Outgrowing XERO Software? Spotting the signs and what next?

Outgrowing Xero Finance Software

There are some obvious, and some not so obvious signs that you are outgrowing your Xero accounting software. The importance is to recognise it early, so that you can work out a strategy as to where to go next, without it having a major impact on your business operations. Any finance software package that is not aligned with the company requirements can slowly bring a business to its knees, so read this blog to spot the signs that you are growing out of Xero and get an idea of what to do about it.

Outgrowing Xero Finance Software

The Growing out of Xero Checklist

  • Your system is slowing down
  • You are doing more than 1000 transactions per month
  • You are buying extra modules for much needed functionality
  • You do not have the information you need to make decisions
  • You are manually transferring data between applications
  • You are not doing something new because you do not have the facility to do it
  • You are struggling through using spreadsheets for reporting
  • You are too reliant on an external accountant with little control over the books

The big indicators that you are outgrowing Xero accounting

Basic finance software is the backbone of the Small and Medium Business (SMB) marketplace. The move from fragile spreadsheets and hand-written notes to a robust and feature rich finance package such as Xero has been a big game changer and has seen many small businesses flourish. However, there is a limit to what a basic finance software can do for your business, and it is important to know when you are near the limits, so that you can prepare for the next stage in your growth. Much like looking for new staff, bigger offices or growing your warehouse, getting the software system to manage your business is a key part of the growth. Luckily, there are some very clear indicators, which we will discuss.

Your Xero system is slowing down

The biggest reason people start to question their Xero finance package is that they start to notice it slowing down. What a lot of people don’t realise when they start out is that Xero actually has recommended limits on many things, the number one being transactions – 1000 sales invoices per month, 1000 purchases per month, 2000 bank transactions per month. There are also other limits; 4000 tracked inventory items per organisation and more than 10000 contacts in a list can cause performance issues. Find out more here:


The reality is that processing all these transactions and all the data costs money. Xero is aimed at the smaller end of SMB with a very competitive price point, so these limits are reasonable for their intended use. It is important to understand these limits so that as your business grows, your functionality is not impacted.

Lack of functionality

Xero is aimed at the smaller end of the market, and thus the functionality is limited. The base solution has limitations on multicurrency, cash to quote, Outlook integration, full inventory management, jobs/project management, manufacturing and warehousing. As your business grows, you will likely need to add this capability. Which leads us on to the next clue that you are outgrowing Xero…

Buying too many extensions

The core capability of Xero is finance for smaller SMBs. As the product has grown, very successfully, more and more is being asked of it. This means that they have added extension modules (such as for multicurrency) and have an API so that you can integrate with third party apps. There is a certain level of risk involved with this as the apps are separate tools and we have heard reports of those apps going down leaving companies without the functionality that the require. If you are starting to build a network of different apps, the ongoing licensing costs are probably increasing to the point that you might as well have a fully professional ERP system (read on to find out more).

The more subtle indicators that you have outgrown Xero finance

The big and obvious indicators for outgrowing Xero software often mean that they are already a problem – they are obvious because they are causing your business, and probably you as an individual, a lot of pain! But there are indicators that you are going to have to look for something else that appear a lot sooner. This will allow you to make a more proactive and strategic decision, so we have discussed them here.

Transferring data between applications

At Dynamics Consultants one of our pet hates is manually transferring data from one place to another, especially between different pieces of software! It is both time consuming – a waste of resource – and prone to errors. If you are manually entering data from operations to finance, for example, it's time to re-think what you are doing.

You do not have information to hand

If you are struggling to get the information that you need out of the system, or are having to continually build your own reports, then you need to consider something new. Especially in recent times, being able to be informed and make decisions based on changing circumstances is vital, and if you are spending time trying to make a best guess, that is a massive risk to your business.

You are not doing the next big thing

The number of times that we have spoken to businesses that are not doing something new, such as selling online, or selling a service or a product or changing the way they do things because they just don’t have the functionality to manage it is shockingly high. And as Blockbusters, Kodak and Woolworths would tell you if they were still here, failing to innovate and update your offerings is the downfall of many businesses.

On that note, here is another thing that you are not doing – using the latest tools on the market. Basic finance software tools, and the individual apps you are plugging into them are very often interested in a very specific set of functionalities. With modern, integrated business software solutions, SMBs are now getting to use technologies that are leading the way for industry, such as Artificial Intelligence, Internet of Things and Automation. Being more informed and having better capabilities means that you can be the leader in your market.

The risks of outgrowing your finance system

We have helped a lot of businesses who have tried to stick with their existing system for too long. The major issues tend to be:

  • The system slows to the point that you cannot process transactions
  • Reporting is slow and unusable
  • Losing control as different team members set up their own tools to manage their functionality
  • Mistakes are made through manually typing data, costing money and customer services
  • Soaring costs of monthly software licenses, with little functional gain

What to do if you have outgrown Xero finance software

If you have gotten this far, you probably agree that outgrowing your Xero accounts system is bad for your business, possibly even catastrophic. The fact that you are here also means that you probably are close, or are over the line, of growing out of your system.

So, what now?

This is where we start to talk about Enterprise Resource Planning software, or ERP. The name, to start with, is generally accepted as an industry term for a fully integrated “all in one” solution to manage every area of your business (at least in theory); although we do admit that the name is fairly off-putting for the SMB market. ERP solutions tend to be available either for the SMB/SME market, or for the larger enterprise market.

ERP software allows you to manage every area of your business, with a wide range of functionality, and allows you to think of the business as a whole, both in functionality and from the point of view of reporting. The other added benefit is flexibility – a good ERP system should be configurable, so you can set up the way it works around your processes – not change your processes to suit the software limitations.

What about costs when upgrading from Xero? If you have bought lots of extra modules of software to give you functionality, your total license fees probably are similar, if not more than an ERP license cost. Certainly, the ERP software that we deal with, Microsoft Dynamics® 365 Business Central, has a much higher license price than the basic Xero license. However, by the time companies are looking to grow into Business Central, all the other functionality that they pay for is comparable to the much more integrated and fully featured Microsoft solution. However, there is one thing that stops most businesses moving from a basic finance package to a fully featured ERP solution.


ERP is configurable and more fully featured, they are not designed to be switch on and learn as you go like a simple finance software package is. Some businesses have grown considerably using their Xero system, and can afford to pay for a bespoke implementation to suit their exact requirements – it is often surprising how big some companies get, despite running with some basic finance and running their operations on spreadsheets! However, this means that for most businesses the cost and disruption (it is very time consuming) prohibits the new solution. This means that those companies stay struggling on a disparate mix of solutions, with growth hampered by the systems they have in place.

So, what is the solution?

ERP at a price you can afford

We have taken decades of experience and put together a solution to this conundrum. For this to work we knew that we needed:

  • To make the solution quick to implement
  • People need to learn the bits that they need when they need it
  • The price needs to be affordable to small and growing businesses
  • The solution needs to be able to grow with the company

Introducing Accelerated Business Central

Microsoft Dynamics 365 Business Central is the marketing leading ERP software for the SMB market, and our Accelerated Business Central implementation is specifically designed to help businesses outgrowing their basic finance software, such as Xero, to get up and running quickly and affordably.

Using our experience, we have templated the setup, such as the chart of accounts, with a “plug and play” implementation philosophy. With online training resources, you can learn the software at your own speed – no longer are you having to remember how to do periodic activities based on a 3-day intensive training course! Of course, if you need further help or training, our training team are here to help.

With UK based support, our team will be able to help you with issues, either directly, or with their direct access to Microsoft.

With a wide range of modules, you can implement the functionality that you require. As you grow, just implement the modules you need. And if you need anything special? You have a full Business Central system, and so we can provide you with bespoke setup, fully integrated apps and development. Our team of consultants and developers are highly experienced and work to a very strict methodology, to ensure that your solutions are not only high quality, but future proof.

See Accelerated Business Central

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