The Warning Signs You’ve Outgrown Xero Accounting Software

Xero can be a lot like that favorite pair of jeans you’ve had for the last 10 years. It’s comfortable, but it doesn’t fit the way it used. You may have outgrown it over time. It might not be giving you the same freedom it once did. Or maybe it’s time for something more styled to what you need now.

How can you be sure you’ve outgrown Xero accounting software and now need something that suits you better?

There are a few clear signs.

Sign #1 that you have outgrown Xero: reports slow down and timeout on you

An obvious sign that you are outgrowing your Xero accounting system is that your reports start to slow down and time out.

We are talking important reports here. The impact can mean not being able to run your BAS report, or your general ledger report.

You might email Xero support to ask about it. And they will tell you that you have exceeded their recommended volume of transactions. Panic sets in and you think, “But I have to run my BAS now!”. Xero will run the report for you for a few months, but then, they will advise that you need to look at alternative solutions (I have discussed a few here).

If those solutions don’t work, it’s clear that you’ve outgrown Xero accounting software. You need to look at a better alternative.

A small business ERP system will generally have no issues with high transaction volumes. This leaves you with a lot of room to grow – without having to consider new systems.

“An obvious sign that you are outgrowing your Xero accounting system is that your reports start to slow down and time out.”

Sign #2 that you have outgrown Xero: you spend time figuring out your business in Excel

Are you exporting and manipulating data to get the reporting you need? If you’re continually extracting data from Xero and other systems, importing into Excel, and combining or cross-referencing data, you may have outgrown Xero accounting software (or rather, out-matured Xero).

Manipulating reports is a sign that the complexity of your business is no longer supported by the systems you have.

One solution is to build a custom reporting database. I get into some of your options here. But as always, before developing a custom solution I always recommend to investigate off-the-shelf options that focus on simplifying your data and consolidating reporting, and may do exactly what you need – without the time, effort, and costs of building and maintaining custom solutions.

ERP systems are being used by more mature businesses to help them continue their growth. ERP software utilises single-source data and provides strong reporting capabilities that may cover all your reporting needs out of the box. You can learn more about ERP from this article, What Is ERP Software?

My recommendation: have a chat with an ERP solution provider to find out what they can do. They may be able to cut a lot of work out of your weekly schedule and save you significant time.

“Manipulating reports is a sign that the complexity of your business is no longer supported by the systems you have.”

Sign #3 that you have outgrown Xero: you feel like you have way too many systems

Xero can be great small business accounting software, but it’s not designed to work alone. It may cover your accounting requirements, but it doesn’t claim to cover the operational side of your business.

Most well-run companies have other systems that hold their broader operations together.

This can be a separate CRM system, an add-on inventory solution, or additional manufacturing software.

When using Xero, your architecture can start to look like a network of different applications that cater to different parts of the business. This network of apps is a quick way to get up and running for new businesses and start-ups. But at some point, the communication of data between separate systems can become a liability. You can run into issues with data syncing from one system to another, staff access to numerous systems, using and maintaining multiple platforms, and more. This can quickly become overwhelming.

As a business matures, it may be time to consider other architectures such as an ERP solution or an industry-specific solution which provides all the core business functionality you need. I describe a few of the key architectures to consider here.

“ERP systems are being used by more mature businesses to help them continue their growth. ERP software utilises single-source data and provides strong reporting capabilities that may cover all your reporting needs out of the box.”

Where should a mature business go from here?

As always, the first step is to inform and educate yourself.

Have a chat with someone who can discuss your alternatives with you. I may be able to help you in a quick, 20-minute, free phone chat (book one here). Otherwise, engage a cloud consultant of your choice or an ERP solution specialist.

Once you know the options and start exploring them, you’ll also start gaining a better idea of the types of architectures that suits your business needs. And, which architectures will continue supporting your business growth.

Yes, there will be time and effort involved in researching and changing over systems. You’ll also need to gain input from your team and ensure they are on board with the changes ahead.

Just like shopping for a new pair of jeans, think about what will make a new business management solution the right fit for you. It needs to be comfortable, producing the reporting you need quickly and simply. It needs to be the star of the show – rather than relying on numerous other accessories (or systems) to deliver what you need. And it needs to keep you supported and ensure you plenty of room to grow.

Find out what software systems can support your business needs and give you the right fit. Talk to a cloud consultant and get the right advice.

Inbal Steinberg is an independent consultant helping businesses identify the cloud systems architecture that could work best for them. You can get in touch with Inbal by booking a chat here.