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Xero acquires Australian online payroll provider

We’re thrilled to announce that Xero has signed an agreement to acquire Australian online payroll provider Paycycle. This will provide a fully featured payroll solution as part of the Xero platform.

We listened

I’ve been at the helm of Xero in Australia for just under 5 months and so much has happened in that time. A week after I started we released Payroll in Xero that’s suitable for businesses with a handful of employees or pay runs that don’t change a lot. This was never designed as a full payroll solution, but boy did it spark a great deal of discussion among our accounting partners about where we might ultimately take payroll.

We have, and will continue to promote, a best-of breed approach whereby a number of Add-on Partners offer our customers payroll solutions. But it’s clear that an integrated and more fully featured offering is needed in Australia. It’s just expected that this will be part of the accounting software.

We looked long and hard at building this functionality ourselves, and while possible, we decided an acquisition was the fastest path to market and the one that would deliver the richest result for our customers.

Why Paycycle?

Unlike life in a big corporate where an acquisition is often incubated around a board room table amongst suited-up and stern-faced executives, this one started far more humbly, in a SUV car rental en route from Parramatta to Wollongong. Paycycle was a sponsor of our roadshow and after getting more requests for an integrated full payroll offering, the idea of combining the two took hold. It’s has been six weeks since that memorable first chat with Paycycle co-founder Stuart McLeod, and a lot of hard work has gone into making this happen.

What’s most encouraging about this move is the exceptionally positive feedback we’ve had about Paycycle, both in terms of its offering and also the calibre of its people. There’s a good cultural fit between our two companies and I look forward to welcoming them into our expanding team at Xero. We now just need to find a new office to house everyone!!

What this means for our Australian customers

We’re looking to complete the integration of Paycycle into the Xero platform in the first quarter of 2012. However, Paycycle will continue to provide the current standalone Silverlight version, and this will be upgraded to HTML5 before the end of October. It’s this HTML5 version of the software that will be integrated into the Xero platform.

Paycycle will continue to be sold as a stand-alone product until integration is complete. If you’re a Xero customer and use Paycycle you can continue to use it under the current pricing structure. Once under the same platform, you’ll then be able to access Paycycle from your Xero login.

We’re working through the pricing structure for our business customers and our goal is you will pay no more, and in most cases less, for the integrated product.

We’ll be in touch to let you know how the change affects you.

 

Read more about Company News, Australia

 

29 comments

Anton Gerner
21 July 2011 #

Well done Paycycle and Xero !

Glenn
21 July 2011 #

This is great news! :)

Hayden
21 July 2011 #

Why just Australia? Dying for a more straight-forward payroll solution here in NZ!

tony
21 July 2011 #

Nice ne, we already use it, so if it works out cheaper than we now pay on top of Xero, that would be nice

Simon
21 July 2011 #

Congratulations, a fantastic fit!

cheapstart
21 July 2011 #

Congratulations! Drives small business online costs down and makes Xero even easier to recommend on cheapstart http://bit.ly/pbqGhe

Jerry
21 July 2011 #

Fantastic!!!

Brandon
21 July 2011 #

Great work……..

A Website Designer
21 July 2011 #

Nice one. Now you need to acquire freshbooks.

Mikel Lindsaar
21 July 2011 #

As a xero and paycycle user, this is great news. Paycycle definitely have a lot of attention to detail and have been very proactive in keeping up with Australian tax laws. The prospect of full integration with expense claims and everything is just such a win.

xero could not have picked a better partner.

Well done to the paycycle team and to Xero

Great news! We have been waiting for a cloud solution that helps us serve our clients. An integrated payroll solution, suitable for our clients will make Xero a real option.
Keep up the good work Xero!

Sue Hirst CFO On-Call
21 July 2011 #

Congratulations Xero and Paycycle. We look forward to working with both excellent systems.

Simon T
21 July 2011 #

great news guys…how are you going to manage Wayne and the capaca in the same office?

John
21 July 2011 #

I hope there’s a NZ version planned!

[...] Buys PayCycle and Clarifies US Market Entry By Ben Kepes At its AGM today, Xero announced a number of things, one of which was the acquisition of Australian payroll provider PayCycle in a [...]

[...] read more about the Paycycle acquisition and Xero’s plans for the future, read their blog. Posted in BAS Agent’s Blog, [...]

Luis Aleixo
22 July 2011 #

Well done Xero. One of your big competitive advantages is that you listen to your partners and users and you make it happen in a short period of time. I raised the non payroll integrated issued with Rod and Hamish last year as a big hurdle to convert users from other packages to Xero. As a user of Paycycle, it was the obvious choice to go with to intergrate the same into Xero. Well done and continue such great work.

Anna
25 July 2011 #

I would appreciate if someone from Xero will be able to answer these questions. Will Paycycle be integrated into New Zealand version including the global versions?

After Paycycle has been integrated will there be an additional fee to use payroll feature or will it become part of the monthly standard fee?

Rod Drury
25 July 2011 #

@Anna We’re only thinking about Australia first up and then we’ll look at other countries. We’ve already got a lot of great payroll partners in New Zealand so NZ is not a high priortity.

The intention is for Payroll to be part of the standard fee probably for the Medium and Large versions of Xero for a certain number of employees. For companies with lots of employees we may have to do a small per employee charge but we plan for the costs to be compelling.

We’re thrilled to have Paycycle join our team. It will take a bit of time this year to get the integration done but we’re very excited about where this will go over time.

Rod

Stephen
26 July 2011 #

@Rod Yes, there are some great payroll partners in NZ – but if Australia is going to get full payroll included in the standard subscription fee then why not us as well? Your NZ users, i.e. the subscribers who took the risk when Xero started many years ago, will be paying more for features that your Aussie customers enjoy as part of their subscription.

I do understand that the option to purchase someone like SmartPayroll may not be available, but how about a joint subscription fee??

Cathy
12 August 2011 #

An integrated solution for UK would be fantastic too.. the partner offerings when you’re looking for payroll with accrual mangement are just not there.

Neil Ballard
13 August 2011 #

@Cathy – MyPAYE The Online Payroll Solution is integrated with Xero for the UK market. Click on the Xero logo, currently at the bottom of the homepage of http://www.mypaye.co.uk to register for a free trial on the Xero landing page.

BTW – MyPayUSA is the sister product for the US market. wwwmypayusa.com

luke
23 January 2012 #

surprised this is not already offered. For $50 per month this should have already been included.

Chris Ridd
23 January 2012 #

Hey Luke… what can I say… we agree and so it will be included in the app for no extra cost. The reason why it hasn’t happened earlier is it took Paycycle a couple of years to get the best cloud payroll application into the market. We could have attempted to build it upfront and do something “OK”. Now we have something really compelling with the added value of employee portal and other great functions. And all for the same subscription cost. See other blogs with further updates.

Kirsty
24 January 2012 #

Love my xero acc. How’s that improved payroll service for Nz going? Is it the answer for me taking on more staff and contractors now?

Michael
15 March 2012 #

Sounds perfect.

What’s the best way of notification when the integration is complete!

Small design company owner

Graeme
16 April 2012 #

I was originally turned-off switching to Xero when I learned that I’d be up for $20+ per month extra to do payroll through another provider. Now I see this blog post and am very keen to sign up. Has integration been completed yet? If not, what month is this to happen? I know a few people interested in signing up but would want this done before July 1.

Stuart McLeod
17 April 2012 #

Hi @Graeme,

Integrated payroll will be happening very soon for Australia. We’re in the final stages of completion and testing, and we’ll be well and truly out prior to the end of the financial year.

Cheers,

Stuart.

Jeremy
30 April 2012 #

Hi Stuart,
Love XERO, excited about PAYCYCLE Integration. Cant wait for announcement when its live!
Is there an Emloyee Portal (or is it accessable somewhere for them oline) for them to view entitlements etc.? Perhaps even submitting leave and timesheets?
thanks.

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