Outgrown Xero? The signs, the options and what to do before you switch

Cloud accounting packages such as Xero and MYOB are excellent at what they are built for. But as a business grows, more of its work starts to happen around the accounting system rather than in it: stock in a spreadsheet, job costing in another, approvals by email, reporting rebuilt from exports every month.

At some point the question comes up: have we outgrown it? The honest answer is often “partly”, and the right next step is rarely the biggest one.

The signs

You may have outgrown your current setup if several of these are true:

• Spreadsheets fill the gaps. Stock, job costing, commissions or forecasting live outside the system and are keyed back in.
• Add-ons do not talk to each other. You pay for several apps that each hold part of the picture, and people reconcile them by hand.
• Month-end keeps getting longer, because more of the close happens in spreadsheets.
• Reporting needs exports. Margin by customer, product or job has to be rebuilt outside the system every time.
• You now have more than one entity, and consolidation is a spreadsheet.
• Approvals happen outside the system, in email or on paper, so there is no trail.

What “outgrown” usually really means

In many businesses, the accounting system itself is fine. What has been outgrown is the way the tools around it are connected, or not. Before replacing anything, it is worth separating two different problems:

1. The system cannot do something you need. For example, genuine multi-warehouse inventory, complex manufacturing, or consolidation across many entities.
2. The system can do it, but your data and processes are not set up to. For example, stock kept in a spreadsheet because nobody set up the inventory module properly, or reports rebuilt because the chart of accounts does not match how you want to report.

The second problem is far more common, and much cheaper to fix.

The options, in order

1. Fix the setup

Clean up the chart of accounts, tracking categories and item lists so the reports you want come straight out of the system. Use the features you already pay for.

2. Connect what you have

Integrate the apps you already use, so orders, invoices and stock move between them automatically instead of being retyped.

3. Add a specialist tool

Where one area has genuinely outgrown the system, such as inventory or job costing, a dedicated tool that syncs with your accounting system is often enough.

4. Move to an ERP

When several areas have outgrown the system at once, a single ERP that runs finance, inventory, purchasing and sales in one place can make sense. It is also the biggest change, with the biggest cost and disruption. Our guides to choosing between Xero, MYOB and an ERP and choosing an ERP for a small business cover how to decide.

What to do before you switch anything

• Write down the processes, as they actually run today, not as they are meant to.
• List what hurts, and what it costs in staff hours. That tells you which problem to solve first.
• Clean your data. Migrating messy customer, supplier and item lists into a new system just moves the mess somewhere more expensive.
• Get independent advice. Anyone who earns a margin on the software you choose has a reason to recommend it.

How we help

Our business systems and integration work starts with how your business actually runs, then recommends the smallest change that solves the problem, often connecting what you already have. Because we do not resell software, the recommendation is whatever fits. The diagnostic looks at your finance function and your systems in the same pass, which is usually the fastest way to answer “have we outgrown it?” properly.