Your introduction to using Xero for property management businesess

Not using Xero for your property management bookkeeping? We think it’s time you had a rethink.

Here’s the Cloudfox guide to Xero accounting and property management. 

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What is Xero? 

Xero is a cloud-based accounting software platform aimed at small and medium-sized businesses. It was founded in 2006 by Rod Drury in Wellington, New Zealand. The platform offers bank reconciliation, expense tracking, invoicing, payroll processing, and financial reporting features all in the cloud.

Need to be bigger for your portfolio?

Wait. Xero is actually built with a much bigger scale in mind. Read on, and we’ll show you what we mean.

Cloudfox says, “Xero accounting is more robust for property management compared to other market leaders” 

While several other accounting software providers are available, Xero has gained a significant market share and has been recognised for its comprehensive feature set and user-friendly interface.

We believe Xero is the most robust platform for PBSA and BTR businesses, and here's why: 

1. Comprehensive functionality and easy integrations - The Xero platform offers a complete accounting base with features and tools covering various accounting and financial management aspects. Its core functions include invoicing, bank reconciliation, expense tracking, and financial reporting. Additionally, Xero integrates with numerous third-party applications to help you tailor your system and ease your workflow.
2. Scalability - Xero accounting was initially aimed at small and medium-sized businesses but now offers scalability. Each building can have its own Xero instance, allowing you to onboard and offboard companies as the business continues to grow.  Copying charts of accounts and setting up a new instance is a matter of clicks away. This scalability makes Xero ideal for property companies that have an Operating company and property company structure. PBSAs and BTRs would do well to consider it. 
3. It’s Cloud-based and easily accessible - Users can access their financial data from any device with an internet connection, facilitating remote work and collaboration. The cloud-based infrastructure ensures data security, automatic backups, and seamless software updates. Accessibility also refers to user experience. Xero has an intuitive and user-friendly interface, making it simple to use, even for those without extensive accounting knowledge. 
4. Compliance friendly - The best part about the service is that Xero thinks about financial compliance. For example, Making Tax Digital was very quickly simplified for those who hit the VAT threshold, which property managers will likely do in the first month or two of operation. VAT reports are now pre-generated, so you simply grant access to your accountants, bookkeepers, and other team members, and they get the job done directly through the software. 
5. Extend capabilities with the App marketplace - Xero is used in over 180 countries by more than 3.7 million subscribers and integrates with over 1000 third-party apps. If you need a payment integration Stripe and GoCardless can be added, authorisation workflows, no problem with ApprovalMax just a click away. 
6. Data automation and machine learning - Xero’s use of data automation and machine learning enables a shift from manual data entry to review-driven bookkeeping workflows. Save time by using supplier rules to automatically code transactions before posting to Xero. 

How much does Xero cost to run? 

Xero pricing is based on three basic tiers: 

• The "Starter plan" - is suitable for sole traders and includes basic features. It costs £14 per month. 
• The “Standard Plan” - is better for small businesses and includes the additional bulk reconciliation feature. It costs £28 per month. 
• The "Premium Plan" - is designed for growing businesses and offers additional features such as multi-currency support and bill and receipt capture. It costs around £36 per month. 
   

Once you select your tier, you bundle the extra features you need. Currently, costs are estimated at 

• Xero Payroll £5 per month per user, up to 5 users, and then £1 per month for every extra user 
• Xero Expenses £2.50 per month per user 
• Project tracking £5 per month per user 
• CIS returns £5 per month 
• Xero Pay with Wise (bill payment automation) from £1.50 per month 
• and Xero Analytics £5 per month. 
   

Our property clients often benefit from opting for the "Ultimate Plan", which is geared towards larger businesses and those with complex needs that require advanced functionality, such as payroll, expenses, project tracking and advanced analytics. It costs £49 per month and avoids some of the additional expenses of growing team numbers.  This also allows you to integrate your own private apps to work on your specific company requirements.  

What Xero features would property management businesses need? 

Property management businesses typically require specific features within Xero to manage their financial operations effectively.

Xero's invoicing functionality allows property management businesses to generate and send professional-looking invoices to tenants for rent payments, deposits, or additional charges. It enables customisation of invoice templates, automated recurring invoices, and payment status tracking. All of which saves your team time in their workflow and streamlines student onboarding.

Bank reconciliation is a crucial feature that helps property management businesses match their bank transactions with entries in Xero. This feature streamlines reconciling rental income, expense payments and other financial transactions, ensuring accurate accounting records. Automatic bank feeds from all the major banks means no more downloading csv’s to import them in before you even start.

Property management businesses need to track various expenses related to property maintenance, repairs, utilities, and other operational costs. Xero's expense tracking feature allows easy categorisation and recording of expenses, facilitating accurate financial reporting and analysis. Integrate ApprovalMax, and you’ll also cut the purchase order approval process by 70%!

When dealing with late payers, Xero can automatically send chaser emails as the debt ages. These emails are usually sent after 7, 14, and 21 days, but you have the flexibility to customise them based on your escalation stages. Each chaser email contains links to an online invoice, making it convenient for customers to make payments and removing any barriers to payment. 

Integrating Xero with payment gateways like Stripe or GoCardless enables efficient collection and reconciliation of tenant rental payments. This integration automates the process, reduces manual effort, and improves cash flow management.  Allowing customers like Novel Student to offer monthly instalments to their students, increasing sales without increasing head count or debt. 

Xero's Payroll processing feature can help manage payroll calculations, tax deductions, and direct deposits. It ensures compliance with payroll regulations and simplifies employee wage management.

Xero's document management capabilities allow property management businesses to securely store and organise important financial documents, receipts, and invoices. This feature ensures easy access to records for auditing, record-keeping, and collaboration purposes.  You can even integrate this with your preferred cloud storage provider to keep your documents in your control. 

What would property management businesses need to integrate with Xero to form their tech stack? 

There are several apps we'd recommend property management businesses integrate with Xero to form the ultimate tech stack, but here is the standard setup you need. 
 

• Property Management System (PMS) - A PMS tailored to your property management streamline various property management tasks such as manage online bookings, allocations, rent collection, maintenance requests, and reporting. Integrating the PMS with Xero allows for seamless synchronisation of financial data, including rental income, expenses, and tenant details. 
• Payment Gateways - Integrating payment gateways like Stripe and GoCardless with Xero enables automated payment reconciliation and makes tracking incoming rent payments from tenants easier. This integration can save time and reduce manual data entry. 
• Customer Relationship Management (CRM) software, like Hubspot helps manage and track interactions with tenants, prospective students, and other stakeholders. Integrating a CRM solution with Xero allows for the smooth flow of customer data, ensuring accurate records and facilitating communication. 
  
  

How to integrate Xero throughout your property management business 

Rolling out Xero and app integrations across your business is easy with Cloudfox. We are seasoned Gold Champion Partners (recognised partners since 2014), so we know how to manage complicated data migration from your old system to your new and improved one. Plus, we know which apps to pick to tailor your accounting.

We can also manage your monthly bookkeeping where you need it.

We understand how important your financial and client data is, so we have worked tirelessly to ensure our setups are secure. You can guarantee you are industry compliant throughout the transition. 

 
Want to know more? Contact Eddie today.