For clarity Xero is a great accounting solution for small businesses. This blog is not about disrespecting Xero but instead looks at common issues that lead businesses like yours to search for Xero alternatives.
The following are common example of when businesses start to struggle with Xero.
- Legal entities – Xero does not support multi-entity reporting. As a result, as a business grows and wants to separate elements of a business into a group format or because of an acquisition, Xero is no longer fit for purpose.
- Sales – It is very difficult to manage large volumes of quotes for sales (if you need to send out large volumes of quotes or invoices each month it is very difficult to do within Xero).
- Reporting – Reporting options are very limited in terms of dashboard-style reporting
- Support – end-user support is limited and is often left to accountants – who are not always software specialists – to offer local & personal support.
- Usability – If you come from a larger business / more traditional accountancy system then the way in which the system is laid out is not familiar. As an analogy, Xero is a Mini (you can add a trailer with light goods, etc. as bolt-on) whereas the business might need a long wheelbase transit van that can deal with the loads and requirements of the business.
- No bundling/assembly tracking – If you are selling an item or service that requires multiple products or multiple revenue accounts then Xero does not cover this out of the box. The alternative is to make time-consuming adjustments or utilise an expensive 3rd party tool.
- Departmental Budget Management – When you want to split your business into dimensions (for example, departments, cost centre, projects, etc.) you are not able to create budgets or forecasts for these.
- Excel / Spreadsheets – Even though you are using Xero you find people are still using spreadsheets outside the system to do your accounting or support other business functions.
- Transaction volumes / System speed – Xero has a limit of 4000 transactions per month. As a result, if you are starting to raise large volumes of invoices you will struggle.
- Inventory Management and Supply Chain – Xero has a limited stock management capability and struggles to deal with businesses that hold stock and this stock changes value over time.
- Integration with Microsoft 365/Office/Outlook – Xero does integrate with 365 but the limitation isn’t native and therefore limited.
- Asset Businesses – Dealing with assets can be difficult. Wealth management business is also difficult to manage in Xero.
Changing your accountancy system can be a daunting process. The following blog and checklists may help with this decision making process.