Many of our clients came to us because they had simply outgrown Xero, but why is this and what does it mean?
Xero Accounting Software is a great finance tool as your business is starting out, but as you start to grow you might find it cracks a little under the increased pressure and can no longer meet your needs. This is a common problem we hear when speaking with prospective clients.
One of the questions we will ask early during the conversation is ‘How many invoices do you generate and process each month?’
You might think a more pertinent question would be ‘What is the sum-total of all the invoices you process?’ – but in terms of accounting software it’s actually not so relevant.
Imagine a recruitment consultant with a sales target of £750,000 in a year. They might hit that target with 10 deals valued at £75,000 each – that’s just 10 transactions for the accounting software to process. On the other hand, an online retailer might be required to sell some 2500 toilet brushes at £30 each to reach the same target (they are quite fancy toilet brushes). So, although the value of transactions is the same, the accounting system at the online retailer will be required to process 2500 lower-value transactions versus the recruitment agency, which would process 10 transactions to deliver the same amount of revenue.
In some industries, the challenge is even more acute. For example, in software, payments and fintech companies, you often have micro-transactions, sometimes on a monthly recurring basis. Each transaction could be very low value, for example 5p or 10p, but there could be hundreds of thousands or even millions of these transactions that need to be processed per month. To further complicate matters, these transactions are often being fed in from other systems, so the accounting system also needs to integrate with 3rd party systems to process the transactions.
In the examples above, the performance of the accounting software is more closely related to the number of transactions that must be processed, than it is about the total value of them. It is the number of transactions the database has to handle that requires processing power.
It’s only after you’ve stepped outside your comfort zone that you begin to change, grow, and transform.
When your business is starting out, Xero might be perfectly adequate, but hopefully you will grow and the number of transactions you need to process will increase too. You may start to see some common warning signs that you’ve outgrown Xero:
- The volumes of data that you are trying to process through Xero are too large to be imported via CSV.
- Reporting will take longer and might even time-out before its finished.
- You will probably find you are constantly having to export data into Excel to produce reports.
- If you have multiple users entering invoices in Xero it can cause duplication of invoice numbers.
- The lack of Governance, Risk and Compliance controls in Xero starts to become an issue for your auditors.
So, what should you do?
Consider moving to NetSuite – If your business is growing quickly, you need a finance solution that can grow with your business and not creak under the pressure. NetSuite is a highly scalable ERP solution that can handle accounting, procurement, sales, CRM (Customer Relationship Management), marketing and reporting for businesses that range in size from rapidly growing fintech start-ups like Glint, to publicly listed enterprises like Spotify.
See more here: Is it time to switch?
Have you outgrown Xero? If you would like to know more about NetSuite, please get in touch and speak to one of our experts:
☎️ +44 (0) 203 733 2110