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.


Anton Gerner
July 21, 2011 at 4:52 pm

Well done Paycycle and Xero !

July 21, 2011 at 4:56 pm

This is great news! :)

July 21, 2011 at 4:59 pm

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

July 21, 2011 at 5:00 pm

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

July 21, 2011 at 5:01 pm

Congratulations, a fantastic fit!

July 21, 2011 at 5:01 pm

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

July 21, 2011 at 5:05 pm


July 21, 2011 at 5:15 pm

Great work……..

A Website Designer
July 21, 2011 at 5:16 pm

Nice one. Now you need to acquire freshbooks.

Mikel Lindsaar
July 21, 2011 at 5:58 pm

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

AOB Outsourced Bookkeeping
July 21, 2011 at 6:04 pm

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
July 21, 2011 at 6:32 pm

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

Simon T
July 21, 2011 at 6:34 pm

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

July 21, 2011 at 7:54 pm

I hope there’s a NZ version planned!

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[…] 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 […]

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Luis Aleixo
July 22, 2011 at 4:09 pm

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.

July 25, 2011 at 1:07 pm

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
July 25, 2011 at 5:59 pm

@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.


July 26, 2011 at 9:06 am

@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??

August 12, 2011 at 12:53 pm

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
August 13, 2011 at 12:43 am

@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

January 23, 2012 at 12:03 pm

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

Chris Ridd
January 23, 2012 at 12:10 pm

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.

January 24, 2012 at 8:37 pm

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?

March 15, 2012 at 9:07 am

Sounds perfect.

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

Small design company owner

April 16, 2012 at 4:33 pm

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
April 17, 2012 at 2:08 pm

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.



April 30, 2012 at 11:19 pm

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?

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