized companies with international transactions and unlimited employees): $64. Unlimited bank reconciliation and invoicing available in multiple currencies.

Purchase Xero
R2B has recently become a Certified Partner with Xero. To celebrate this partnership, and the integration of payroll to Xero, we’re giving away Xero subscriptions to new clients for free until 1 June 2012!
***No payments for Xero subscriptions until 1 June 2012!***
This offer is only valid when you sign up for Xero through R2B. Start today to take advantage of all the services Xero can offer your business, free of charge until 1 June 2012.

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