Xero Accounting Software Review and Pricing

Why We Chose Xero as the Best for Growing Businesses

New businesses typically begin as small operations. However, as a company grows, its financial needs change. Many business owners with a growth mindset prefer selecting and sticking with one accounting software solution. Compared to other software we reviewed, Xero stands out for meeting businesses’ needs at every stage of growth. 

Xero’s pricing structure is an excellent fit for growing businesses. Unlike many competitors, Xero’s pricing and plans are based on features instead of user numbers. 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 — one of the highest integration counts of any accounting software we reviewed. As a business moves into higher-growth phases, it will likely require more integrations to scale and operate efficiently.

During testing, we realized how ideal Xero is for business owners with minimal accounting knowledge. Even with impressive features, Xero keeps it simple with a user-friendly interface and data visualizations to help customers who are new to running a business. For these reasons and more, Xero is our pick for the best accounting software for growing businesses.

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

Ease of Use

During testing, 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 popular accounting packages, such as QuickBooks Online, Xero’s feature-packed interface can sometimes feel a bit overwhelming. However, compared to 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. 

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 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 and frequency. If you know when a customer’s invoicing period will end, you can also select an end date. Automatic payment reminders encourage customers to pay on time, saving you from following up on late payments. 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 in draft mode while awaiting payment, or after payment, without any hassles. You can then easily resend the invoice to customers and it will reflect any changes automatically. You can email invoices directly from the software, allowing clients to view and pay them online. Xero also 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 it is with competitors like FreshBooks, which specializes in invoicing. A professional invoice is essential for getting paid, so this is something to note for businesses that send out many invoices. That said, converting a quote to an invoice is straightforward 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.

Customize your invoice to your business transaction needs, from your logo and reference number to unit and total price. Source: Xero

Inventory Management 

One cool Xero feature is the beefed-up Inventory Plus system, which allows you to manage inventory across multiple locations and channels. It integrates with Shopify and Amazon and includes order fulfillment functions, shipping options and tracking information. We think this system proves particularly useful for larger businesses with a big e-commerce presence.

However, if you don’t want to pay for the top-tier plan that includes Inventory Plus, Xero still offers basic inventory tools on all plans. These are helpful if you sell only in-store, invoice for sales and don’t need first-in, first-out valuation. That said, we’ve found that Inventory Plus delivers the best overall inventory management experience.

Xero’s Inventory Plus features allow you to manage inventory across multiple locations and channels. Source: Xero

Transaction Monitoring

We liked Xero’s unique History & Notes feature, which displays an activity report at the bottom of every transaction screen. This tool lets you monitor key details about the document. For example, you can see if an invoice was copied from a quote, who created and approved it and when those actions occurred. This screen also shows automatic payment reminder information, such as the relevant email address and the date and time. Additionally, you can add notes, such as the expected payment date. 

Time Tracking

We appreciate that Xero includes time tracking in all its plans — something many rivals offer only on more expensive tiers or as an add-on. Users can download the free Xero Projects app to record time and costs, generate invoices and create reports. We especially like that this feature is included at no extra cost, although some stand-alone time-tracking apps offer additional functionality. Xero also integrates with more than 50 other time-tracking tools, including favorites like Deputy, LiveCosts and ServiceM8.

For more advanced capabilities, businesses can upgrade to the Established tier, which includes full project tracking. This unlocks features that record time, monitor project costs and display progress against budget in the financial dashboard. Time can be logged using a timer or a location-based job tracker on mobile devices.

The Xero Projects app allows you to track time on the go, add start and end times and use a stop-start timer or location-based tracking for more accurate timekeeping. Source: App Store

Reports

Big data is changing businesses, with an increasing impact each year. Growing companies need data presented in a digestible format so owners can act on the insights. During our software demo, we found that Xero’s reporting features make it easier to interpret key data analytics. The reporting tool distills your accounting data into easy-to-read bar charts, pie charts and other visuals. Popular options include the top 10 customers report, Xero’s budget manager and tools that let you drill down into your top revenue generators. Xero also lets you export multiple reports for further analysis or sharing.

Security

Xero connects to your bank and credit card accounts and imports data daily, so we appreciate that it protects your sensitive business information with bank-level encryption. Xero is certified as compliant with ISO/IEC 27001:2022 — the premier global standard for information security management systems (ISMS).

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 what data they can access.

Xero Pricing

We found Xero to be affordably priced, with feature-rich tiers and a pricing model that makes it ideal for growing businesses. Notably, Xero doesn’t base its pricing on the number of users — all plans support unlimited users. In our view, this is one of Xero’s key differentiators, making it a great choice for companies rapidly adding employees.

Here’s the breakdown:

Additional pricing considerations include the following: 

• Free trial: Xero offers a 30-day free trial for the Growing and Established tiers, so you can test the software before buying. This is a great way to explore advanced features and determine whether a lower-tier plan meets your needs. 
• Human resources (HR(/payroll add-on: Xero partners with Gusto to provide HR features, including payroll services. With Gusto, you can onboard new hires, administer employee benefits, track hours and paid time off, run payroll and file payroll taxes automatically. The monthly base price is $49 plus $6 per employee.
• Discounts: Xero frequently offers introductory discounts, so check the website for current deals.

Implementation and Onboarding

During our test run of Xero, we found it easy to set up. New users can access a free one-month trial with no credit card required. We liked that your free month doesn’t begin until after you finalize your business details and set up your account. This means if it takes you three days, the trial starts on day three. We also like that the trial version is full-featured, so you can test Xero with real data. This gives Xero an edge over competitors that don’t offer such generous trial terms.

Once you sign up, Xero provides several guided tutorials to help you get started, such as connecting your business bank account, adding customers and creating invoices. Many pages within the app include how-to videos and links to step-by-step guides, which is great for business owners who aren’t especially tech-savvy.

Customer Service

In general, we were pleased with Xero’s customer support options. However, they’re not as comprehensive as what we found in our review of QuickBooks Online, which details this vendor’s multiple support resources:

• Live help: Phone support isn’t immediately available. Instead, you must contact customer service via email or live chat and leave your phone number if you’d like a callback. The upside is that Xero doesn’t leave users waiting — the company will call you back at a time that’s convenient for you. The system seems to work well for most users. Xero scores 3.8 out of 5 on Trustpilot, with many reviewers praising the fast response times. This is ideal for growing businesses that don’t want to waste time resolving technical issues.
• Online resources: Xero also offers valuable online support resources, including videos, webinars, blogs, podcasts, small business guides and training courses. For self-guided help, the 24/7 customer support Xero Central lets you read articles and browse by topics, trending articles and skills. 
• AI support: Xero is rolling out JAX (Just Ask Xero), a generative artificial intelligence (AI) customer service companion. Currently in beta, JAX can help automate accounting tasks, provide personalized insights (like payment history or recommended actions) and assist with tasks like creating invoices and modifying quotes. It can do this within Xero or via commonly used platforms like short message service (SMS), WhatsApp and email.
• AI guides: To help businesses stay current, Xero publishes AI-focused guides that explain relevant updates and offer practical ways to get started with AI — including real-world examples of how businesses are already using these tools.

JAX (Just Ask Xero) is a generative AI business customer service companion that can answer questions and automate tasks. Source: Xero

Limitations

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

• Cap on invoicing and billing: The Early plan only allows you to send 20 invoices and five bills per month, which we found unusually low. For comparison, FreshBooks lets you send unlimited invoices to five clients on its lowest-tier plan. Users must upgrade to a higher-tier Xero plan to remove these caps. 
• Expense tracking: The Early and Growing plans don’t include expense tracking. To access this feature, you’ll need to upgrade to the Established plan. 
• Niche limitations: While Xero covers a wide range of features, it may not suit businesses with niche requirements. For example, companies that need to track billable hours or send invoices on the go must use Xero’s top-tier plan. Businesses with more specialized needs may prefer FreshBooks for time tracking and invoicing or Oracle NetSuite for enterprise resource planning (ERP) functionality. Our FreshBooks review and review of Oracle NetSuite have more information.
• Accounts payable limitations: Xero lacks a comprehensive vendor network, which limits its usefulness in the accounts payable space. Since managing accounts payable is critical for many businesses, some users may want to supplement Xero with a third-party solution.

Methodology

We researched and analyzed dozens of the best accounting and invoicing software solutions to help small businesses choose the right 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 vendor websites and software demos. 

Additionally, we studied user reviews for independent insights into 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. You can read more about our editorial process here.

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 color-coded visuals to help analyze business performance.

We don’t recommend Xero for …

• Businesses that need a low-cost way to send a high volume of invoices or bills.
• Niche businesses, such as those in e-commerce, which require more specialized solutions instead of a mass-market, one-size-fits-all platform.

Amanda Hoffman contributed to this review.