September 13, 2022
by  Josh Sab

Making Tax Digital - Xero, is it right for my business?

Next, in our series on software for MTD, we will be covering Xero. PFC is a Xero Gold Partner and we are experts in using the system, our team has much to offer in both time-saving and information clarity when making use of these cloud accounting tools.

Advantages

Receipt recording - Scan or take photos of bills and receipts and automatically extract the relevant data using the inbuilt algorithm or 3rd party plug-ins.

Intelligent transaction reconciliation - Xero uses innovative AI learning to speed up repeatable processes, matching recurring transactions and offering increasingly more accurate suggestions as you use the service.

Dashboard Customisation - Specific sections such as total cash flow, account watchlist, outstanding invoices, bills owed, expense claims and business performance are all interchangeable based on their importance to your business. This means no more getting overwhelmed with data you don’t need right now and instead being able to glean the current situation with a glance.

Inventory Management - For businesses that sell a range of products stock management is vital. Xero allows you to track both the levels and the value day by day. This allows you to easily see what products sell best and how to adapt your business to take advantage of it.

MTD Compliant - Of course, the most crucial requirement for any company in the UK planning on operating long term. Xero’s initial success in the UK market was largely due to its speed and effectiveness at putting out software capable of delivering the necessary reporting to HMRC.

Disadvantages

Price plans – Xero has three pricing tiers requiring the purchase of add-ons or a higher monthly subscription to get unrestricted access. Some affected features at the basic level include limits on the number of invoices that can be sent and an inability to do cashflow forecasts beyond one month.

Convoluted Customer Support – Xero does not offer a phone number for users to use if they encounter issues or have questions. This means that the turnaround in responding to an inquiry can be up to 48 hours

Unsuitable for large organisations – Xero’s software has a soft cap of 1,000 transactions per month after which the system begins to slow down due to capacity limits on the underlying API. This means that firms with a consistently higher trade flow will find their software unable to keep up.

Conclusion

Overall Xero is an undisputed competitor in the online accounting market, however, its limitations self-made or otherwise make it clear that its target audience is small and growing businesses rather than large corporations. For petite, modern, minimalist companies Xero will fit the bill with a consistently lauded user interface. Any large firm operating with high transaction quantities will likely suffer from the limits of Xero’s software and its inability to provide deeper insights into trends and cash flow.

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