The Ambitious Bookkeeper Podcast

235 ⎸ Why I only use Xero

• Serena Shoup, CPA • Episode 235

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 29:13

Send us Fan Mail

I've been getting this question for years, and since I'm now on YouTube and Xero keeps rolling out new features, it was time to give this topic a serious refresh. In this episode, I'm breaking down all the reasons why I am a hundred percent Xero firm and why I genuinely love this software. This is not sponsored (but yes, please use my affiliate link!). I'm just a bookkeeper who has seen what a mess the alternative can create, and I want you to understand what you could have instead.

In this episode you’ll hear:

  • Why Xero's security and data integrity controls make it the smarter choice over QBO
  • How Xero's reporting structure saves us massive time across our entire client roster
  • The efficiency tools and automations that let us simplify pricing and serve high-volume clients without penalty
  • The invoicing features and included extras that QBO actually charges you for (yes, really)

Resources mentioned in this episode:

Videos linked in this episode:

Thanks for listening. If this episode inspired you in some way, take a screenshot of you listening on your device and post it to your Instagram stories and tag me @ambitiousbookkeeper

For more information about the Ambitious Bookkeeper Podcast or interest in our programs or mentoring visit our resources below:

Thank you for your support of our show. If you haven’t left a review yet it’s super simple. Please go to ambitiousbookkeeper.com/podcast and leave your review.

Podcast Publishing Tools we use:

Join the next free training >

In today's video, I'm going to talk about why I love Xero. I actually recorded an entire episode about this. Basically at the very beginning of my podcast, and now that I'm on YouTube and years and years and years have gone by and I still get asked the same question, I figured it was time to refresh this content and talk about some of the new features that Xero has. Also linking some videos here, that actually walk you through those features. And today is mostly just gonna be me talking about what I love about Xero. So whether you're watching on YouTube. Or you're listening in your car on your podcast app, you're in the right place. So first and foremost, if you don't know who I am, I'm Serena. I am the founder and mentor at the Ambitious Bookkeeper where I mentor, and coach other. Bookkeepers and accountants and starting their own virtual bookkeeping business. And I also have been running a virtual accounting firm for on the line businesses for the past eight years. And, it's pretty obvious if you come to my channel that I am a Xero enthusiast. This, this video is not sponsored by Xero. However, if you are an accountant or a bookkeeper, or even a small business owner and you're interested in using Xero. Please do me a favor and click the link in the description of the video or below the show notes where you're listening to this because that is an affiliate link and I really do appreciate you using my link. If you're gonna sign up for Xero. Now let's get into all the reasons why I love Xero. And it's really funny whenever I talk about this and share stuff like this, in the accounting world, there's always somebody who is like, I hate Xero because X, Y, Z. And I really tried to love it, but I can't. And that's okay. It's not for everybody. Just like QBO isn't for everybody, just like I'm not for everybody. But I'm gonna talk about some of the reasons. That I love Xero. I've actually been compiling this list all day because every time I would go do something, I'd think of something else and I was like, okay, I really do need to write all of these down. I've got my handy dandy notepad, so that I don't forget anything. And most likely I will have forgotten something, but. I'm gonna walk through several different areas of why I love Xero. If applicable, we might have some graphics pop up on the screen here. but for the most part, I'm just gonna walk you through it. Number one is the security. I came from a corporate environment and there are certain things that you should not be able to do in an accounting software that you can do in other softwares. And I will name names like Intuit's products. has a really good audit trail, meaning. Anytime someone performs an action in the software, it logs that, transaction and who did it and what time That's an audit trail. Well, in other softwares like QBO, you can actually delete transactions, and once you delete a transaction. Poof, the audit trail is gone, so you can't even see who deleted the transaction. As you can imagine, deleting transactions can cause a disaster. It can cause you to not know what happened with transactions. And I've spoken with XIRS auditors and of all of the. Bookkeeping and, um, systems that they've audited. QBO is usually the worst because of this feature alone that you have the ability to delete transactions and it sometimes it's on accident and you don't realize you're gonna do it. But, I'm an accountant and I have gone in and I have screwed up a QBO file, so if I can screw it up, I know that a small business owner can too, as well. And so that leads me into the data integrity that Xero has because they have their software locked down in certain ways that don't allow you to delete transactions. You have to avoid something when it's already posted, that just has higher data integrity. They also have, the ability to customize user roles and permissions. So there's certain things you can allow somebody to just view reports only and not action anything in the software, which is great for some of our business owners who. Probably shouldn't be in Xero or any accounting software, but they wanna be able to run reports. This allows them to do that, to see what's going on, but not make any changes. You can also invite people in that only have access to create and view invoices, or only have access to do accounts payable or look at bills, and then you can Other accountants in that have advisor role permissions, so there's a lot of different permission levels that you can create and use within Xero that makes it a lot safer of an environment and higher security. I already talked about system controls. That was kind of like the voiding transactions versus deleting them. one of the other system controls that they have in place is that you can't create a transaction without a contact or a vendor., So you cannot create an invoice or you cannot create a bill without a vendor name in there. In a system like QBO, you can actually create transactions without vendor names. And, , we migrate all of our clients to Xero for free. And we've found that that's usually one of the biggest issues when we're cleaning up a file, is having to assign a vendor name on every single transaction because the last bookkeeper maybe was lazy. Also, QBO doesn't alert you that you forgot to put in a vendor name. It'll just let you post a transaction, all sorts of stuff like that. that's one of the things we really like. You have to have a contact name for every transaction, unless it's a journal entry. so those are some of the security features that I really love. Uh, lastly it is, it was built for the cloud. QBO started out as a desktop software. Xero has always been on the cloud. It was born on the cloud. They built it for the cloud from day one, they have designed their system to function on the cloud and be top level security. they also vet their app partners extensively. Apparently, it's pretty hard to become a partner, like an integrated app with Xero, and there's still other things that they don't allow apps to do that you can do with other apps connected to QBO. where you can actually make changes to the QBO file through another app. You can't do that in Xero. You have to do everything actually through Xero, which that's one of the features that a lot of bookkeepers don't like, because they wanna be able to have another app that sits on top of, the software that they can, you know, change things around in. And I get why it's, it's not a thing. And I also get why people wanna be able to do that. I see both sides. but I appreciate having, Data integrity and not having a mess of books on my hands. Okay, my number two favorite, feature and why I really love Xero and why we are a hundred percent Xero firm is the reporting. And this kind of ties into efficiency, which I'm gonna talk about in a minute as well, with the way that the reporting structure is built in Xero, no matter what. Each client's chart of accounts looks like, like all the different categories they have, we can create, um. The same reports that can get run down in every single client without recreating it within each client. And so, Xero uses a report, mapping code thing that allows us to create a standard set of reports from the firm level and then run it within each client file. And that cuts down on so much time because when I was working in QBO. And running reports for clients, I have to design that same reporting package within each client file. And you can imagine if you have 20 clients, that's a lot of custom report creation. And also the way they export doesn't have all the columns, like percentages and things that I want on my reports when I give them to clients. And in Xero, we can customize that, build it into the reports, and then run it on every client without having to, , export it to Excel, put in the columns and the percentages. And that's again, room for more error and issues with formulas. The other really cool thing that is similar to reporting, but is, is something that we have access on the, partner level at in Xero hq, if you're a, an account partner, you have access to be able to. create a custom chart of accounts and save it into HQ so that when you create a new client, if you work with clients across one industry and you're a niche down and you have a specific chart of accounts that you want to give to each client, you can just select it. You import it in there, and then you just select it when you're creating a new file and. Boom, your chart of accounts is there for the new client without you having to use the basic chart of accounts that comes in canned in QBO, and then change all the accounts that you don't like and remove the accounts you don't want and add different accounts. It just creates, again, so much more efficiency. one of the other things that has to do with, reporting is the ability to toggle between true cash basis and true accrual basis in Xero. and that's because in QBO, when you book a journal entry and this, if you're a business owner, this is probably gonna go way over your head. But if you're an accountant, you know what I'm talking about. When you book a journal entry. In QBO, it's gonna show up on all your reports, whether you run a cash basis or accrual basis in Xero, you get to decide if you want that journal entry to show up on cash basis reports. So effectively, if you're booking accruals, you don't want those journal entries showing up on cash basis reports, but you wanna be able to have accurate cash basis reports. A lot of small businesses want to see. How much cash actually came in versus went out in a month. so it's really easy to toggle between the two. The other aspect of, kind of in line with that is the cash flow statement that is built into Xero is the direct method. And, in QBO it's the indirect method. The indirect method, and the direct method. come to the same conclusion, but the way it looks is really confusing To try to explain to a non accountant to explain the indirect cash flow statement is rather difficult, but in Xero. It's pretty straightforward. As long as you have your chart of accounts mapped correctly, you can, very easily explain what's going on in the cash flow statement. All right. A third area of why I love Xero. It was built with advisors and small business owners in mind. And what I mean by that, as a partner, we're considered advisors in, the Xero World and Xero actually was developed in Australia, I believe. I'm pretty sure it was Australia, not the uk, one of the two, but. Either way. Xero has been very popular in pretty much the rest of the world, other than the US and the way that they handle things in Australia and the uk. People don't start businesses and wait to hire an accountant. They hire an accountant, and then they start businesses. So they have a relationship with an accountant from day one. I really wish. The US operated this way, but they don't. it's just the way they have their regulations set up there. It's like you have to have an accountant to be able to run a business. And, here it's a little bit backwards, but because that business culture existed where this program was originally developed, it was built with the advisor and the small business owner in mind. Where they were going to be partnering together. So with that, Xero has amazing customer support and they don't compete with us like QBO does. QBO has their own QuickBooks Live, a team of bookkeepers that they are constantly pushing QBO users, business owners, to opt into that service rather than working with an accountant. And so a lot of accountants, feel a little bit jaded in that regard because they feel like QBO is competing with them and they really shouldn't be. They should be supporting, US bookkeepers and accountants because we are the ones that bring them clients and set them up on their software. So Xero really has that down, pretty well. another, component of having it being built with advisors, in mind is b. Like I said, the customer support is amazing. I usually get a response and get things resolved within 24 hours without having to be on the phone and on hold and talking to a million people that don't know what they're doing. I've never had to escalate my ticket to. Someone higher that could help me. Whoever was first to try to help me has usually resolved it, and they're usually pretty minor issues. there's also a Find and Recode tool, which kinda leads me into the fourth area of. Efficiency and, QBO has a similar tool. They have like an an accountants toolbox where you can, it's called the reclassify tool. Xero has something similar. It's called Find and Recode. You can, but there, it's more robust. You can filter on date ranges, on accounts, on contact names, and you can recode not only where it was categorized, but you can recode who the contact was if you accidentally. Created a bunch of transactions with the wrong vendor name or something like that. it's a little more flexible than the reclassified tool in QBO. something else that makes Xero more efficient for us is it has a very clean, simple, and beautiful interface, in my opinion. others might say that. It's really basic and boring or like dated. They have updated their interface over the last year or so, and to me it's, it looks modern. I don't know. I would rather log into something that looks clean and simple than something that is overwhelming and every time I log in it looks different. I. I'm trying not to make this A QBO Bash session, but I'm just giving you the comparisons. When I log into QBO, I get overwhelmed. I get frustrated because I can't find things that I used to know where they are. There's so much in there that I have to sift through, and I really only need to get to like one or two different places in the platform, but there's so much extra stuff in there that it. It's, if it's overwhelming for an accountant, it's gotta be overwhelming for business owners. And so if you're a business owner watching this and you feel that way when you log into QBO, you're not alone and there's a better option. So, the clean and simple user interface and it's modern, if you're like a designer or someone who has a visual eye for things, I think you're gonna love Xero. So definitely check out some of my other videos where I actually demo some things. Another efficiency tool that we have access to in Xero, and it's available on every plan, every business plan. There's partner only plans where, I'll talk about that in a different video. But if you're a business owner, there's three plans that you can be on early growing or established. and on all three of those plans, you have access to a tool called cash coding. So when you are. Working on coding all of your bank transactions. if you have Stripe connected for example, or PayPal and you have a lot of the same transactions coming in, you can actually just go to the cash coding tab and mass code hundreds of transactions at once. And so that's one feature that has enabled us to. Offer our clients, instead of charging by transaction volume and things like that, because of the nature of a lot of our clients' businesses, they have launches. And so there's some months where there's thousands of transactions, and then there's some months when there's only a hundred. And so we don't wanna penalize and fluctuate the pricing every time they launch. And so we've been able to just say. In those situations, 'cause it's all pretty much the same transaction. We have a tool that makes us really efficient, so we're not gonna upcharge you for increased volume one month. so the cash co coding, there's also bank rules that you can set up, and now we have access in beta when this video goes live, to auto bank reconciliation, which is an AI feature in Xero. And I have another video I will link here, or at the end of this video that, I walk through that so you can see how that works. another efficiency tool is that they, I mentioned Stripe a moment ago, and this is one of the big reasons why we love Xero for our clients, especially because a lot of our clients, most of our clients use Stripe and PayPal as payment processors. In QBO, you actually, you can connect PayPal, but Stripe. You have to use a third party app to get that to integrate and it costs extra money in Xero. It connects just like a bank account, direct feed, all the transactions with the descriptions and everything feeds right in. And so we can create bank rules and reconcile your payment processors really easily. there's also direct feeds with some of the bigger banks like Wells Fargo, and then of course they have a direct feed with Relay, which I love Relay. It's an online bank. and over the eight years that I've been banking with Relay, I've only seen their bank feeds break maybe once or twice, which is amazing. Because when you look at banks like American Express or even Wells Fargo, that do have direct feeds with Xero, those tend to break and have to be reconnected fairly often. And lastly, with efficiency, we have access to a tool that is, owned by Xero. It, started out as a separate program. It's still pretty much separate, but it's called Hubdoc. And that's what we use to organize receipts and invoices and we can, sync those into Xero and attach 'em to each transaction. And that way when we're drilling down on things, we can see what the source document actually was. Super cool. Number five are some features that. Xero has embedded or included, whereby other programs such as QBO actually charge for. Number one is the budget feature in every plan, early growing or established. Xero, you have access to the budgeting feature and I think that's pretty cool. It's also really easy to use. We love it. We use it for our CFO clients and when we create a budget with them, we can, you know, I do it all in Excel using the template that comes out of Xero, and then I import it back into Xero once we've flushed out how we want the budget to look and modeled things out. And then every month we can run the report of actuals versus budget and see where we're at. so it makes that process a lot more efficient. like I said, the Stripe integration is direct and free with Xero. In QBO, you have to pay for a third party app to integrate Stripe as a bank account. we also have access to some visual reports. and last but not least, unlimited. Users on every plan. and that's not something that happens with QBO. So you can invite somebody to do your invoicing, you can invite somebody to do your ap, you can invite someone in to just handle payroll. You can invite five accountants if you want to, and you can have multiple people within your organization with access to Xero, if that makes sense for you. at different permission levels like we talked about. So the controls are in place. And you don't have to worry about paying for another seat. I personally think that's a game changer right there. Number six are invoicing features that I really love about Xero that just makes it easier to get paid and accept payments and make you look professional you can customize your branding on your invoice. And not only that, you can actually create. different multiple brands within one file. So say, say you have like. A trademark of, I don't know, something in your business that you invoice your clients for, and then you have like this other sub-brand, or subdivision, but you're under the same LLC and you want a different logo on the invoice. You can create multiple different invoice templates within Xero and decide which brand you're gonna invoice from. It makes it really cool. you can also connect multiple payment processors. You can connect Stripe, you can connect PayPal, you, we use GoCardless as an option for a CH and you can set up auto payments in there as well. within the invoicing feature, It can auto calculate sales tax. So if you're in an area where you should be charging your customers sales tax, I highly recommend turning on that auto lookup feature. I will say, I believe in the phone app. That feature doesn't work yet when you're invoicing from the app. So if you do need to charge sales tax, you can start the invoice on the app, but you're gonna have to finish it on the desktop to get the sales tax to calculate. you can set up invoice reminders. You can do this in QB O2, however you, there's more customization in. Xero. You can set up as many different types of reminders of you as you want. You can send reminders leading up to the due date. You can send reminders once the due date has passed, all sorts of cool stuff like that. And you can customize the wording in each and every one and make them completely different if you want. and then, like I said, you can set up autopay, have your customers save their credit card information and check a box to auto. Let you auto charge them. Lastly, I will talk about the mobile app. I briefly talked about it when it comes to the invoicing. Another feature that the mobile app has is tap to pay, so you can accept people's, cards on your phone without a credit card swipey thingy and being charged extra. So. I think that's pretty much it. Also in the mobile app, you can look at your net profit, year to date. Prior year, uh, you can look at your revenue, you can look at your expenses. you can do a lot from your app. There's oftentimes when I am like laying in bed stressing about money, and I'm like, what is my profit so far this year? And you can see your bank balances when they're all connected to the feeds. You can log in there. And see everything in one place. so that's some pretty cool features about the app. You can also do quotes, and, you can accept people's quotes and convert it right into an invoice, which makes that process really seamless. lastly I'm gonna talk about a couple things that, and objections that I get when, , avid QBO users. Try to come to the bright side, the beautiful side of business, and one of them is that they can't book journal entries to cash accounts or bank accounts in Xero. And while I understand the sentiment. I don't believe you should really be booking journal entries to a bank account. If you're doing accurate bookkeeping, you can still adjust things on the bank account if you so need to. And you just have to know which direction you should be going, whether it's a spend money or receive money. You book it, you market reconciled, you move on. It's not that hard. It's basically the same effort as it takes to do a journal entry. I don't know why people gripe about that, but what are you gonna do? so with that, it can make it a little more difficult if you need to do like a payroll clearing account or a sales clearing account to, to get some stuff done. but yeah, that's one of the big gripes. One of the other big gripes that I've heard in the past, which is no longer an issue, much to my chagrin, is the way that you actually did the reconciling the bank account step previously in Xero. You could just, categorize all the bank feeds. And you know, accept every transaction that came through the bank feeds, and that was actually the reconciliation process. You would then just run a report comparing what you just did with what's on the bank statement, instead of doing a whole separate tick and tie process that you do in QuickBooks Well. Last year they unveiled that they were implementing a reconcile period process. And while we have implemented that in our firm, I'm actually not a huge fan because it adds another step to our process and makes things a little bit. more complex that they didn't need to, but I get that they had to please the QBO users. So it was a little compromise. but yeah, so that feature now exists for any of you who had that big gripe. Now you get a whole separate process and a window that you can go to after you've already accepted all the bank transactions to just make sure that the bank transactions you accepted. Are there. Alright, so those are some of the big reasons. most of the reasons why I love Xero. And I'm loving it more and more every time they do updates, which by the way they do updates a lot, but nothing huge ever changes. Except this year they did change the layout of the dashboard and the interface. but it's actually better now. It's more visually appealing. There's better information on the dashboard when you log in. And I'm all for it. So if you are ready to come on over to the beautiful side of Business with Xero, I still like their old slogan where they, their old slogan was like, beautiful business. Now it's like supercharger business. I don't know, I'm still a fan of the old slogan, so I'm gonna stick with it. But if you're ready to come over to the beautiful side of business, check out the links to join Xero in the comments or in the , description below the video. Or the show notes where you're listening, and I super appreciate you using my affiliate link. If you are an accountant and you want to become a partner, there is a process for that. That's another gripe of people that they have to get on a call with a partner, advisor, and, . I'm okay with it.'cause they also vet their accounting partners. They wanna make sure that you actually are an accountant, you are trying to grow a business and you are trying to help clients and you have integrity. So I don't think there's anything wrong with that. and then you get a partner advisor in your corner helping you grow your business. Oh, one last little thing too is as a Xero partner, you get access to marketing funds. Maybe I should submit this for marketing funds. We'll see. Alright, we'll catch you on the flip side.

Podcasts we love

Check out these other fine podcasts recommended by us, not an algorithm.

Accounting High Artwork

Accounting High

Accounting High