There is so much written on Xero on the web that there isn't much new we can add here.
Xero initially gained prominence due to the introduction of two key innovations: live bank feeds and an application marketplace. Quickbooks was fast to close the gap and today the two systems are largely comparable.
We have written an article about the adoption of Xero and where we are on the adoption curve for cloud accounting
Xero is our preferred finance system for most businesses (see exceptions below). It has the following compelling advantages:
Open access API and good interoperability
Customisation of reporting templates
Payroll and Expenses module
Xero also has the advantage of making available an excellent array of
. This is available as both online modules and classroom days in Milton Keynes.
However, the pace of development seems to have slowed markedly since 2018. Refer to our review of
For full training modules by Xero, check out
. Here are a few pro tips for using Xero, only available to those with Adviser access on Xero!
Xero has two versions of reports, "new" and "old". As you can tell from the screenshot below, the new report is labelled "New".
The "new" reports were introduced before 2015 and they've somehow decided to leave both versions available for users to customise rather than making the "old" version obsolete.
The "new" reports are much more customisable. You can re-order the accounts, which you can't do in the "old" reports.
❗️However, you have to manually save any changes made every single time you can make any changes, by clicking Save as > Custom at the bottom right on the page.
Assurance dashboard and user activity
To see an audit history of what has been going on in Xero, including any changes in bank account details and any bills that have been backdated (ie - created today but dated more than 30 days ago)
To access, go to Accounting, Advanced and select
History and notes
For more information on Xero (you have to be logged in), see
Sometimes, it's helpful to see a list of manual journals posted through a date range. This is not possible from Accounting > Manual Journal page where you would normally go to post a journal.
To see the list, go to Reports > Journal Report and check the box "show posted manual journals only".
❗️Manual journals default to "cash basis" which means they almost always get accidentally included in the cash-flow report. If you are using the cash flow report, make sure to uncheck this.
Find & Recode
This may be obvious but it makes the list because it's a powerful tool to quickly update accounts and tax codes for a list of transactions.
You are probably starting to outgrow Xero if you are experiencing pain points around:
Multiple entities with consolidation and inter-company trading
Multiple foreign companies
There is a significant gulf in available systems between the small business layer and the enterprise layer. Xero is extremely good value for money at c£30 per month, and upgrading to the next tier will incur a big increase in cost.
Chaser is a credit control system that sends automated emails from different inboxes. It integrates with Xero so that the process runs without manual intervention.
Xero also has an invoice reminder system, but Chaser usually has better results as the emails appear more personal and less automated.
We have seen results drop over time with Chaser as debtors realise there is no consequence to ignoring emails. To work effectively it needs to be used as part of a wider process.
As at the time of writing the lowest pricing tier is £25 per month for up to 50 invoices. For Quantico clients we cover the cost.
Receipt Bank acts as a bridge between your invoices and your finance system.
Most users will forward invoices directly onto a Receipt Bank email address, which results in them being scanned and uploaded to the Receipt Bank system. Through a combination of optical character recognition and human review Receipt Bank will attempt to capture the relevant information from the invoice, reducing the manual work required. On a regular basis you will then need to login, review the information processed by Receipt Bank, and send it to Xero.
Receipt Bank for employee expenses
The intended use of Receipt Bank is for purchase invoices, but it can also be used for employee expenses. This is done via the '
In our team opinions differ on whether this is an appropriate way to capture employee expenses. If you do use it you should be aware that...
Non finance teams sometimes confuse the concepts of purchase invoices and employee expenses, resulting in errors.
There is no approval process built into the expense reports.
Receipt Bank and accountants
Receipt Bank has historically targeted accounting firms as its primary route to market. Therefore if you are working with a service provider it is possible that the system will be included in your fee. At Quantico, Receipt Bank is part of the basic suite of tools we include in our service fee.
When using Receipt Bank email addresses it is important to ensure that you still have an effective approval point at some point in your purchase to payable process. For example if the email addresses are shared widely it can make it easy for fraudulent invoices to make their way into Xero, and from there to payment upload files.
At the time of writing Receipt Bank starts from £10 a month, although most of our clients will need the £20 or £40 a month versions (based on volume and number of users).
The accountant subscription is billed on a flat annual fee, determined by features and by how large they believe your practice is. According to our research most firms will pay around £4,500 per year.
Triggers you need something more complex
You've moved your finance systems to a tier that no longer integrates with Receipt Bank.
AutoEntry provides a very similar service to Receipt Bank, capturing invoices in a similar manner and with (in our experience) broadly similar reliability.
We initially favoured AutoEntry over Receipt Bank as it provided similar results at a lower price point. However our view is that Receipt Bank have introduced more product enhancements faster over the last twelve months or so.
In Autumn 2019 AutoEntry was acquired by
Notable differences to Receipt Bank
Priced per unit rather than per month - will be cheaper for most businesses
We found that AutoEntry frequently crashed when adding new contacts, reducing the effectiveness of our bookkeeping
Unlike Receipt Bank AutoEntry doesn't capture the content of forwarded emails, only attachments
HubDoc provides a documentation management system similar to ReceiptBank and AutoEntry.
In addition to being able to upload invoices by email and phone, it also has a pull function that allows it to bring in invoices from a few large suppliers without the need to forward an email.
Whilst logistically impressive this feature is only available for a tiny range of suppliers. We don't consider that the time saved will be
HubDoc was acquired by Xero in Summer 2018. This will provide a significant boost to HubDoc's customer acquisition but as Receipt Bank and AutoEntry also have good Xero integrations it doesn't meaningfully impact the user experience.
HubDoc vs the competition
During our testing we found HubDoc less reliable than competitors. Hopefully this will improve as the product continues to develop.