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Xero Accounting Software Review and Pricing

Updated Feb 21, 2024

Table of Contents

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Editors Score:9.1/10

Xero is the best accounting software for growing companies. Its service plans and features easily accommodate different stages of small business development and the changing needs that accompany that growth.

Thumbs Up Pros
  • Xero’s pricing plans aren’t based on user count, so you can add employees without worrying about software costs increasing.
  • The software integrates with more than 1,000 business apps.
  • Xero has a well-designed user interface and layout that make complex accounting statistics easy to understand.
Thumbs Down Cons
  • The lowest tier has caps on invoicing and bills, which means many businesses will need to upgrade to a more expensive plan.
  • Invoice customization isn’t as intuitive as in competing programs.
Editor's Rating9.1/10

Xero is our pick for the best accounting software for growing companies. Because its pricing plans are not based on the number of employees, Xero can easily accommodate various development stages and the changing small business accounting needs accompanying business growth. We recommend Xero for companies that are rapidly adding employees and don’t want to worry about the number of people at the organization using the product. 

Xero Accounting Software Editor's Rating:

9.1 / 10

Payments
9.0/10
Automatic invoicing
9.0/10
Third-party integrations
9.5/10
Mobile app
9.0/10
24/7 customer support
8.5/10

Why We Chose Xero as the Best for Growing Businesses

When starting a business, you likely begin as a small operation. However, as a company grows, its financial needs change. Many business owners with a growth mindset prefer choosing an accounting software solution and sticking with it over the long haul. Compared to other software we reviewed, Xero stands out for meeting businesses’ needs in all growth phases.

Unlike many competitors, Xero’s pricing and plans are based on features instead of user numbers. In fact, all of Xero’s plans support unlimited users, which is great for expanding businesses. Xero also integrates with over 1,000 third-party business apps – among the most integrations of any accounting software package we reviewed. As a business moves into higher growth phases, it will likely require more integrations to scale up and keep things running smoothly. 

During our testing of the software, we found that Xero was ideal for business owners without much accounting knowledge. Even with all of these features, Xero keeps it simple with a user-friendly interface and visualization to help customers new to running a business (see the screenshot from our demo below). For these reasons and more, Xero is our pick for the best accounting software for growing businesses.

Did You Know?Did you know

Xero is considered a quality QuickBooks alternative because of its mobile app availability, accounting and invoicing features, and international invoicing capabilities.

Xero financial tracking

Business owners can track bank balances, invoices, bills and more from Xero’s main dashboard. Source: Xero 

Ease of Use

When testing the software, we found Xero easy to navigate, with an intuitive and user-friendly interface. The main dashboard displays several key statistics business owners need at their fingertips, including how much money is in their business checking account, who owes them money, bills that must be paid and the current cash flow situation. 

A bar at the top of the interface contains several drop-down menus that house Xero’s features. Like other major accounting packages, such as QuickBooks, Xero’s feature-packed interface can sometimes feel a bit overwhelming. However, compared with competitors we reviewed, Xero excels at presenting information in an easy-to-understand way. For example, Xero’s cash-flow bar chart displays cash going out of the company as a gray line and cash coming in as a blue line. A business owner trying to maintain positive cash flow would look for the blue line to remain above the gray line (see the screenshot below for an example)

Additionally, we like that Xero avoids accounting jargon, such as “debits” and “credits,” throughout its interface, which is helpful because most business owners aren’t accountants or bookkeepers. Many other accounting software programs use accounting terminology, but Xero uses terms like “invoices owed” and “bills you need to pay.” This clear language makes the software easy for anyone to understand, even if you aren’t familiar with general ledger accounting.  

Xero cash flow tracking

Xero makes it easy to understand your business’s current cash flow situation. Source: Xero

Xero Features

Xero saves business owners time by streamlining processes and providing tools to accomplish financial tasks faster. Here are some of the must-have accounting software features Xero offers to make accounting less tedious:

Recurring Invoices

One cool feature is that Xero lets you schedule recurring invoices (or “repeating invoices”) by setting the send date, frequency and end date. Automatic payment reminders encourage customers to pay on time, saving you from following up and dealing with unpaid invoices. You can set the software to send reminders before the payment is due or when it’s past due; you can also set up the system to email your customers’ receipts after receiving and recording payments.

Online Invoicing

Except for a few minor inconveniences, we were impressed with Xero’s invoicing capabilities. Everything is done in the cloud, meaning you can edit invoices without the hassle of resending them to customers. You can email invoices directly from the software; Xero integrates with PayPal, Stripe, Square and other payment processors, so you can accept payments online.

However, we discovered a drawback: Customizing an invoice’s look and feel is slightly less intuitive than competitors such as FreshBooks, which specializes in generating invoices. A professional-looking invoice is essential for getting paid, so this is something to note for businesses that send out many invoices. That said, we found converting a quote to an invoice easy, and invoices have drag-and-drop lines that make it easy to reorder items. Conveniently, you can attach files to invoices, such as a document or a photo of your completed work (see the screenshot below for an example of an invoice created using Xero during our demo). 

TipBottom line

If you decide to charge late fees or interest on an unpaid invoice, it’s crucial that your original contract clearly outlines that these charges may be assessed.

Xero invoice changes

With Xero, you can make changes to invoices in the cloud without resending them. Source: Xero

Inventory Tracking and Purchase Ordering

We like that Xero shows you many items you have in stock as you create quotes and invoices. If you must reorder inventory, you can easily create and send purchase orders and then convert the purchase orders to bills for payment or invoices for your customers. For complex inventory needs, advanced inventory integrations are available through the app marketplace.

TipBottom line

If your operation’s inventory needs are complicated, consider implementing one of the best POS systems, which have extensive inventory management tools.

Smart Reconciliation

We were impressed by Xero’s smart reconciliation feature, which simplifies reconciling your business bank account by matching bank transactions with those you’ve entered into the software. Most other accounting software providers offer some form of bank reconciliation. The difference with Xero is that it uses machine learning to predict more accurate matches. It also has bank rules and cash-coding features to make the reconciliation process easier and faster. Growing businesses will need to automate many tasks if they want to become large enterprises, and Xero’s smart reconciliation tools can help with that. 

Hubdoc

We loved Xero’s unique Hubdoc feature, which allows you to capture and store data from documents (see the screenshot below from our demo). Using photos or documents that you upload, the software will scan the file and extract key data. Hubdoc also integrates with many online banking apps to pull transaction data directly into Xero. Alternatively, you can capture transaction data from a PDF downloaded from your bank’s website. The robust features from Xero’s Hubdoc make it a potential alternative to Neat’s software, which also focuses on document scanning. We feel Hubdoc’s ability to sync transactions with Xero will prove particularly useful for business owners that deal with a lot of paperwork. 

Xero Hubdoc

Hubdoc allows you to capture data from receipts and other documents. Source: Xero

Mobile App

Not every accounting software we reviewed offers a mobile app, so we appreciate Xero’s full-featured mobile app capabilities. The Xero Accounting & Invoices mobile app helps you accomplish accounting tasks on the go. With the iPhone and iPad app versions, you can view cash flow, access customer and vendor contacts, reconcile transactions, and create invoices. Additionally, the Apple Watch app allows you to see account balances and the number of new transactions. The app is rated 4.6 out of 5 on the Apple App Store, indicating a high level of customer satisfaction.

We also like that the Xero Expenses and Xero Projects apps – included with the Established plan – allow you to capture photos of expenses, submit expense reports, track time, and attach billable expenses and time to projects. Xero Expenses and Xero Projects are rated 4.6 and 4.8, respectively, on Apple’s app store. Also, they are included on a less expensive plan than QuickBooks’ project management apps.

Xero’s robust mobile app functionality was superior to many other accounting solutions we evaluated. 

Integrations

Xero’s integrations impressed us. Xero offers more than 1,000 integrations – among the most of the accounting apps we reviewed. These apps include Square, Stripe, PayPal, Gusto, DEAR Inventory and Expensify. Integrations help growing businesses by allowing them to upgrade their digital infrastructure as they become larger. If Xero lacks a feature you need, or if you want to connect it to the other business systems and services you already use, you can probably find an add-on in the company’s app marketplace. 

Transaction Monitoring

We really liked Xero’s unique History & Notes feature, which presents an activity report at the bottom of every transaction screen. This feature lets you monitor information about the document. For example, you can see if the invoice was copied from a quote, who created and approved it, and when they created and approved it. The email address, date and time for automatic payment reminders also appear on this screen. Furthermore, you can add notes, such as the expected payment date. 

Time Tracking

We appreciated that Xero includes time tracking in all of its plans (see the screenshot below from our demo). This contrasts with many alternatives, such as QuickBooks, which only offer time tracking as a separate piece of software or include it on more expensive plans. Users are required to download the free Xero Projects app, which they can use to record time and costs and create invoices and reports. We especially like that this feature is free, although some time-tracking apps include additional functionality. 

Xero time tracking tools

Xero doesn’t charge extra for its time-tracking tools. Source: Xero

Reports

Big data is changing businesses, affecting operations more each year. Growing businesses need data presented in an easily-digestible manner so business owners can act on the insights. During our demo of the software, we found that Xero’s reporting features can help you make sense of the data analytics at your disposal. Xero’s reporting tool distills your accounting data into easily digestible bar charts, pie charts and other graphs. A few popular tools include your business’s top 10 customers, Xero’s budget manager and the ability to drill down into your best revenue generators. Xero also allows you to export multiple reports. 

FYIDid you know

Xero also capably generates profit and loss statements, trial balance reports, balance sheets, and other traditional accounting reports.

Security

Xero connects to your bank and credit card accounts and imports data daily, so we really appreciate that it protects your sensitive business data with bank-grade encryption. Additionally, you can opt in to two-factor authentication to make your login more secure. If you add employees to your account, you can set user permissions to control the data they can access. 

Xero Pricing

Xero’s pricing compares favorably with other accounting software we reviewed. Popular alternatives, such as FreshBooks and QuickBooks Online, cost at least $15 monthly without introductory discounts. In contrast, Xero’s entry-level plan is slightly less expensive, at $13 per month.

Xero’s tiered pricing plan makes it ideal for growing businesses. We like that all Xero plans include nearly every available feature, including estimates, accounts payable and inventory management tools. With some other accounting software we reviewed, these features are available only in the top-tier plans. However, there are three features available only in Xero’s top tier: expenses, multicurrency support and project tracking. 

Unlike many other accounting applications, Xero does not base its pricing on the number of individuals who need access. With every Xero plan, there is no limit on the number of users. In our view, this is one of Xero’s key differentiating factors, making it a great choice for growing businesses rapidly adding new employees.

Additionally, Xero offers a 30-day free trial, so you and your employees can try out the software before you buy it. Not every accounting software provider offers a free trial, so we appreciate this feature. 

Here’s a breakdown of each Xero plan:

  • Early: This plan costs $13 monthly and limits you to 20 invoices and five bills per month. It also includes access to Hubdoc.
  • Growing: This plan costs $37 monthly and includes everything in the Early plan, plus unlimited invoices, bills and bank transactions.
  • Established: The highest-tier plan costs $70 monthly. In addition to everything in the Early and Growing plans, the Established plan includes expenses and projects and can handle multiple currencies. 

Xero partners with Gusto to add more HR functions, such as payroll services. With Gusto, you can onboard new hires, administer employee benefits, track hours and paid time off, run payroll, and automatically file payroll taxes. The monthly base price is $40 plus $6 per person. 

TipBottom line

Read our comprehensive review of Gusto to learn more about the features and capabilities of this robust HR solution.

Implementation and Onboarding

During our test run of Xero, we found it easy to set up. New users can access a free 30-day trial, which doesn’t require a credit card for sign-up. We liked that the trial version of Xero is full-featured, meaning you can test it out with real data. This gives Xero an edge over competitors that don’t offer such generous terms. 

Once you sign up, Xero provides several guided tutorials to acquaint you with its tools, such as connecting your business bank account, adding customers and creating invoices. Many pages within the app have how-to videos and links to a step-by-step guide, which is great for business owners who aren’t very tech-savvy. 

Customer Service

In general, we were pleased with Xero’s customer support options. However, they were not as comprehensive as what we found in our review of QuickBooks Online. Phone support is not available immediately; you must contact customer service first via email or live chat. Afterward, you may be directed to a phone-based rep for further assistance. Xero’s customer service scores 4.3 out of 5 on Trustpilot, with many users praising the fast response time. This is ideal for growing businesses that don’t want to waste time on technical issues.

During our test run, we reached out to Xero via email. Eventually, we were directed to a representative by phone. We found Xero’s agent to be extremely helpful and knowledgeable about Xero’s features.

In addition to reaching out for live help, you can access valuable online support resources, including videos, a blog, podcasts, small business guides and training courses. Xero recently streamlined the ability to search for help while using the software, so you don’t have to leave the site. 

Xero online support

Xero provides unlimited online support. However, phone support is not available immediately; you must contact customer service first via email or live chat. Source: Xero

Limitations

Xero is an excellent accounting solution. However, we did encounter some limitations. 

  • Cap on invoicing and billing: One limitation of Xero compared with alternatives is the cap on invoicing and billing for its lower-tier plans. The Early plan allows you to send only 20 invoices and five bills a month, which we found unusually low. As a point of comparison, FreshBooks lets you send unlimited invoices to five customers on its lowest-tier plan. Users will need Xero’s higher-tier plans to remove these caps. 
  • Expense tracking: The Early and Growing plans don’t offer expense tracking. You’ll have to upgrade to the Established plan for this feature. 
  • Niche limitations: Although Xero offers a comprehensive set of features, this may not appeal to businesses with niche requirements. Businesses that must track time for billable hours or send invoices on the spot should read our FreshBooks review, while those focused on enterprise resource planning (ERP) might appreciate our review of Oracle NetSuite.
  • Accounts payable limitations: Xero also lacks the comprehensive vendor network that would make it an effective player in the accounts payable space. Processing accounts payable is a vital part of running a business, so small business owners may want to consider software that supplements Xero’s capabilities. 
FYIDid you know

Free software, such as Melio, can supplement Xero for your accounts payable needs, including automating accounts payable.

Methodology

We researched and analyzed dozens of the best accounting and invoicing software solutions to help small businesses choose the ideal accounting software for their needs. To generate our quantitative score and use case, we reviewed software features such as payment and invoicing capabilities, integrations, mobile apps, report generation, supported user count, and customer service options. We also assessed pricing and the availability of free trials. Our information sources included the company’s website and software demos. Additionally, we studied user reviews for independent opinions on the software’s pros and cons. When looking for the best accounting software for growing businesses specifically, we focused on pricing tiers, the number of integrations, and the breadth of features and tools.

Xero FAQ

Xero is an accounting software package designed to help small businesses manage their finances. It offers bookkeeping, invoicing, business analytics and more.

Whereas QuickBooks is the market leader in the U.S., Xero holds a major market share in countries such as Australia. Both software packages offer many features and integrations, but Xero is slightly less expensive and allows unlimited users.

Xero features a user-friendly interface and avoids confusing accounting jargon, making it an excellent choice for users who are not tech-savvy or who do not have deep knowledge of accounting.

Bottom Line

We recommend Xero for …

  • Growing businesses that are rapidly adding employees. 
  • Businesses that need their accounting software to integrate with many different third-party apps. 
  • Less accounting-savvy business owners who prefer lots of color-coded visuals to help them analyze their business’s performance.

We don’t recommend Xero for …

  • Businesses that need a low-cost way to send many invoices or bills.
  • Niche businesses (such as those in e-commerce) that require more specialized solutions instead of a mass-market, one-size-fits-all software package. 
Mike Berner
Mike Berner
Senior Analyst & Expert on Business Operations
Mike Berner is a staff writer at business.com and Business News Daily, where he specializes in finance topics including business loans, accounting, and credit card processing. Mike has a deep background in the financial world, having written hundreds of articles and blog posts on financial markets, business and investing. He holds a B.A. in economics and a B.B.A. in finance, both from the University of Massachusetts, Amherst. Prior to his writing career, he performed financial analysis and research as an economic analyst.
Editor's Rating9.1/10
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