Xero

Our Rating: 9.1

Our Verdict

We recommend Xero for its user-friendly interface, affordability, and unlimited users per subscription. Xero is responsive and intuitive, with core accounting features in billing, invoicing, purchasing, and expense tracking.

However, we would not use Xero if your team requires consistent one-on-one support. Xero does not provide a customer service phone number. Instead, you can reach out via email to create a support ticket or request that an agent call you.

Xero is a cloud-based, double-entry accounting software for small businesses not exceeding 2,000 transactions a month. It aims to improve bookkeeping processes like bank reconciliation and financial reporting. Xero can customize sales tax rates, automate calculations, and prepare sales tax returns.

It provides a comprehensive view of a company’s cash flow by presenting upcoming bills and outstanding invoices in a clear, tabular format. Whether you have its basic or most advanced plan, Xero supports unlimited users for real-time collaboration between your employees, accountants, and financial advisors.

Our Ratings

My assessment of Xero factored in three major functions of accounting software: creating invoices, adding and approving bills, and reconciling transactions.

How to Create an Invoice in Xero

Creating an invoice in Xero is quick and simple:

1. Click the + icon in the top nav.
2. Next, select the Invoice option under the Create New dropdown menu.
3. Customize your invoice with fields for recipient(s), invoice numbers, and tax information.
4. Add product-related information, such as item, quantity, and price.
5. Click the Approve & email button to preview a text version of your invoice.
6. Select the Send button to email your recipient.
7. Recipient will receive your message and an attached PDF automatically generated by Xero with the total amount, bill due date, and a link to pay online.

We liked that Xero gives you the option to attach files and preview the final look of your invoice at any point in the process.

Quick note: Xero will not auto-save your entries; you must click the “Save” button to commit your invoice or bill to drafts.

Quick and Simple Invoicing in Xero App

Creating an invoice in the mobile accounting app follows the same process, though it’s broken into more steps:

1. Click the + icon on the dashboard screen.
2. Select the Create Invoice option.
3. Customize your invoice with fields for recipients(s), invoice numbers, and tax information.
4. Select the Add an item button.
5. Click Select Products or Services.
6. Choose the item(s) and specify their quantity.
7. Click Add another item or Done.

As on desktop, you can then choose to save the invoice as a draft, approve it, or send it via email.

How to Add and Approve Bills in Xero

Adding a bill mirrors the invoicing process – we like Xero for its consistent and accessible interface.

1. Click the + icon in Xero’s top nav.
2. Select the Bill option under the Create New dropdown menu.
3. Customize your bill with fields for the seller, due dates, and tax information.
4. Add product-related information, such as item, quantity, and price.
5. Click the Approve button. Xero will now indicate that the bill is Awaiting Payment.
6. Go to Make a payment and fill in Amount Paid, Date Paid, etc. fields.
7. Click Add Payment to move the bill to Paid.

How to Reconcile Transactions in Xero

We like Xero for its clear, one-to-one comparison layout when reconciling bank line items against your Xero transactions. Here’s how to do that:

1. Select Accounting from Xero’s top nav.
2. Click on Bank accounts to view all accounts connected to Xero.
3. Click the Reconcile xx items button.
4. Select the OK button to verify a match.

The software simplifies this process further by providing written and video guidance on what to do if you encounter differing balances. It also flags Xero transactions that appear to match bank statement lines, making reconciliation more straightforward.

What we don’t like: bulk reconciliation isn’t possible unless you have the Growing or Established plan. Manually reconciling individual line items could be time-consuming for businesses with a larger volume of transactions.

What Features Are Missing?

Though Xero provides core accounting functionality in a streamlined interface, it lacks a few key features integral to small businesses:

• Limited Phone Support: Xero does not offer a support phone number. This poses setbacks for users who prefer real-time, interactive guidance when learning new software or resolving issues. In some cases, Xero can reach out to users via one-way calls. On the other hand, Xero offers free unlimited support seven days a week via email, which guarantees a response within 24 hours.
• Features Restricted to Established Plan: Businesses requiring project tracking, expense claims, multiple currencies, and in-depth analytics must upgrade to the Established plan at $70/month. Furthermore, Xero requires third-party add-ons to run payroll, which is common for basic financial software of its kind.

Pricing Plans

How long does it take to learn Xero?

The average time to become proficient in Xero varies widely, depending on users’ prior knowledge and experience. Xero reports that you can receive certification, free of charge, in approximately 6-8 hours. However, the average time is likely closer to 3-4 weeks as users become more familiar with the software through consistent use.

Is Xero accounting software free?

Xero is not free, though it does provide a free trial of the software for 30 days. Afterward, plans start at $13/month. Wave, Zoho Books, and ZipBooks are a few of our top picks for free accounting software.

Can Xero handle payroll?

Xero does not have built-in payroll capabilities. Instead, you can integrate a payroll add-on called Gusto, recommended for up to 100 employees. It’s a full-service option with unlimited, automated payroll runs and direct deposit. In addition, Gusto pay runs sync seamlessly as Bills in Xero.

Is Xero good for small businesses?

Due to its scalability and cost-effectiveness, Xero is a great choice for growing businesses. Because it supports unlimited users, it facilitates employee collaboration and allows them to quickly submit expenses and send invoices. Xero also grows with your company, integrating with your email, customer relationship management (CRM), or point-of-sale platforms to help streamline operations even further.

Alternatives

←

→

★★★★★

★★★★★

(5)

FreshBooks

Price Range

   $     $     $     $     $   

   $     $     $     $     $   

Starting Price

$15/month

Client OS

iOS, Android, Web

Deployment

Cloud Hosted

Demo Pricing

★★★★★

★★★★★

(35)

QuickBooks Online

Price Range

   $     $     $     $     $   

   $     $     $     $     $   

Starting Price

$30/month (50% discount available)

Client OS

Web

Deployment

Cloud Hosted

Demo Pricing

★★★★★

★★★★★

(22)

Sage 50c Accounting - US

Price Range

   $     $     $     $     $   

   $     $     $     $     $   

Starting Price

$439/user/year

Client OS

Windows

Deployment

On-Premises

Demo Pricing

Summary

We recommend using Xero if you’re a small-to-medium-sized company that values affordability, collaboration, and user-friendly design. Because Xero doesn’t charge more as you add users to your plan, it offers a cost-effective way to provide employees access to real-time financials. Furthermore, you can scale it up as your company grows; Xero integrates with over 1,000 third-party apps for payroll, time-tracking, and more.

Keep in mind that support is only available via email or one-way call. If you’re a larger company with multiple bank accounts, go for a more robust accounting system like QuickBooks Enterprise. For heavily inventory-based businesses, we suggest an ERP like NetSuite ERP or Sage Intacct.

Xero offers plans starting at $13/month. All and all, it’s an excellent option for sole proprietors and growing companies requiring an inexpensive way to manage finances and basic inventory.