Cloud Accounting Xero

Xero Update: Lots of Incremental Changes

Written by Greg Lam

While there may not be any groundbreaking release coming out of Xero currently, there are a few changes I’d like to talk about. In this article I’ll cover the changes to payment terms, the interface, and machine learning.

New Payment TermsXero Update

In April, Xero updated their payment terms.

  1. The first big change is that you have to give a month’s notice before you cancel your subscription. This goes into effect on July 1.
  2. Instead of waiting 10 days after the monthly invoice to charge your credit card, Xero will charge you on the same day as you invoiced. This change will occur in 2-day increments starting in July and will be in full effect by the time November rolls around.
  3. From August 1, new subscribers (or people who are new to paying for their subscriptions, as in the event of a transfer), will need to pay in advance for the month to come, instead of after the fact.

Broadly speaking, if you read the comments in the blog post announcing these changes, there were many negative reactions to them. Realistically speaking, however, this seems to be in line with what other software-as-a-service companies do.

Since Xero is shifting to charging in advance, I do think it’s unfair to require a month’s cancellation notice. For example, if you cancel on July 15, instead of stopping the subscription at the end of July (which you’ve already paid for), it’ll stop on August 15, which means you’ll have to make another payment on August 1 for another half month.

Transaction Interface Changes

We recently wrote about Xero’s foray into machine learning and how it will change the way Xero acts in the future. Part of that change is that the interface for invoicing was updated.

Xero Update

If you’re familiar with the look of pages like Quotes, this will be no big surprise. I checked throughout Xero, and this now (finally) appears to be the standard look for all transaction pages.

Machine Learning

Speaking of machine learning, I’ve learned some new facts about how it currently works. So you know what it’s all about, it’s an algorithm that learns how you code accounts when creating an invoice, and automatically does it for you. So, when you create an invoice, by the time you finish typing in the description and are entering the quantity and price, the account code will magically appear.

Does it work well?

Since the machine learning is new and it takes time to learn, I haven’t seen much of a difference on the invoices I create so far. Perhaps this is because the learning is done based on what’s input into the description, and I type in something new almost every single time I invoice. For my business use case, it would be more productive if the machine learning placed more weight on how I billed out the customer in the past. Currently, the machine learning factors in the contact name and description, so it’s a 2-point model. Xero is looking at a 7-point model in the future, however.

Right now, the algorithm re-trains itself once a day and it’s completely based on your own organization. This means it doesn’t take into account any lessons learned from other companies, good or bad. This may change in the future, though.

Talking with a developer, I learned that the algorithm should reach peak efficiency after 50 invoices. If you do happen to do recoding, those recodes do have an effect on the machine learning.

Machine learning sounds like a cool work in progress, so I was wondering if this worked on all parts of Xero. The current answer is no, but the goal is that all parts of Xero will have machine learning applied. If you’re familiar with Xero, you know that the Reconcile page does have some predictive algorithms set up, but I am told that this is different from what’s used on account codes in the invoicing module.

Other Updates

There are some other minor updates that debuted in March and April. There were improvements to payroll, reporting, and a new direct bank feed with Capital One. Something that caught my eye is the list of what’s supposed to become available in the next 90 days:

  • Find & Recode enhancements
  • Create bank rules
  • Edit and print checks (US)
  • Report templates for agri sector (New Zealand)
  • Further reporting enhancements
  • Business lookup & indicators of credit/payment risk (Australia & New Zealand)
  • Import Excel into Budgets
  • Attach files to quotes (Android)
  • Client management enhancements in Xero HQ
  • Fixed Assets enhancements (Australia)

I don’t know about you, but it seems like this is a list of pretty incremental changes. There’s certainly nothing wrong with that, and I think we are at the point where there won’t be anything groundbreaking released that’ll really rock your accounting world.

The big changer, machine learning, is being worked on, but like the items on the list above, this will provide incremental improvements initially. In the years to come, however, when all these incremental improvements have really added up, I think we’ll register the big change — for example, when we’re truly not spending time coding transactions any longer.

About the author

Greg Lam

Greg Lam is a passionate small business guy who loves technology and automation. He holds a BBA from Simon Fraser University, Canada. He's a Certified QuickBooks ProAdvisor, Certified Xero Partner, and Kashoo MVP. His business interests are focused on online accounting and how it can be used to streamline and automate a company’s accounting processes. He currently lives in Tokyo, Japan.

Greg operates the Small Biz Doer website, an "Entrepreneur's Guide to Small Biz Bookkeeping." He is the author of Online Accounting Software: Finding the Right Match, published by The Sleeter Group.

Connect with Greg on Twitter, Google Plus, YouTube, LinkedIn, or Facebook.

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