Xero
Xero is a cloud accounting software that offers crucial accounting features such as invoicing, mileage tracking, expense tracking, project expense prediction, budgeting, reporting and analytics, time tracking, tax filing, bank reconciliation, and inventory management.
Features
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Create customizable and recurring invoices
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Claim management with mileage tracking
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Project management with time tracking
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Generate customizable reports to predict financial health
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Cash flow tracking and bank account reconciliation
Pros
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Simple dashboard and user-friendly interface
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Integration support for 1000+ apps
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Document management through Hubdoc
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Task breakdown, budget estimate for projects
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Artificial intelligence-based predictions for financial health
Cons
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Limited invoice customization
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Complete audit log not available
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Workflow automation is not available
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Live chat and phone support are not available
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No dedicated estimation and proposal features
Accounting Software Review Methodology
Geekflare tested the accounting features of Xero through hands-on subscriptions. We evaluated essential features needed for small businesses and calculated a combined overall rating for each. To ensure an unbiased review, we gathered factual data from official websites and analyzed user feedback from various sources to provide comprehensive insights and detailed reviews.
What is Xero?
Xero is accounting software for small businesses. Founded in 2006, it is based in New Zealand and has clients worldwide. Xero allows companies to collaborate with their accountants and offers a friendly UI for employees and admins. It is ideal for small businesses and freelancers.
Xero Feature
Xero’s key features include online invoicing, project tracking, bill payment, expense claims, and more.
Online Invoicing
Xero’s built-in invoicing feature lets businesses create customized invoices by including the company logo, custom message, and added fields. The clients can click on the Pay Now button on the invoice to make payments using a credit card, debit card, direct debit, or any other payment method of their choice.
Xero displays notifications when the client views the invoice and the invoice is paid. It offers settings for sending multiple reminders to clients for due and overdue invoices. Users can choose their preferred intervals for sending reminder emails, which include an invoice PDF link and a button for online invoices.
Paying Bills
Xero offers a clear overview of companies’ accounts payable and cash flow. It lets users access bills online from anywhere and pay them on time. Batch bill payment and bill scheduling features are available. Paperless record-keeping is also feasible by emailing bills to the file’s inbox.
Besides an overview of unpaid bills, expenses, and purchase orders, Xero displays bills in different categories, such as draft, waiting for approval, or ready to be paid. Users can organize the bills in folders and view bills on-screen while entering the data. Xero enables companies to set up recurring bills by replicating the last bills from a supplier and modifying them as needed.
Project Tracking
Though Xero is not a project management software, it offers useful features such as project planning, budgeting, time tracking, expense monitoring, quoting, and invoicing that companies can use to manage various projects. Businesses can further perform a cost-benefit analysis to evaluate the financial viability of projects and ensure resources are allocated efficiently.
Its built-in time timer lets users track time invested in a particular task. Users can manually add the tracked time to their tasks. Xero Projects features show the project profitability and generate reports on different aspects of a project, including project summary and project details.
Accounting Reports
Xero also has an extensive reporting feature that lets business owners create reports on various aspects of financial performance, financial statements, projects, payables and receivables, taxes and balances, and transactions. Users can mark report types as favorites and quickly access drafts, published, and archived reports through dedicated tabs.
While Xero is focused primarily on financial accounting, understanding different types of accounting—such as cost or managerial accounting—can help businesses tailor their use of Xero’s features to their specific needs.
Multi-currency Accounting
Companies operating in multiple countries or dealing with multinational companies can use Xero’s multi-currency accounting feature. This feature makes international transactions easy by allowing businesses to send invoices, quotes, and purchase orders in over 160 currencies.
Xero automatically gets hourly currency conversion rates to provide real-time insights into gains and losses. It also enables companies to manage global businesses accurately by setting up foreign currency bank accounts and viewing currency movements.
Claim Expenses
Xero Expenses feature allows businesses to track and claim their expenses. It supports paperless expense tracking by scanning receipts and auto-filling claims from the scanned copy. With Xero, admins can review and approve expense claims submitted by employees.
The Xero Me app enables quick claim submission and approval by employees and employers. For expense organizations, users can also add tags to the expenses.
Accept Payments
To accept payments from their clients, Xero allows businesses to connect to payment services without any monthly subscription. Clients can make online payments using debit cards, direct debit using GoCardless, credit cards, and Apple Pay or Google Pay using Stripe. Users can stay worry-free as Xero uses encryption and strong security measures to protect against fraud.
Bank Reconciliation
Xero reconciles daily bank transactions by getting a live bank feed. If the banks or financial institutions do not connect to Xero, users can manually import bank statements for reconciliation. Xero uses rules to match bank statements to invoices or bill payments. Bulk sorting and grouping of transactions before reconciliation and receiving alerts for suggested matches are also possible on Xero.
Reporting For Future Cash Flow and Financial Health
Using Xero Analytics feature, users can generate reports on the financial health of the organization. It offers an idea about short-term cash flow and shows the impact of invoices and bills. It tracks income and expense metrics to identify trends and help with financial health. For more customization and AI-powered predictions, users can switch to Xero Analytics Plus.
Sales Tax
Xero automatically calculates sales tax on companies’ transactions and prepares sales tax returns on the company’s behalf using sales tax reports. Users can set up as many sales tax and the tool will record them automatically.
Xero allows users to set up default rates for contacts, inventory items, and accounts, get tax summaries based on rate, account, or component, get sales tax based on cash or accrual, and view an audit report to see the individual transactions.
What are the Benefits of Xero Accounting Software?
The benefits of Xero accounting software are outlined below.
Managing Payments
Xero users benefit from streamlined invoicing and payment processing, which makes managing their payments easy. They can create and send invoices and track payment status from the same platform. Thus, the scope for manual data entry is reduced, and cash flow accelerates. Xero also offers flexibility and convenience to all businesses by integrating various payment gateways.
Expense Management
With Xero, businesses can automate the process of tracking and managing business expenses. They can categorize expenses, attach receipts, and assign them to specific projects or employees. Xero functions as a centralized system for the overview of spending, enabling businesses to identify cost-saving opportunities.
Multiple Payment Options
Xero lets companies accept payment from their customers using multiple methods, increasing the chance of getting paid on time. It also supports accepting payments directly from the online invoice and reduces the time spent chasing payments. While sending the invoice, companies have the freedom to choose the most suitable payment method for each customer.
Bank Reconciliation
With Xero’s bank reconciliation feature, the transactions and financial records are automatically verified and matched, reducing errors in the financial records. It minimizes manual effort and ensures peace of mind due to its reliability and accuracy. This feature lets users supervise their cash flow and transaction activities while adhering to accounting standards and regulations.
Inventory Management
Xero users can track basic inventory from the same platform. It counts the stocked items and shows their total value. Users can learn how well a certain product is performing from its inventory report and easily generate editable invoices for the products.
Financial Management
Xero’s robust financial management features allow businesses to manage their finances effectively and confidently. By automating regular tasks like invoicing and expense tracking, it frees up financial professionals to work on strategic planning and analysis. For those seeking more specialized invoicing capabilities, exploring the best invoicing software can provide additional options.
Bank Integration
Xero supports integration with 21,000+ global financial institutions for fetching bank data. Xero uses an encrypted connection to securely import bank transactions into it. Users can link any number of bank accounts from multiple banks. For a bank that does not support a direct feed connection with Xero, companies can export bank data in OFX, QIF, QBO, QFX, or CSV format before uploading it to Xero.
Collaboration
Xero is known for its support for collaborative tasks. Users can easily collaborate with their teammates, clients, and other stakeholders. By inviting them, users can work together on any feature of the software.
Being Compliant
It is valid to worry about data security while using Xero because it deals with sensitive personal and banking information. To provide them with peace of mind, Xero complies with ISO/IEC 27001:2013, SOC 2, and PCI DSS v3.2, SAQ A compliance.
Xero Pricing
Xero offers three major pricing plans, which are outlined below. Currently, Xero is offering a special offer: Get 95% off for three months when you buy Xero.
| Plan | Pricing (monthly) | Best for |
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| Starter | $1 | Freelancers |
| Standard | $2.35 | Small businesses and sole traders |
| Premium | $4 | Medium-sized businesses |
Can I Use Xero for Free?
Yes, you can use Xero for free using its 30-day free trial to test its functionality. However, it does not have an entirely free plan.
Xero Support
Xero offers customer support primarily through email. It does not have any phone support number, but you can request a callback from Xero if necessary. Xero does not offer live chat support either. However, it has an active community forum and a collection of support articles that are beneficial to the users.
Who Should Use Xero?
Freelancers, sole traders, self-employed, and small businesses will find Xero perfect for their accounting needs. Its invoicing, reporting, project costing, Stripe payment acceptance, and bank reconciliation features help businesses. Businesses in professional services, retail, non-profits, hospitality, manufacturing.
Who Shouldn’t Use Xero?
Xero is not suitable for large companies or enterprises. Companies that require highly specialized accounting features or advanced inventory management features should not use Xero. It is not ideal for companies with complex financial structures or large teams. Construction companies and schools should consider using construction accounting software and school accounting software that offer tailored features for these businesses.
Xero Verdict
Xero is an accounting application with an easy-to-use user interface. It is suitable for small businesses and freelancers and allows users to perform all the necessary accounting tasks, such as expense tracking, invoicing, bill payment, bank reconciliation, document storage, and reporting.
Xero offers additional features like project management, payroll, and inventory management, but it is not dedicated software for these functions. Xero recieves the Geekflare Excellent Innovation Award.