Accounting
2019 Review of Xero Accounting for Nonprofits
Apr. 16, 2019
Though not designed for nonprofit organizations, Xero can be a good fit for smaller organizations that are not currently managing multiple funds, projects, or grants.
Xero is a completely cloud-based application that also offers a mobile app for complete anytime/anywhere access. Xero is available in three versions: Early, Growing, and Established, with each version offering more extensive functionality. Xero includes a default chart of accounts, though users can also import their current chart of accounts if desired. There are limited customization options in the chart of accounts, making it difficult to manage multiple grants or projects.
Xero easily handles multiple transaction types including online invoicing, inventory management including adding and editing inventory totals, electronic bank reconciliation capability, bill payment, fixed asset tracking, sales tax calculation, cash receipts, and customer quotes. Users can also create recurring invoices in t Xero if desired.
Users can easily import budgets into Xero, though the majority of budgeting for Xero users will likely occur in Microsoft Excel. There is a budget manager function that allows users to create a simple budget, and users can easily track budget totals. Users can create a new budget from scratch or copy an existing budget and edit amounts as needed. Xero allows users to create only one organizational budget, but secondary budgets can be created.
Xero does not offer donation or fundraising capability in the application, though it does offer integration with a variety of third-party nonprofit specific applications such as Expensify, Calxa, infoodle, and Asset.Guru. Though users can add sub-accounts to track a grant, the system is not equipped to handle management of multiple grants, projects, or funds.
Xero uses a two-step authentication model to ensure system security. Managers invite those that they wish to have access to Xero and create the level of system access best suited for the new system user by assigning them a role with access only to the features available in that particular role.
Xero offers good reporting capability, with a variety of standard system reports available. The product also includes a dashboard that displays a snapshot of current financials and transactions recently entered into the system. The dashboard is customizable, so users can display the information they need. Xero recently updated a variety of their standard reports, which now offer more flexibility and have an easy-to-read design. Reports offered in Xero include a Detailed Account Transactions report, Account Summary report, and a GL Exceptions report. Standard financial statements are also offered in Xero, including a trial balance, statement of cash flows, and balance sheet. All Xero reports can be exported to Microsoft Excel or Google Sheets, or saved as a PDF.
Xero offers good help and support resources through Xero Central, where users have access to popular support topics, as well as access to their account, including billing and subscription options. Users can type in a topic or ask a question in the Help box at the top of the screen, or choose to access some of the other resources include a Reviewer Guide. Podcasts, a video library and training options. Product support is free and is included in the cost of the monthly subscription and is accessible via email, with a chat option available as well.
While Xero does not offer nonprofit specific functionality, it can be a useful tool for very small nonprofits organizations that wish to transition away from spreadsheet software to an accounting and financial management application. Xero currently offers three versions; the Early version, which offers a limited number of invoicing, billing, and reconciliation transactions, and currently runs $9.00 per month. The Growing version includes processing for an unlimited number of invoices, quotes, bills, and bank transactions and currently runs $30.00 per month. The Growing version includes the same features found in the Growing version along with multi-currency capability, expense management, and project tracking, and runs $60.00 per month. Xero also offers a free 30-day trial so those interested can try out the product to see if it’s a good fit for them.