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.