Using Xero for accounts

We have been using Xero accounts software for our clients since 2011, not long after it was first launched in the UK.  As a long term Sage user prior to that I was sceptical at first as it was so different, but I was slowly converted to its benefits and ease of use.  Fifteen years on from that initial networking meeting with the then head of Xero promoting its benefits we, as a practice, only use Xero for our clients and only take on new clients who are happy to convert to Xero.

There have been significant changes to Xero over those 15 years and, as with any software, some are welcome and some are not so much!  No accounts software is ever going to fit the bill for every user but Xero suits us and our clients really well.

So what are the benefits to you of using Xero now?

• Accessible 24/7 from your phone, PC or laptop 
• Xero connects to your bank each day to download transactions from the previous day enabling easy matching of receipts and payments
• Xero recognises previous allocation of bank payments and receipts and provides a suggestion of how to code the transaction
• Customer invoices can be prepared and sent directly from the software ensuring you have a record of every invoice raised, when it was sent and if it has been viewed by the customer, and of course the customer receipt can be allocated directly to that invoice when it is paid.  This then leaves you an accurate picture of who owes you so you can follow this up promptly.  You can also send automatic reminders.
• Customer quotes can also be prepared and sent and converted to an invoice once the quote is accepted.
• Bills can be added to Xero either via Hubdoc which is free software connected to Xero or via its own bill creation option.  Entering bills ensures you keep a clear picture of who you owe and of course any supplier payment you make can immediately be allocated to that bill.  If you are consistent with this you will always know what and how much is to be paid.
• Bill payments can be done directly from Xero although there is a small additional cost.
• If you are VAT registered Xero will produce a VAT return which, once checked, can be submitted directly from Xero.
• Xero's new dashboard shows you at a glance your bank account balances, the customers that owe you and the bills you owe, along with other useful information which you wish to add.
• Standard reports are provided so it is easy to run a profit and loss report for different periods of time so you can compare and it is straightforward to create bespoke reports if needed.

Xero Subscriptions

Xero provide 5 different levels of subscription so there will be one which suits your needs.  Some will limit the number of customer invoices you can send each month, or limit the number of bills you can add.  The two more expensive subscriptions will enable foreign currency transactions with the larger one providing the addition of forecasting tools.  Some will have the option to add a budget if this is something you want to add and track against actual.  Allocating income and expenses to specific departments is also available.

Bill payments are available in all but the lowest subscription.  There is a cost per payment, although some subscriptions have a few free each month.

Making Tax Digital for Income Tax Self Assessment (MTD ITSA)

All five Xero subscriptions will be enabled from April 2026 for submission of quarterly returns to HMRC for those sole traders and landlords who will be required to do this.  

Do you need to move from spreadsheets to accounts software?

You may be one of those who are mandated to submit quarterly returns from April 2026 or you may have a growing business that needs to have more control over your finances than a spreadsheet gives you.  Spreadsheets are good when you start out but errors can so easily occur and not be seen.  Accounts software, whilst seeming daunting to begin with, will make managing your finances so much easier.

Outsourcing your move to Xero or DIY?

As a business providing bookkeeping support to business owners we are used to setting up Xero and managing it for our clients on a monthly or quarterly basis.  We can therefore take on your bookkeeping needs.  Alternatively you may wish to do it yourself but once started find it difficult to find your way around.  We provide bespoke Xero training and can help you to use Xero in the best way for your business.

Summary

As a long term user of Xero, and having used other accounts software briefly, we recommend Xero to potential clients who are planning to move from spreadsheets or just have a change.  It is user friendly, intuitive, it provides everything you need to maintain your finances and its costs are in line with other cloud software,

If you need to move to software, have decided on Xero and need some help do get in touch with us on 01722 341820.