Worth it? $55 per month for the Xero pricing in Singapore

Full disclosure: I had a 6-month free trial with Xero, under the DBS Start Digital Programme.

The day I registered for Xero, I thought I was pretty smart.

After all, it seemed that I had finally graduated in our business journey, finally needing an accounting software!

But for the next 3 months, we hardly went into Xero.

Is Xero actually worth the trouble? And more importantly, is it worth the money?

Our context as a small service business

As a small content business that made all of $27,000 in 2022, we thought we were doing the right thing by moving our accounting to Xero. After all, it made sense, especially when our Excel sheets were a mess.

Here, you might necessarily identify with our situation as a content and communications agency.

The bulk of our invoices were for articles that ranged between $150 to $550, and we sent these out about 5 times a month.

In addition, we were extremely tight with our budgets and didn’t think it made sense to have the Stripe fee when our clients paid through the Xero invoice.

For you, it may make sense, especially if you’re having a large number of clients (ideally I would say this is more than 15), and having them pay through bank details might be too taxing to follow up.

The 2 problems that may make you think about Xero

You may have 2 primary problems when you think about the move to Xero.

1. Reconciling payments

1. Meaning that you know where your money is going out to
   
   2. That people are paying you for the work you do (and that this appears as cash in your bank)

It can be a nightmare to be looking at the multiple line items on your bank statements, and wondering where each went to, and where each came from.

Because at the end of the year, you’re going to have to reconcile hundreds of transactions, and you could possibly go crazy from doing all of that.

Better to do that in the Xero app.

Or so it seems.

For example, as you can see from the example above, this is a picture of DBS’ bank feed, integrated into Xero. Every single bank transaction can be seen, and then sorted into its respective category.

This helps you in your accounting at the end of the year.

2. Invoicing

1. One big problem is ensuring that invoices go out at the right time (not too early, and not too late)
   
   2. Making sure that clients pay
   3. And that the invoices are followed up, ideally automatically, if they are not paid

You might hate to be loanshark (and no, this is not the time to play that hit song Baby Shark), but running your own business means that you might sometimes have to beg clients to actually pay up. You are at their mercy if they don’t pay.

Mind you, there’s no option for clients to pay via direct bank transfer, meaning that all payments have to go through your payment processor.

This is good for Stripe, not so good for you.

In Singapore, you and I know that paying through ways such as PayNow or bank transfer yield no charges, and the money goes straight to you. Having these processing fees can eat into your already small margins.

Stripe argues that because customers find it easier to pay online, they will pay faster (and more). But come on.

Is it that hard to key in your PayNow mobile number and make the payment? After all, wouldn’t your client be keying in his company credit card details to pay the invoice online?

As bootstrappers, this is what we used instead

Ready?

Microsoft Word for invoices

You might be surprised.

As a web development agency, you might think that we are pretty tech-y, and Word just doesn’t seem so. But it’s worked well for us, especially when we don’t send out more than 5 invoices per month.

But we also prefer Word because of how it allows us the flexibility of determining the payment options, rather than forcing our clients to pay through credit card on Xero.

Once you’re used to this pattern, then it takes about 5 minutes for us to change the details on the template, and becomes much faster than Xero.

You might want to consider this option.

Microsoft Excel for reconciliation

We continue to use Excel for reconciling our accounts. Although that may not be the easiest way, it continues to be the best workaround.

Yes it is a stupid process whereby we have to:

1. Gather all your bank statements
2. Look through each line item on each bank statement
3. Figure out where the money went
4. Figure out if clients you have billed have given you the money

Doing our accounts twice per month, on the 10th and 25th each month, forces us to keep our eye on the ball.

Should you upgrade to Xero?

My belief is that you shouldn’t chase after the new shiny objects, especially if they don’t bring much to your business.

Unless your service business is:

1. Needing to generate more than 15 invoices per month
2. Having more than 200 transactions to reconcile per month

Then, Xero is not the thing you should use.