Xero has announced Xero Go, a new mobile-based solution that is available on iOS today. The announcement came at its annual conference in London, Xerocon. Xero Go targets sole traders, that often have simpler business requirements than that offered by a full version of Xero.
In the most recent census, the ONS recorded 2,765,140 sole traders, of which 493,140 were less than two years old. Many of these will never grow into the small business that requires Xero. It is a segment of the market that is now being served by numerous startups, including companies such as CountingUp that rival Sage invested. Xero Go aims to provide a cheaper entry point for those sole traders onto the Xero platform.
Anna Curzon, Chief Product Officer at Xero commented: “This is a product that caters to the entry-level accounting needs of the self-employed – a growing area of demand. So we wanted to offer early access to a product that caters to the basic accounting needs of self-employed businesses in the UK, the number of which has increased over the last 20 years, and also those of their advisors.
“Xero Go helps businesses streamline the manual, time-consuming elements of being self-employed, while also providing accountants with accurate, clean financial data they need to service these clients.”
What does Xero Go deliver
The application is only available at this time as an iOS app. Xero will release an Android version in the coming months. The app is free to download and is available as an early release to subscribers now. Xero will roll out additional functionality in the coming months as MTD for ITSA (Income Tax Self Assessment) approaches. Additional functionality will be available on the app, some of this will be chargeable, but Xero does not expand exactly on what that is.
Full Xero users can use the app, though they already have the Xero accounting app that provides existing users with most of the functionality they require. Whether the app will include support for VAT is unclear as the app does not currently support VAT on invoices.
The initial app has two main pieces of functionality, recording expenses and issuing invoices. For expenses, users can use a Quickscan feature that will extract pertinent information from a receipt and import it into Xero Go. The Artificial Intelligence within the application will suggest the most relevant tax category, saving time and potentially increasing accuracy over manual expense recording.
Invoices
Users can also create, send and track invoices. Invoices are customisable. Users can set up an invoice template that they can use for all invoices as well as generic payment terms if required. Users can also set up reminders for late payments, and there is already an integration with Stripe, to streamline the payment process.
For each invoice, users can inventory products and services and attach additional files, such as a photo of the completed work. They can then send the invoice to the client or save it to complete it later.
Users can view a list of invoices, see which are paid and look at a summary of income by month.
There is no mention of integration to PayPal, which the main Xero application supports. The Stripe payment functionality will improve the invoice-to-pay process for sole traders. It means that they can raise a customised invoice on the fly and have it paid before they leave the premises. Often invoicing would have to wait until the sole trader returns home in the evening or at the end of the week.
Why this matters
With the ability to record expenses and invoices, sole traders will have a single point of reference for their records for the end-of-quarter and end-of-year submissions to HMRC. This gives them ready access to every expense and invoice without having to trawl through shoeboxes of paperwork.
MTD for ITSA is due to go live from April 2024 for self-employed individuals earning above £10,000. Sole traders and others will be required to keep digital records of income and expenses on MTD-compatible software, and to make quarterly submissions. Xero Go is one of the applications available that will help sole traders navigate this significant change.
They will not be alone, though. The second part of Xero Go is the access that their accountants will have to support their clients. The Xero Go Partner Plan is a new edition for accountants and bookkeepers. It will provide access to the sole traders’ records for their designated accountant.
Advisors will be able to review digital, rather than manual records that are already coded, saving them time and their clients (in theory) money in the preparation of their accounts. It should mean that these advisors are better placed to offer advice rather than administrative support.
Alex von Schirmeister, Managing Director, UK and EMEA, Xero, commented: “With MTD for ITSA also coming soon, we want to support our accountants and bookkeepers by removing the time-consuming workload associated with its increased reporting requirements, so they can work smarter, not harder, to help their customers prepare. Accountants and bookkeepers can remain compliant while focusing on what they value the most: providing the best service and experience they can for their clients.”
Enterprise Times: What does this mean
As the standard Xero application has become more sophisticated there has been a growing gap that the company has missed. With the launch of Xero Go, Xero aims to close this gap while also providing a means by which startups can also mature into the full Xero app if their sole trader turns into a small business with employees.
This approach has merit, but there are some flaws to their approach. There is no android app, and Xero Go appears a little rushed to the market in comparison to some other solutions out there. There is also no tie to a bank account, which solutions such as Counting Up provide. Considering the relationships that Xero already has with banks across the world this seems like a big omission. While this is a useful business app, users will have to switch between Xero Go and their banking app (at times, a frustrating process because of security).
Xero also provided no details on what the additions it intends for the app are or anything around pricing for either Xero Go additions or the Xero Go Partner plan.
