Seven clear signs you have outgrown Xero

So, you’re running Xero and think it might be time to level up?

We’ve put together a list of the specific signs you have outgrown Xero and when you should begin looking for something with more robust capabilities.

Your growth demands multi-entity or multi-currency management

When you’re looking to expand, Xero will not be able to handle multiple entities from one instance, and will require new instances for each entity. If expansion involves different languages, Xero natively supports English only, presenting additional problems for businesses operating in multilingual environments. Similarly, if you’re requiring multi-currency management, you’ll need a more robust system to handle this.

Ask yourself:

• Do you anticipate expanding to multiple entities in the future?
• What operational challenges will you encounter when running separate Xero instances for each entity?
• Do you plan to expand into regions or markets with different languages or currencies?

You have moved beyond basic accounting

If you require capabilities like cash flow forecasting, revenue recognition, global compliance, support for multiple forms of depreciation, budget roll-ups, total-organisational budgets, subscription billing, and detailed custom reporting – it will be beyond the capabilities of Xero.

Ask yourself:

• Do you often find yourself needing more detailed and long-term forecasts?
• Are you able to accurately predict your cash flow status for the next quarter?
• Do you need to manage multiple forms of depreciation (like straight-line, reducing balance, etc.) for different assets?
• Are there specific reports you need regularly that Xero cannot generate?

You are relying on multiple third-party tools

The complexity of managing disparate systems, and plugging gaps with third-party solutions, can lead to inefficiencies, data inconsistencies, and a drain on resources, and could eventually break or degrade to a point that is unsustainable to operate and scale.

Ask yourself:

• Do you have a clear inventory and understanding of each tool in your tech stack, including their specific roles and integrations?
• Do you often find yourself reassessing and optimising your SaaS stack to remove redundancies and adapt to changing business needs?
• Are you duplicating costs by subscribing to the same tool multiple times for different departments or functionalities?

You have limited automation options

Xero is currently investing in its third-party marketplace to offer additional automation tools and integrations but it’s a short-term fix that can lead to complexity in setup and configuration.

Ask yourself:

• How much time does your team spend on tasks that could be automated?
• Has the volume of transactions in your business reached a level where manual data entry in Xero has become untenable?
• Are there specific processes that you would like to automate, but can’t be due to Xero’s limitations?

Your headcount is increasing

As your employee count grows beyond 50, payroll processing will become noticeably slower and less efficient until you reach Xero’s cap of 200 employees. At this point, you will either need to deploy a second instance of Xero or transition to a new solution.

Ask yourself:

• Have you noticed a decline in the efficiency of Xero’s payroll processing?
• Have you evaluated the cost and logistical implications of running a second instance of Xero?
• How does the 200-employee limit of Xero align with your projected business growth and payroll requirements?

Your transactions are starting to grow

If you begin to experience slower processing times, challenges in executing complex reports such as GST, or encounter system crashes or freezes, it’s possible that you’ve hit Xero’s daily API call limit of 5,000.

It’s important to remember that a single sales transaction could require multiple API calls. For example, one sale might involve individual API calls for verifying item availability, processing the payment, updating inventory levels, and creating a shipping order. Consequently, a singular transaction like a sale could trigger a series of API calls, often amounting to half a dozen or more calls. During peak sales periods, such as Black Friday or Christmas, the volume of transactions (and consequently, API calls) increases significantly. This surge can overload Xero, leading to transaction processing delays or inventory update lags, directly affecting customer experience and profitability.

Ask yourself:

• Have you experienced system slowdowns in Xero during peak sales times?
• During high-traffic periods – considering that each sales transaction generates several API calls – is there a risk of reaching or exceeding Xero’s daily API call limit?
• If the API limit is reached, what is the estimated delay in processing sales transactions, and how does this affect customer service and order fulfillment?

You want to incorporate subscription billing into your business model

If you’re considering launching subscription billing, it’s important to note that Xero does not currently offer native support for subscriptions. This means that subscription billing processes would need to be managed manually outside of the Xero platform.

Ask yourself:

• Have you considered the complexities of managing subscription billing manually within Xero?
• Are there any compliance or reporting requirements specific to subscription billing that need to be addressed?
• Do you have plans or strategies to automate subscription billing processes?

Where to from Xero?

If your business is currently experiencing any of these growing pains, then be warned – your issues are only going to intensify as you grow. It may be time to look towards a more robust business system that will support your growth.

A few more helpful resources:

• Levelling up from Xero with NetSuite: Why businesses make the switch + capabilities comparison
• Feature-by-feature comparison: Xero versus NetSuite >
• NetSuite versus Xero: The essential guide to upgrading your systems >
• Competitor Analysis: NetSuite vs Xero >
• Infographic: Shopify-NetSuite versus Shopify-Xero >
• Is your Shopify-powered business experiencing growing pains? A comparison of Xero & NetSuite with Shopify >
• Whitepaper: Has your business outgrown Xero? >