I’m glad you called out the feature of sharing your account with your financial advisers—that could save time in generating reports, make the accountant’s life easier, and reduce costs by streamlining the entire process. Since we’re pondering switching to a different accountant this year, having them familiar with Xero might be a big win.
FWIW they have an accountant finder tool, if you don’t know someone who works with Xero through your own word-of-mouth network: Xero Advisor Directory: Find Accountants, Bookkeepers & More | Xero IE
The real elephants in the room with Xero is trying to download all your data and making a proper backup.
To my knowledge there is no easy and simple one-click way of making a backup directly in Xero. And should Xero go “pop”, and we have seen that with companies, then so does all your data and financial records.
Not a good thing and I am sure my tax office would take a dim view if I said the equivalent of the “dog ate my homework” (i.e the software company took my data).
So I use https://www.getboxkite.com to automatically download backups of data and invoices etc etc from Xero to my Dropbox.
Anyone moving to Xero should budget for, and use that service – or one of the similar ones that are offered.
I’m curious what you see as the disaster situation here, and how you’d use the backup that these services would provide. For the most part, Xero is just pulling data in from other accounts, so the backup would largely involve categorization of transactions, at least for us (since we’re not doing invoicing or billing in Xero).
So if Xero goes under as a company and millions of people were forced to switch to some other service, it’s not entirely clear to me how useful data exported from Xero would be, beyond lists of contacts and a chart of accounts. The other service would still have to connect to all your accounts and pull the data in from them. Perhaps it would support importing the Xero data, but that seems like a big assumption to me.
If the disaster scenario is instead that Xero has somehow deleted all your data, having a backup might make it easier to import data back into a fresh Xero account, for sure. However, in that case, I think I’d be very leery of continuing with Xero and would be looking for an alternative immediately.
When we switched from AccountEdge to Xero, the only thing we imported was our chart of accounts with starting balances. Admittedly, that was at the start of the year, so we were starting fresh. But having other data in AccountEdge certainly didn’t help us in any way.
I run a small business and I use Xero as a full accounting package dealing with invoicing, billing, VAT (a UK sales tax), payroll etc. Unless you are meticulous in keeping records and copies of all the receipts, invoices etc before they are entered into Xero then you are relying on Xero keeping all of these records secure. In UK law you (not Xero) are responsible for keeping full tax records for (I believe) x7 years and that includes copies of all receipts, invoices, expenses claims, bank account records, VAT returns etc.
Now, Xero say in their T&Cs that you are responsible for maintaining backups of records (https://uptakedigital.zendesk.com/hc/en-us/articles/360000096036-Do-I-need-to-backup-Xero-). Yet Xero gives you no easy “one click” way to export all your records. You have to do lots of exports: Xero Central
If Xero were to fail, go bust or disaster should strike, and all my data in Xero were to disappear, then UK tax authorities would say that liability for my records lies with me. Which is why I use the third party backup service that I previously mentioned as this backs my data up daily in a way that another accounts package or accountant could easily work with.
Yes all the original data my still be found in lots of different places, but Xero is where all my receipts, expenses, bills were uploaded, and that is where I generate my tax returns, VAT returns and invoices etc. So I am amazed that Xero does not offer a simple built in way of backing up all my data I have entered in an easily accessible form and I am surprised that you seem “relaxed” about this – I thought your data was only as good as your backups
It does sound like backups would be vastly more important for a business that was using as much of Xero as you are. In our case, Xero has very little unique data since it’s just reading the data from the actual sources, which would remain accessible. If we were forced to switch to another accounting package tomorrow, it would be annoying, but with a chart of accounts and recent account balances, it wouldn’t take long to bring it back into sync. It sounds like that would very much not be true for your business.
From what you’re saying, the key for Xero backups is to make sure they’re being made in some sort of format that could be imported into a different accounting package. Perhaps I’m as “relaxed” about this as I am because AccountEdge did nothing more to help us in that regard—we switched to Xero with just the chart of accounts and opening balances.
This is a topic near and dear to my heart, @ace. In the past year, I have used just about every major and most minor bookkeeping packages for MacOS, as well as a few cloud solutions. I’ve been thinking about Xero (as well as waveapps) but haven’t made the leap yet.
I agree with your assessment of AccountEdge - it’s very 1990s, and just so clunky. For my personal finances I live on GnuCash, which is also clunky but allows me to keep everything offline. I also had a brief flirtation with the “plain text” accounting programs ledger and beancount, but disliked how unstructured entering data was.
I have been thinking long and hard about the cloud issue. It’s certainly true that the cloud luddites (I’m one!) tend to be individuals - businesses, by and large, have flocked to the cloud in droves, so I think this may simply be a case where we as individuals are magnifying the risks past what they actually are.
Lately I’ve been experimenting with manager.io (in fact, I just made a video about it), which is a multi-platform package that supports both cloud and local use. Like Xero, it’s very focused at business. Unlike Xero, it doesn’t have the tight integrations to banks. I suspect that once you’ve gotten used to those integrations, going back to a package without them is going to feel like lighting a fire by rubbing two sticks together.
It is not unusual that double entry accounting programs don’t have good support for investments - GnuCash is really the only one I can think of with first-class support, and even there you run into the impedance mismatches between how we as individuals want to think of our investments (“My BIGCO shares are worth $50,000!”), and how the ledgers want to think of them (“You paid $200 for your BIGCO shares, so that’s what they’re worth.”)
Thanks for the deep dive into your migration to Xero! It gives me a lot to think about.
Sounds like you’ve put a lot of thought into this indeed, @peterb1! I hadn’t heard of manager.io before, but it looks like it might be a good alternative for those who were using AccountEdge and want to stay off the cloud.
I will say that since I wrote this article, I’ve continued really liking Xero. The reconciliation aspect is just so satisfying.
The real question I have is why is it so impossible to port data from one accounting package to another. We have the .qbo format, but it’s fairly primitive. There should be a portable document format that all of these types of software adhere to. I guess the incentives align against it, though.
I HAVE SO MANY THOUGHTS ON THIS TOPIC, I’m sorry sorry for continually necroing it!
Moneydance is my “It’s ALLLLLLLLLmost great” choice from among the single-entry “checkbook register” programs; Banktivity is in this category too. I like much about the UI (although Moneydance’s split-entry UI is super-overloaded and IMO confusing). But all of these programs suffer from the same problem, which is that checkbook-register accounting is inherently error prone and, once you’ve made a mistake, is difficult to recover from. I can’t count the number of times I began using a new personal finance program in earnest and then, 18 months later, realized my books were garbage and had to effectively pick a new “day zero” to fix things up. (Having used double-entry for years now, I’d estimate that my “error rate” is about one mistake, per account, per month. So any software that doesn’t help me find those mistakes IMMEDIATELY is software that is causing more problems than it solves.)
So you want double-entry, because if your finances are sufficiently complicated it’s a requirement to find your mistakes. But, none of the double entry programs do a great job with investment accounts. So basically you’re faced with this Venn diagram, and there is nothing in the intersection of all three circles:
The format is there, it’s called XBRL.
Now convince the software makers to adhere to it.
I am currently going through accounting system change in my office, from Solomon 6.15 (Windows, ancient version) to Acumatica (cloud based accounting for businesses). I’ve been through a few accounting system migrations in my IT career, but most too ancient to bother mentioning. But in every case we never ported all data, just month closing balances for the previous 2 years, vendor information, and the like. But never entries. In many cases we had to redesign the chart of accounts to work well with the new system, though also a good chance to streamline our systems. I will be so happy that I will be able to retire our single Windows server after migration is done, we will keep the old system running for 18 months for looking up historical information. Otherwise we will depending on the monthly spreadsheet exports for historical information.