Xero Accounting Software

After doing research, having selected Xero and using it for over a year now, I can offer support for Xero.  Xero is a New Zealand-based strong competitor of Quickbooks.  The system is intuitive and simple to operate.  The out of the box features make it easy for many accountants to use immediately for small and medium size companies or Technology start-ups.  It has several notable features.

xeroIn the Cloud

Cloud-based is the buzz these days as most software companies are moving towards it.  Anyone can access the system from anywhere without having to download and install software.

Journal Entries

You can’t delete a posted journal.  You can void it and it will remain in the list of voided entries for future reference. This is something that was lacking in other small accounting software packages in the past that I found disturbing.

However, you can still edit a journal that has already been posted.  But, there is history of the activity on the journal, with dates of edits and postings. So, you can see when journals were modified, from an audit perspective.

I recently completed the automation of journal entries from our internally developed transaction processing system, integrating with Xero’s modern Application Program Interface (API).  The integration was straightforward.  The developers and engineers were appreciative of the simplicity.  The journals can transfer to Xero in an unposted or posted status.

You can track entries and reporting by categories, such as entities, locations, or product groups.  This is useful when you want to view financials by different categories.

Cash Accounts Integration

All of the cash accounts, credit cards and even Paypal can be linked to the institutions and automatically imported at any time.  Some accounts, such as Dwolla or other financial transaction service companies, can’t be automatically imported, but the manual import is easy to process by downloading the .csv file from the provider.


The trial balance is segregated by account type and then optionally by account number.  At first, I wasn’t sure about this because it’s not the traditional view of a trial balance by accounts.  However, I have come to gain appreciation for Xero’s difference.

Other Features

There are many other functions, such as invoicing, purchasing/payments, payroll, inventory and fixed assets accounting that are offered in Xero.


The price ranges from $9 to $70 per month, depending on your transactional requirements.  If you need multiple currency accounting, you will be paying the $70.

Things that can be improved

There are a few changes that would enhance Xero’s usability.  When a default account number is entered for a supplier, the account does not automatically transfer when you use that vendor in invoicing, purchasing or reconciling bank accounts. This is inefficient because the information is already supplied when the vendor is created, but you still have to rely on your memory to select the appropriate account for the vendor.

Another inconvenience is the inability to make manual journal entries directly to system accounts, such as cash, AP and AR.   Some companies that use Oracle and SAP choose to assign separate accounts for system generated entries and manual entries.  Likewise, Xero should give companies the option to either allow manual postings to systems accounts or not.

Reconciliation of bank accounts can be tedious if you have a lot of transactions in the accounts.  Each transaction has to be reconciled individually.  However, you can create rules so that Xero can predict how you want the transaction to be accounted.  Although this feature eases the reconciliation process, Xero should consider the option to group like transactions to make reconciliations quicker.

Xero to be easy to setup and use.  Small and medium size companies with moderate banking transactions will benefit from the system’s full accounting features.  It is great for early stage Tech start-ups that want the convenience of automation and integration with their transaction processing system.  For more details, visit Xero.com.