Pros & Cons
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- Thorough accounting features
- Supports an unlimited number of users
- Handles employee expense claims
- Exceptional support
- Great reporting tools
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- Must link time entries to projects
- Transaction templates are difficult to modify
- Contact records could have more detail
Xero Specs
| All Major A/R, A/P Forms | |
| CRM Integration | |
| Customer/Vendor Portals | |
| Document Management | |
| Double Entry | |
| Mobile Access | |
| Multi-Currency | |
| Payroll | |
| Time Tracking | |
| Tracks Inventory | |
| Training Available |
Xero supports every element of financial management that young and growing companies need, offering excellence in areas such as advanced reporting and employee expense claims. The accounting app has received some welcome user interface changes since the time our last review and continues to accommodate an unlimited number of users at no extra charge, all while offering outstanding support options. All that said, transaction records could be more flexible. Our Editors' Choice winners are FreshBooks for service-based businesses, Intuit QuickBooks Online for companies that sell both products and services, and Wave for sole proprietors who don’t need payroll.
Price: Premium Features Come at a Premium Price
Xero offers three pricing levels, all of which include a 30-day trial. The Early tier ($25 per month) has monthly limits of 20 invoices and five bills. The Growing plan ($55 per month) supports unlimited billing and invoicing. The Xero Established version I tested ($90 per month) is the only one that supports multiple currencies. It also offers advanced analytics, employee expense claims, and projects. You can connect Xero with Gusto for your payroll needs.
The version of QuickBooks Online (Plus) that's most similar to Xero Established costs $115 per month; here's how the two services stack up. The equivalent Zoho Books tier (Premium) goes for $70 per month. One of the most affordable, full-featured accounting services for small businesses is Patriot Software Accounting, which costs $30 per month for its advanced tier. Wave Pro is $19 per month, but it’s most suitable for sole proprietors who don’t require payroll services, rather than the larger small businesses that Xero supports.
Interface and Ease of Use: Cleaner, Faster, and More Intuitive Than Before
Xero helps set up your company file by asking questions whose answers it uses to build the foundation for your records and transactions. It makes suggestions about what some of your first steps might be (such as connecting to your financial institutions so you can import transactions). Xero also devotes a major section to its core settings, which you will have to revisit occasionally to toggle a feature or modify its operations. This page includes options around currencies, invoices, online customer payments, and user permissions. You can experiment with the app using a demo company and fake data, which provides a good idea of how the app looks and functions.
(Credit: Xero/PCMag)The site has a no-frills, uniform, and professional look. Its consistency and simplicity make it fast. It’s not as aesthetically pleasing as FreshBooks, especially in areas like contact records, invoices, and transaction registers, which are particularly plain. However, recent changes to the navigation toolbar make it easier to navigate. Some pages are spacious, while others feel cramped.
Xero's revamped dashboard (not yet available to everyone, as of this writing) makes for an even better launching pad for your accounting work than before. The service expanded and rearranged the widgets (blocks of data) on this page, and they’re more attractive as a result. You can hide any that you don’t want to see, but you can’t rearrange them. Account balances appear at the top, followed by sections like Bills to Pay and Cash In and Out. Each link leads to more detailed information (such as View all Bills) and suggested actions (such as Add Bill). All these changes make the time you spend in Xero easier and more productive.
Sales and Receivables: Solid Sales Tools, Though Customization Falls Short
Generous import capabilities ease the process of getting started with accounts receivable in Xero. In addition to adding customer data from CSV or TXT files, you can download templates for or import data from bank statements, budgets, Charts of Accounts, fixed assets, inventory items, and invoices.
If you try to enter customer data manually, you will find that the record templates cover basic contact details effectively but lack extras that competitors, such as Zoho Books, offer, including portal language, price lists, and reporting tags. However, Xero's customer records appear more organized than before, with details easier to access across four tabbed panes, rather than on a single lengthy pane.
(Credit: Xero/PCMag)Customizing sales forms isn't as flexible or intuitive as it is on competing sites, nor are data fields as plentiful. Templates are available for one-time and repeating invoices and quotes, and you can queue up multiple statements to print or email. Unfortunately, you must make any advanced modifications in Microsoft Word, whereas competitors build customization tools directly into their sites. The forms don’t miss anything major, but those in FreshBooks just look so much more state-of-the-art. Xero's thorough, step-by-step support articles can walk you through customizing forms and other tasks. Chat, email, and phone help options back up this online guidance.
A sales overview page displays the status of your invoices and quotes, indicating their current stage in the process: creation, approval (which most competitors lack), awaiting payment, and overdue. You can automate late payment reminders and accept online payments through services like Square and Stripe, but Xero doesn’t have a dedicated payment service like Wave. The best place to view your sales activity and take related actions, such as creating credit notes and statements, is on the main Invoices page.
(Credit: Xero/PCMag)Bills and Expenses: Dependable Expense Tracking With a Helpful Twist
Like competitors, Xero lets you track bills. You can enter bill details manually, configure the service to send them to a unique email address, or upload them. Thanks to its acquisition of HubDoc several years ago, Xero does a good job of reading bills, extracting important details such as vendor and amount, and entering them into forms. Xero used to offer online bill pay through an add-on for BILL, a highly regarded standalone accounts receivable and payable application, but it is no longer available to new users.
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If you’ve imported bank transactions into Xero (as you really should), you can view and edit them, adding any missing details and ensuring they have the correct category (Xero uses the word “accounts” rather than “categories,” since it relies on the Chart of Accounts for classifying income and expenses, like Patriot Software Accounting). Xero is unique among the accounting apps I tested in that it also provides tools for reporting and approving employee business expense claims. The site also supports purchase orders.
Inventory Tracking: Basic Tools with Premium Add-Ons Available
Xero’s product records are generally accurate, although there are some deficits. The app allows you to track inventory, but it doesn't provide as much in-depth information as QuickBooks Online. For example, you can’t set a reorder point. You also have to go through the inventory adjustment process to add your opening stock level (QuickBooks Online handles this during the creation of an item record), but you can make bulk adjustments. It's not possible to bundle items as assemblies or connect with sales channels.
(Credit: Xero/PCMag)Xero’s add-on, Xero Inventory Plus, solves these problems. Available to Growing and Established subscribers, albeit at an extra cost of $39 per month, it's a good fit for online sellers who operate through e-commerce stores (Amazon and Shopify, with more coming) or physical stores (point of sale) that need robust tools to monitor inventory, profitability, and sales.
Project Tracking: Capable Project Tracking, Limited Flexibility
Xero has tools to create, monitor, and track the profitability of projects. You can set staff cost rates, but there’s no flexibility around project billing, unlike competing sites. You can add expenses and assign bills to projects from their home page, but you can’t do so when you’re entering the original purchase forms.
Each project’s home page shows transactions that you’ve assigned to it: estimated expenses, quotes and invoices, tasks, and time entries (which you must assign to projects; Xero doesn't allow standalone timed activities). But the project infrastructure isn’t as detailed and flexible as it is in FreshBooks, for example.
(Credit: Xero/PCMag)Reports: Creative and Insightful Options
Xero’s selection of reports suits the site’s features. These templates, such as Duplicate Statement Lines and Foreign Currency Gains and Losses, focus on specific subsets of data that I haven’t seen on other small business accounting sites. Some filter options are also creative and unusual, such as Outstanding Tax and Profit Per Item. Customization options are good overall, and you can save your modifications.
Xero offers two advanced reports that provide valuable insights and analysis. One offers short-term (30-180 day) cash flow projections, along with suggested actions that might improve your outlook. The other, Business Snapshot, includes numerous tables and graphs that illustrate various financial ratios and metrics. I haven't seen the latter in other accounting applications.
Privacy: Is Xero Safe to Use?
Xero has multiple layers of protection for the personal and financial information you entrust to the company, including encryption for data in storage and transport. Multi-factor authentication (MFA) adds an additional level of security. The company claims its servers and data centers have robust physical security controls, along with 24/7 monitoring and surveillance. Xero also solicits regular and independent data security audits.
Mobile Access: Apps That Cover the Basics—But Not Much More
Xero offers three separate mobile apps, all of which are available for both Android and iOS. The company has retired the Xero Expenses app and folded its features into the Xero.me app. Xero Projects lets users who don’t need access to the main Xero app still contribute to projects. The main Xero app is designed for business owners who want to perform accounting tasks remotely. It replicates some of the tools and data of the browser-based version, though a lot is missing.
(Credit: Xero/PCMag)The main app has an abbreviated dashboard that shows your most important numbers. Sales and purchase overviews provide access to bills, expenses, invoices, and purchase orders. You can record payments and enter new forms. Imported transactions for all accounts are available, which you can match to existing ones in Xero. Customer and supplier records contain contact information as well as lists of outstanding invoices and bills. Xero recently introduced the ability to extract data from a photo or image of an existing bill and transfer it to a bill form. I appreciate these apps for their simplicity and usability, but I would welcome more tools and data.