Is Xero Suitable for Family Offices?

DOS & Co. is a Xero partner, specialising in setting up and running Xero for family offices, aircraft, yachts and other luxury assets.

What is Xero?

In a nutshell, Xero is a cloud-based accounting software with the primary purpose of providing an online accounting system to small businesses.

Xero is designed to be easy to use and allows you to track your accounts and transactions with ease. It also offers a wide range of reports and graphs that can help you keep track of your finances.

Can Xero be used for Family Offices?

Family Offices come in all shapes and sizes, but generally they do have some unifying characteristics. They all tend to own assets (be it property, aircraft and/or yachts); they all tend to have overhead costs (in the form of staff, consultants, advisors and asset running costs), and they will often have revenue as well (income from investments, property portfolios, business sales etc).

For this reason, at its most basic level, Xero is perfectly suited to family offices.

Do you need any additional plugins for Xero?

There are some plugins that we recommend for every installation of Xero - ApprovalMax is brilliant for creating a clear audit trail of payment applications, and for ensuring that purchase orders can only be sent out if they have been approved internally.

We also recommend using Dext (formerly ReceiptBank) to automate the scanning of incoming invoices - it's a huge timesaver and gets your data straight from your PDF invoices/bills and into Xero without any typing or manual data entry!

Are there any reasons Xero isn't suitable?

There are two primary challenges that family offices find, in our experience, face in implementing Xero for their family office accounting needs.

Using Xero with multiple family office entities

The first is that luxury assets (like properties, yachts, aircraft and even investments) are often structured in multi-entity international wealth holding structures, each having its own separate legal personality (and, thus, each requiring its own separate Xero account) - this is something we are very experienced with in implementing, and we have developed some great tools to provide the helicopter view required for these family office structures.

Capturing interim data in Xero (live valuations, unrealised gains etc)

The second is that for consolidated wealth-management reporting purposes, Xero can be considered two-dimensional, or 'static' (tracking fixed-price assets and liabilities), but not three dimensional, or 'dynamic' (tracking the ongoing value of portfolio positions, realised and unrealised gains, variances in property values, or being able to consolidate complex investment positions in multiple currencies straight out of the box).

Our Conclusions on Xero for Family Offices

In summary, Xero is particularly suited to modern family offices because it is cloud-based; secure; allows for fine-grade permissions controls and is readily extensible via the dedicated API.

We have a proprietary in-house platform (see our Digital Family Office platform) which consolidates the data from multiple Xero accounts, overlays them over one another and presents a unified, live view of the family office's position, at any time by drawing upon and embellishing your Xero data.

Please don't hesitate to get in touch with us if you would like further information.