We've been needing a new system for a while now. Our business is £2m t/o, it's a leisure centre which is the parent company, with a hotel as a trading subsidiary. I've seen a lot of recommendations for Xero and I've just watched a webinar on setting this up. It certainly looked good, but it's brought to mind a few questions. I would ask Xero these, but in my experience vendors always say "yes" to everything...
- Is the chart of accounts hierarchical? For example for the leisure centre we want to analyse sales into swimming lessons, gym membership, room hire etc. Same for the hotel. I didn't see a demo of the reporting - could this be done there instead?
- For the hotel we'd want to analyse data (sales, wages etc) between the bar, restaurant and hotel. Does it handle this sort of drill-down requirement?
- We have the two separate companies (hotel and leisure centre) so we'd need two licences. Can these then be combined in one consolidated P&L report at the end of the month?
- Overheads need to be allocated to different business areas via nominal journals. Can Xero handle this easily?
Like I say it did look like a good product, but I got the feeling maybe it's aimed for smaller companies or might not quite offer us the flexibility we're looking for. I'm happy to be proven wrong though!
Replies (25)
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Answers
1. Yes you can set this up with as many headings as you want under sales, etc
2. Yes you can use tracking to do this
3. No, but you could export into Excel and then combine using pivot tables
4. Yes, using journals and tracking
Consolidated Accounts - aka answer number 3
Do any of the popular Cloud packages offer consolidation of multiple companies accounts? Something I am going to have to look at shortly, using Sage 200 currently but it only does it if the year ends co-inside and in many cases they don't.
consolidations
Do any of the popular Cloud packages offer consolidation of multiple companies accounts? Something I am going to have to look at shortly, using Sage 200 currently but it only does it if the year ends co-inside and in many cases they don't.
This can be done using Xero by employing and add-on such as DiGA or Spotlight Multi
Reporting
occca has answered most of your points but I'd add the following comments
You can set up the chart of accounts as you wish but there are no sub accounts. There is a feature called tracking working at two levels which you can use to tag input. You can have a number of different sales accounts, and the existing reporting allows you to produce a report with the totals combined into one figure. Or you could use one sales account, and then use a tracking code to identify room hire, lessons etc
Tracking will allow you to split costs across different cost centres even on the same invoice. You can post one line to bar, the next to restaurant and the third to hotel. If you have recurring payments going out you can set your bank rules up to split in a fixed proportion - e.g. 40-40-20 across three areas If necessary you can have negative lines on most transactions
You could ask Xero if they have anybody who can demo the system, but I'm not sure that's possible. If not, it could be worthwhile to find a Xero certified accountant and sit down with them to see what the system can do. I'd imagine that this would have to be on a fee paying basis.
The current reporting is fine in most circumstances but it does have limitations. I know that Xero are currently working on what they call Reporting 2, which is a pretty substantial rewrite of the reporting facilities. I'm sure that this is well advanced but I don't think that there's a date for release yet. It current reporting doesn't suit, it might be worth waiting for this version to come out - I'd guess that it will be some time later this year
Consolidation & Tracking
We can provide an Excel spreadsheet with some smart macros that consolidate multiple exported Xero reports into a single, consolidated view but we don't make this generally available unless the recipient is familiar with Excel and the use of macros.
This video clip explains how Tracking in Xero is designed to improve upon the original sub-account method of computerising charts of account.
http://www.xero.com/uk/tv/video/?id=5175-rethinking-subaccounts
Gary Turner
Managing Director, Xero
@garyturner
Xero and the larger T/o company
I suspect you might be rather fed up with the very few reports that come off Xero automatically. The larger the company the more prewritten reports you are going to want and although I can see these may be available in the future, I feel Xero is much better suited to the very small one man band type company or consultancy type companies with very few different overheads.
I find there aren't enough input fields if I want the sort of complex analysis you are likely to need.
Just given what you've asked for above I can't believe there aren't other more detailed packages out there that could do more for you. I don't know Clear Books, but I think you should look at that if you want a cloud based system.
Otherwise I would still recommend Sage Line 50. Goodness knows when this version of Sage will ever get to the Cloud format. It isn't for beginners, but given the number of transactions you are already processing I doubt if it can be beaten yet for all the things it could do.
One man bands?
, I feel Xero is much better suited to the very small one man band type company or consultancy type companies with very few different overheads.
That does Xero a gross disservice. I'd agree that it's probably not suitable for companies with complex reporting requirements but suggesting that it's for one man bands is frankly ludicrous.
QuickBooks
Why not try QuickBooks desktop version?
It seems more suited to what you require.
Alternatively - Netsuite ....
Netsuite may be worth a look
http://www.netsuite.co.uk/portal/uk/home.shtml
This is a step up from the entry level Cloud offerings and may suit you requirements better
xero
Moonbeam did you watch the video Gary mentioned ?
"I find there aren't enough input fields"
"I would still recommend Sage Line 50. Goodness knows when this version of Sage will ever get to the Cloud format"
Sage Line 50 was designed to work on the desktop
Xero was designed to work on the web, it has built in advantages and efficiencies that Sage Line 50 cannot have.
I'm afraid you just don't get it.
Xero is cloud based, and has all the related drawbacks.
Ask yourself these questions;
What if your internet connection fails?
What if the software company goes bust?
What if the software suffers some major bug that chews up your data, or an ill-trained member of staff messes it up badly? How do you restore a backup?
Can you even make backups? (Often you can't on cloud system).
What if you find one day that your PC is no longer compatible with the software?
Xero has its good and bad points, but cloud accounting generally should be avoided, as it is much harder or sometimes impossible to address these questions compared to having your own accounting software on your hard drive.
"cloud accounting generally
"cloud accounting generally should be avoided"
Everyone is entitled to their opinion, but I'm afraid you don't get it either JD
The massive advantage cloud accounting has is the ability to work together or 'collaborate' from different physical locations. If you don't wish to collaborate with your clients, you can be sure another accountant will !!
That is why in the long run cloud accounting will become the norm. Yes your internet connection can temporarily drop. I thought about getting a cheap back up connection. Then I discovered I can plug my phone into the router to give the office a connection (all be it rather slow)
"What if the software company goes bust?" Do you know how much funding Xero has? If it did ever come to it, another company would buy it and continue the service.
"What if the software suffers some major bug?" It is very clearly the cloud providers responsibility to protect your data. If it did happen you have a claim against the company. You can be sure they are doing everything possible to ensure that this disaster never happens. However on the desktop it is your responsibility to protect your data from viruses etc I would say this is a much greater problem.
The responsibility for backups rests also with the cloud provider.
"What if you find one day that your PC is no longer compatible with the software?"
This happens on the desktop yes. But not with a browser? You just keep your browser up to date.
Just consider what has been said ...
@JDBENJAMIN
What if your internet connection fails? - Valid but when was the last time you had an outage; mobile phones can be used as carriers; an outage would probably have a wider impact in other areas - i.e. email etc.
What if the software company goes bust? - - Valid but so can desktop providers - the difference is therefore ... ?
What if the software suffers some major bug that chews up your data, or an ill-trained member of staff messes it up badly? How do you restore a backup? - Most providers will backup data on a frequent basis (daily, if not rolling, mirrored etc.), whereas the same cannot generally be said for desktop users - therefore hosted solutions provide better backup facilities
Can you even make backups? (Often you can't on cloud system) - Exports can be done, however, if the answer to the previous question is considered then hosted is a better bet
What if you find one day that your PC is no longer compatible with the software? - Hosted in these terms is delivered by via a browser and there is far less chance of incompatibility that desktop where a change of OS can completely foul one up - i.e. 32 to 64 bit OS introduced incompatibilities
Conclusion - scaremongering without valid reasons that stand up to scrutiny
poor purchase ledger
Xero is great in some ways, but has a really poor purchase ledger (if any), which may be significant if you are dealing with several suppliers on credit.
I suspect this is because most users use the bank feed/cashbook to code expenses. But it is still a significant omission
Failures
What if your internet connection fails?
Well, I can use my phone (not ideal) or tablet without moving from my desk. I can easily go somewhere else where there is an internet connection - home is the obvious one - and carry on working.
What happens if your computer fails? Power cut, or hard drive failure. Virus even. Can you get a spare (or new) machine up and running, reinstall the software, install a completely up to date backup and be up and running again with no noticeable delays?
And if my internet browser isn't compatible with the internet, it's time for a new PC. I have to say that one's a new one on me among the naysayers and probably the biggest clutch at a straw
Xero "has a really poor
Xero "has a really poor purchase ledger (if any)"
What ?
You can post invoices, credit notes, and attach an image of the invoice, pod, etc. You can part pay or fully pay. You can allocate credits or payments in advance against invoices. What is it that you feel is missing ?
how do you do a running balance statement showing overpayments and that you can send to your supplier?
report for supplier
This is no problem at all
The bank payment to the supplier is posted as a prepayment or overpayment and allocated to the supplier
Details here http://help.xero.com/#BankAccounts_Details_SpendMoney
A payment can be credited against purchase invoices, or left unallocated.
Go to the contact page for the supplier and click View Report, you get a report showing all transactions with that supplier (including overpayments or prepayments). Change the date if you want to restrict the period showing, of course you might then have a balance brought forward. There are some details here http://help.xero.com/#Report_SupplierInvoice although it doesn't show an example with a prepayment.
You can save the report as PDF or export to Excel or Google docs.
Whilst on the topic its worth mentioning that Xero now has purchase ordering
@beancounter333
the report you refer to shows invoices only (and whether they are paid or not). It is very difficult to get a ledger showing invoices and payments as separate transactions. Oddly this is available for Customers (via the Customer Statement report) but not Suppliers. It makes (for me and others) reconciling supplier accounts difficult
I just DO get it
As is often the case, there is a happy middle ground between two very opposite views. Xero (along with some other cloud based packages) is fantastic, with certain clients, in certain circumstances, certain locations and with the right accountant. There are benefits for everyone, it's a positive step forwards.
The chances of significant office or home broadband outage are fairly slim these days (although it does occur and can be VERY inconvenient), I have 2 situations however that stop me from going completely cloud-based, and I doubt that I'm alone:
1. This morning I spent 3 hours on the train to a client, during that time I was happily working away on my desktop-based VT and BTC software, throughout the trip I was tethered to my iPhone using its internet connection to send and receive emails. I'll be travelling another 3 hours home tomorrow night so will be working in the same manner, total travel time is therefore 6 hours. I will be productive for about 5 hours of that time at an average charge out rate of about £100 per hour. During my train journey this morning I would say that I had none or at very best 1 out of 5 signal bars for approximately 75% of the journey, even when the train was sat at Sheffield station, hardly a remote location. If I had been entirely reliant upon cloud based software or a hosted desktop then I would only be able to be 25% productive resulting in billable work of £125. Instead I shall be happily be billing £500. I do similar journeys probably twice a month, plus shorter ones as well. The argument may be that I should plan ahead better so that I do other productive work on the train, unfortunately on this occasion the client has an immediate deadline, which doesn't fit in well with the rest of my work and personal life in the next day or two.
2. So I arrive at the clients premises, a large professional services firm near the middle of a large town. The firm has nearly 150 staff and the firm is probably one of the highest profit per partner law firms in the country. They don't like their staff wasting time on personal matters so they don't have Wi-Fi and they have signal blockers for mobile phones. If I was reliant on cloud based software or a hosted desktop then the client would have to find me a work surface and a desktop PC, with a new login, so that I can access my own cloud software, ideally it would also be within their accounts department, the staff of whom I need to supervise and answer queries. That's an inconvenience, for both parties, that I don't want.
Similar practical problems arise when I take my laptop abroad on holiday, when I visit family on the south coast where the phone signal drops in and out, as well as any other time when I 'just want to check something' when I'm out and about. I'm entirely reliant upon finding or getting an internet connection.
When there's public Wi-Fi available throughout the country at no significant additional cost then perhaps some of those problems will be overcome, but in the meantime it will simply cause me additional headaches for very little benefit. That's not knocking the excellent cloud based software available which enables accountants to monitor and work collaboratively on their clients records, or the technology and high-speed connections that people can now get when using their office-based PC's and laptops, it's just a reflection of the current situation with regards to problems encountered when you're mobile and away from your office.
Exactly!
"it seems to me that much of the plus for a cloud system is that it is convenient for the accountant rather than the company."
"For my business the only contact with our auditors is a couple of times a year so there's no advantage here."
Isn't the fact that you only see your accountants a couple of times a year part of the problem? If they were able to review your accounts more regularly wouldn't they have a better understanding of what was going on and correct any errors promptly?
@Dave360 - I usually succeed in resisting the temptation to comment in any way that could be construed as overtly promotional (preferring to let others do the talking), but your comments that the benefits of online accounting seem weighted more towards the accountant and not the business, and the fact that you are in hospitality / catering strongly recalled a recent customer case study video we did for a coffee shop in London.
@Moonbeam - While the majority of Xero customers are micro and small businesses (in part because they unavoidably make up the vast majority of the UK business demographic) there are examples of larger businesses getting on fine with Xero, last week I spoke with the FD of a leading London based design agency with two additional overseas locations and more than 200 staff who had moved to Xero from Sage and was very happy.
Gary Turner
Managing Director, Xero
@garyturner
What about Twinfield?
Have you considered Twinfield?
As well as being able to handle the functionality requirements listed. Twinfield offers Multi-Company Consolidation in the core product and can also handle Inter-company transactions / Multi-Currency if required.
Front of House
@Dave360, what are you doing front of house?
Do you have software that is specific to the leisure and hotel industry?
If this is the case, should you be looking at integration with your back office? This is certainly an area where Twinfield scores.
Being in hospitality, you might find that your core suppliers are better equipped to supply documents such as invoices electronically. This lends itself to many of the cloud offerings.
Paul