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The family is growing – Monchilla joins Xero

Posted 8 years ago in Xero news by
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We have some exciting news to share: Xero has acquired Monchilla to accelerate the rollout of payroll in the US. Monchilla is an online payroll provider that focuses on small business in the US.

Although this was a big decision for us, it wasn’t a difficult one to make. Before deciding to extend an offer to Monchilla, we’ve spent a lot of time looking at how we can accelerate bringing online payroll to all states in the US. And I can say without a doubt, Monchilla will enable us to accelerate our goals in the US but also add experience in building our global platform with best of breed government connectivity.

Xero Payroll

Integrating Monchilla’s advanced technology with Payroll in Xero will offer Xero’s small business customers the ability to calculate and electronically file and pay payroll taxes across the US. But that’s not the only reason we’re excited about adding them to the Xero family. Our companies actually have a lot in common and are aligned on making the lives of small business owners better and making payroll as stress-free as possible.

“It was an obvious choice for us to join Xero to bring our experience in the US to Xero. No other company is building a beautifully designed and full featured global integrated payroll and accounting system. This is something small businesses around the world, but particularly in the US are begging for.” said Jack Couch, co-founder of Monchilla. “We’re excited to be joining Xero and for what the future holds for small business.”

“We’re working to improve the financial lives of small businesses by bringing them the latest tools.” says  Rod Drury, Xero CEO. “This acquisition will further support our customers and accelerate growth in the US.”

The Monchilla team will be joining Xero with Jack and Nanjuan, the Monchilla co-founders, taking up leadership positions within the payroll team. Existing Monchilla customers will be fully supported as we roll out payroll to more states in Xero. We’ll transition Monchilla customers to Xero over time.

US Payroll in Xero

We launched US Payroll in Xero to make it easier for small businesses to manage their payroll, file taxes, and pay their employees while reducing the hassles and costs associated with having separate payroll and accounting software solutions. Early in 2014 we made the decisions to pause the rollout to more states while we built a solid foundation on which to grow and scale our platform and improve the overall experience.

Monchilla is a natural complement to our technology and we’re all excited by the opportunity this brings for us to accelerate towards our vision of supporting payroll in all states with full electronic services. The acquisition of Monchilla comes on the heels of our recent releases of Federal e-file, e-pay and with W-2 forms and filing being released next week. It’s part of our ongoing commitment to deliver beautiful seamless payroll and accounting to the US.

By providing a more complete online payroll solution, even more small businesses will have the chance to experience the joy of online payroll and accounting working as one.



November 6, 2014 at 12.55 pm

Good and timely acquisition I say. The move was just brilliant.

Heather Smith
November 6, 2014 at 1.06 pm

Is payroll in every single state of the US different – like a different country?

Does Monchilla cover all US state payroll?


Oliver Furniss
November 6, 2014 at 1.12 pm

@Romeo, thanks for the comment – we think so too.

@Heather, basically yes. The common theme across all states is reporting and paying Federal taxes to the IRS. Other that that each state has it’s own state agency to report and file with, some have unemployment taxes, some have county taxes for example.

Michael Porter
November 6, 2014 at 3.49 pm

Oliver – congratulations on a great coup. A few questions.
What does this mean for the existing Xero US payroll product, are you retiring that and adopting Monchilla’s functionality (re skinning their product)? – or are you trying to blend the best of both? Is it about Monchilla’s e-file gateway blended with existing Xero US payroll functionality? Are you running 2 separate US payroll products for a period and then producing a Xerofied version- will it have implications for existing AU payroll, or future UK payroll – much common DNA across the Global payrolls?
Answer what you can!

November 6, 2014 at 4.41 pm

Monchilla also offers an accounting program similar to Xero. Will Monchilla continue to offer it’s web-based accounting software or will these customers transition to Xero accounting?

November 6, 2014 at 5.10 pm

How many customers does Monchilla currently have?

Oliver Furniss
November 7, 2014 at 5.43 am

We’ll be continuing with payroll in Xero and connecting Monchillas e-file, e-pay and other features in the backend to bring those features to Xero customers via the Xero interface.

We will fully support all Monchilla customers from today and over time we will move them to the Xero platform.

The Monchilla technology is mainly focused at US payroll tax filings and payments so that’s where the real benefit is; but as we roll out new features we try where possible to make them globally available so all countries will benefit. Still more to do there but it’s going in the right direction. The expertise in the Monchilla team will help us in all tax filing scenarios like RTI in the UK.

Oliver Furniss
November 7, 2014 at 5.45 am

@CJ_NZ, Monchilla as an early start-up, was in the initial stages of launching and building a customer base. Our acquisition is of Monchilla’s technology and is not designed to increase Xero’s customer base.

Oliver Furniss
November 7, 2014 at 5.47 am

@Jana, Monchilla does have accounting feature similar to Xero although their main focus has been on the payroll side. We will continue to support existing Monchilla customers and transition them over time to Xero. New customers will not be able to sign up to Monchilla.

Gayle Buchanan
November 7, 2014 at 7.11 am

Nice Oliver that’ll beef up Xero nicely

Sandra Hunter
November 7, 2014 at 8.23 am

This is good news for the States. It seems to me that Xero has spent a lot of time and effort (not to mention money) in getting a great Payroll system for Australia and all their complicated Payroll rules. Now it is trying to do the same for USA. Which is fantastic for those two countries. (I believe something is happening too in the UK).

My question is why has nothing been done for NZ? Our Payroll laws a pretty simple compared to other countries. I wouldn’t imagine it would be too hard for our Xero experts. The incredibly basic payroll in the NZ Xero doesn’t even work out the tax!

Surely Xero could do something for their home country?

Oliver Furniss
November 7, 2014 at 8.31 am

@Sandra, you’ll be pleased to know that we are actively working on payroll for New Zealand as we speak and it will launch in 2015, date to be confirmed in early 2015. New Zealand is simple in some ways but more complex in others and has certain rules that we don’t need to support like Relevant Daily Pay and Holiday Pay. So rest assured it’s coming and will replace the basic pay run feature available today.

November 7, 2014 at 10.31 am

Does the Monchilla Payroll system work in all 50 States?

November 7, 2014 at 12.30 pm

I’m currently a Monchilla customer and I’m excited for Xero’s integration with Harvest. I’m wondering what the pricing will look like when Monchilla customers are transferred to Xero’s platform?

November 7, 2014 at 11.37 pm

How much would be the estimated monthly income will be added to Xero coffer as a result of purchase of Monchilla?

I could not wait to see the customers growth in the USA.

November 8, 2014 at 4.47 am

When will this functionality be added to Xero? Will Monchilla remain a stand-alone product, or will it be rolled into the Xero platform? How will this impact Xero cost?


Oliver Furniss
November 8, 2014 at 6.37 am

@Anna, yes Monchilla currently supports all 50 states. We’ll be supported more states from payroll in Xero starting early 2015.

@Mary, pricing will be as per the current pricing bundles at this stage but this will be confirmed once we begin to move customers off Monchilla onto Xero. We’ll give plenty of notice and details in due course.

@Rocardo, as with customer numbers this acquisition was not designed to increase Xero revenues but for Monchilla’s technology to accelerate product rollout.

@Jody, we will begin release electronic services for State filing and payments of payroll taxes beginning with the current seven supported states. Further states will begin to be released in early 2015. Monchilla’s customers will be moved to Xero over time.

November 11, 2014 at 6.13 am

When can we start using Monchilla for Alabama payrolls? Will there be a limit on the number of employees? Will there be an additional charge?

Oliver Furniss
November 11, 2014 at 6.28 am

@Sally, we won’t be signing new customers onto Monchilla and existing customers on Monchilla will transition to Xero over time as we roll new state support within Xero. This acquisition was not designed to have new customers use Monchilla but for Monchilla’s technology to accelerate product rollout within Xero. So we will begin rolling new states in early 2015. Until then you’ll have to consider one of our add-on partners.

Debora Perkins
November 21, 2014 at 8.13 am

Xero does not currently offer ACH payments to suppliers (1099/non-1099). It looks like Monchilla’s accounting software does…will Monchilla continue to offer its accounting software? Or will Xero integrate the ACH payment feature? Will I be able to sign up for Monchilla accounting or did Xero acquire that in addition to US payroll?

Debora Perkins
November 21, 2014 at 8.16 am

The only feature I would use in Monchilla is the vendor/supplier ACH function. The bank feed or download would be the Xero integration……works for me!!!

November 30, 2014 at 11.57 am

This is exciting as I search for a new accounting program and plan to move away from Quickbooks for my small businesses.
When can we expect payroll to be available across all states and will the plans and costs remain the same?

Oliver Furniss
December 1, 2014 at 2.00 pm

@Debora, we’re assessing what features we will roll into Xero in the future at the moment. There is no immediate/short term plan to allow the same ACH payment option for suppliers but it’s something we are looking into. Monchilla is now totally part of Xero and we will not be supporting new customers on Monchilla as in time we will shut down and transition customers to Xero.

@Drew our immediate focus is rolling out full electronic for filing and payment of payroll taxes for the current seven states. In early 2015 we will start rolling support for new states and we will move as quickly as we can. When we release a state it will come with e-file and e-pay. Stay posted to the blog and I’ll update you as often as I can on progress. In the meantime you could use Xero with one of our US Payroll Add-on partners (ZenPayroll, ADP, SurePay) and then transition to Payroll in Xero when it becomes available.)

December 4, 2014 at 4.49 pm

When do you anticipate electronic filing will be available in New York State?

Oliver Furniss
December 4, 2014 at 5.00 pm

@Guy, date to be confirmed very shortly, watch this space, but it will be in plenty of time for the first withholding tax due date in 2015.

December 24, 2014 at 7.44 am

Not impressed with this. Was looking at bringing clients to Xero but I hold back because so much of this reminds me of the Internet era in the mid ’90s – it looks great but functionality is lacking (Boo.com comes to mind).

Beautiful Accounting sounds wonderful. Functional Accounting IS wonderful.

December 29, 2014 at 3.48 am

Oliver, do you anticipate payroll for Maryland being available in early 2015? Thanks

January 5, 2015 at 5.49 am

Monchilla has (had?) a very attractive pricing scheme as shown on this page:
You say existing Monchilla customers will be transitioned to Xero at some point but there is no clear answer as to the eventual cost to the customer at this time. The current Xero pricing scheme is:
The way I interpret this is a customer who currently pays Mozilla $5 will eventually pay Xero at least $9 for less (5 invoices per month — really?). To have a realistic solution most customers who actually do business will pay at least $30.
To be fair, however, it appears that Monchilla customers who have 5 employees may have a similar deal at $30. If that is the case then why not keep the Monchilla model for the really small businesses (sole proprieters) and let customer grow into the Xero model?
I really like the Monchilla model but this uncertainty makes Monchilla or Xero a non-starter for me.

Oliver Furniss
January 6, 2015 at 5.30 am

@Steve if you have employees and need to use payroll you would need to select either Standard for 5 employees or one of the Premium plans for more than 5 employees. Starter does not include payroll. Standard is currently $30 a month which includes payroll for 5 employees.

January 12, 2015 at 10.37 am

Xero stated in 2013 that Ohio payroll was on the list to be supported “soon”. Now more than a year later that statement has proved to be false.

How can we believe anything Xero says when they won’t give us details and don’t follow through?

February 5, 2015 at 7.00 am

Now that we are into Feb 2015, are there any updates on when payroll will be rolled out for the remaining states, specifically Illinois?

February 15, 2015 at 1.21 am

I’m not happy with the transition and the customer service thus far. I am told that all the work that I put into setting up my account will be in vain due to the need to transfer out from Monchilla into your Xero platform.

I am only interested in the accounting/invoicing part of it, but I am being pushed away from Monchilla and forced to pay a 500% increase in rates to use the platform that is now the parent company of the smaller company that you purchased.

It doesn’t make sense that you would not grandfather current monchilla customers into a reasonably priced plan.

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