Accounting is an important function in every business organization as it helps you get financial position of your business. When you are choosing a accounting software it becomes very difficult to choose the best one .
Xero offers five scalable pricing plans beginning at $9/mo (no contract is required). Each plan comes with unlimited users and 1GB of online file storage (though this a “soft” limit; you can have as much storage as needed if you don’t mind slightly slower operations). Xero offers afree 30-day trial and even has a demo company set up already if you would rather not import your own information.
Discounts include 25% off for nonprofit organizations and 15% off for users with multiple companies registered on Xero. Also be sure to check out the Xero site and see if they are having a sale, as they often offer six months of discounted software.
Starter:
$9/mo
Expense tracking
5 invoices
Reconcile 20 bank transactions
5 bills
Live bank feeds
Customizable reports
W2’s and 1099’s
Standard:
$30/mo
Expense tracking
Unlimited invoices
Unlimited bank transactions
Unlimited bill
Live bank feeds
Customizable reports
W2’s and 1099’s
Payroll for 5
Direct deposit
Premium:
$70/mo
Expense tracking
Unlimited invoices
Unlimited bank transactions
Unlimited bill
Live bank feeds
Customizable reports
W2’s and 1099’s
Payroll for 10
Direct deposit
Multi-currency support
Premium 20:
$90/mo
Expense tracking
Unlimited invoices
Unlimited bank transactions
Unlimited bill
Live bank feeds
Customizable reports
W2’s and 1099’s
Payroll for 20
Direct deposit
Multi-currency support
Premium 100:
$180/mo
Expense tracking
Unlimited invoices
Unlimited bank transactions
Unlimited bill
Live bank feeds
Customizable reports
W2’s and 1099’s
Payroll for 100
Direct deposit
Multi-currency support
Each additional user after this is $2/a person.
Web-Hosted or Locally Installed:
Web-hosted. No installations or downloads required.
Hardware or Software Requirements:
As a cloud-based software, Xero is compatible with any device so long as you have internet access and are using one of the following browsers: Google Chrome, Internet Explorer 11, Microsoft Edge, Mozilla Firefox, or Safari 8+. Xero also offers an accounting app for Androidand iOS (9+).
In addition, Xero Tax Touch is an app specifically for freelancers and independent contractors, and Xero Me can be used as a payroll management tool for employees and admin.
Specific Size of Business:
Xero was designed with the average small business in mind. However, the smallest plan limits users to only five invoices and 20 transactions, a fact which renders it almost pointless considering the other, more extensive accounting packages available for small business in the same price range.
On the flip side, Xero is unrivaled in its options for mid- to large-sized businesses (or any company in need of payroll). It offers unlimited users – yes, unlimited – which is almost unheard of in the accounting software world; it also provides some of the most extensive user permissions I have ever seen. Xero provides support for multiple companies, inventory, tracking, and payroll (so long as your state is supported, go here to double check).
Accounting Method:
Both accrual and cash basis accounting.
Ease of Use:
Full disclosure: I was expecting Xero to be a lot simpler and easier to navigate, especially considering how often users complain about the complexity of Quickbooks. But while Xero issignificantly easier to learn that QuickBooks Pro, I don’t think it’s any more intuitive than QuickBooks Online.
Happily, Xero has markedly better customer support options than QuickBooks. What’s more, the UI is very appealing, and I’m not just saying that because blue is my favorite color. (Okay, well maybe I am…)
Setup – While simple, the setup process takes a good chunk of time. Most of this time is spent importing contacts, previous bank statements, items, etc. Based on the company information you provide, Xero creates a preset chart of accounts for you that usually only requires minor adjustments. The Xero dashboard will also prompt you to complete various setup tasks. These tasks are a generally a good idea, but I recommend starting by setting necessary automatizations and default preferences. Before sending invoices or importing transactions, I highly recommend creating an items list and adjusting your chart of accounts as needed. For those switching from QuickBooks, Xero offers detailed instructions to help make the transfer as seamless as possible.
Organization – The organization of Xero is pleasing overall, but not as intuitive as it could be. When I first began using Xero, I found myself thinking, “This can’t be everything.” The basic features are easy enough to discover, but some of the more in-depth features are harder to find at first. Once you get used to the software, however, navigation becomes simple. The dashboard offers a quick view of your company’s financial state. There is a toolbar across the top of the screen with tabs labeled dashboard, accounts, payroll, reports, contacts, and settings. In the right top corner, a + button provides a quick shortcut for adding invoices, bills, quotes, purchase orders, and most anything else you can think of. There is also a notification button and a help button.
Instructions and Guidance – Xero offers great help tools. Not only is the customer service spot on, the in-app search button answered nearly every question I ever had (pictured below). When you first use Xero, in-software videos and instructions pop up whenever you open a new feature for the first time. In addition, Xero has an extensiveHelp Center, various guides, and phenomenal how-to/getting started videos for those of us who are visual learners. There is one particular set of videos (Xero 101: Get Up and Running) I found particularly helpful. The degree of help you require will ultimately depend on your previous accounting knowledge, but whatever stage you’re at, Xero has plenty of help options for you to choose from.
Problems – Besides the minor learning curve, I didn’t have very many problems with the software itself. I didn’t notice any bugs or glitches and the uptime was great. The few issues I do have with the software are regarding some of the features—or lack thereof.
Poor Invoice Templates – If you’ve read any of my other reviews, you know I am pretty picky about invoicing options, particularly invoicing templates. While Xero offers some amazing invoicing features (like bulk invoicing), there is only a single invoicing template, and it’s very underwhelming. There are hardly any customizations options; in fact, all you can do is add your logo (though to be fair, there is an option to create and upload your own .docx invoice template). I would like to see Xero expand and offer more templates or at least more customizations. I also would love to see Client Portals similar to those of Zoho Invoice or Freshbooks.
Tedious CSV Imports – This was the worst part of my Xero experience—and the reason why set-up took so much time. In order to import .csv files into Xero, you have to spend a significant amount of time downloading Xero’s unique invoice format and reconfiguring your file to fit their template. This whole process could be streamlined and simplified.
Lack of Projects/Job Costing Feature – The lack of a project/task feature and the lack of job costing could be a big deal breaker for some small businesses. In defense of Xero, there are plenty of integrations that can address this issue, but it would be a nice addition to the Xero feature set (seeing as almost all accounting software provides this feature to a degree).
Features:
Xero is often praised for its robust feature selection. Below are some of the key features. You can find a full list here.
Dashboard – The customizable dashboard features a beautiful UI with graphs showing your bank accounts, invoices owed to you, bills you need to pay, expense claims, and other business performance graphs.
Invoicing – Xero offers time-saving necessities including recurring invoices, automatic invoice reminders, default payment settings, bulk invoicing, and the previous invoice replication. I was incredibly excited about these options until I saw the invoices themselves. Xero only offers a single invoice template. Like I mentioned in the Ease of Use section above, you do have the option to create and upload your own template via .docx file, but overall, I was expecting more. This feature gets the job done, but I would love to see Xero step up their template design; after all, the visual appearance of an invoice says a lot more about a business than people might realize. Customers receive estimates and invoices as pdf attachments, and payment gateways are available for invoices.
Estimates – The estimate feature is a very basic one, but it gets the job done. There is a single estimate template. You can program default terms and conditions and quickly convert estimates into invoices.
Contact Management – Xero has some of the best contact management features I’ve seen thus far in my career. You can add the expected basic contact information, of course, including a default discount and sales tax for customers. But Xero takes this a step further through contact groups and smart lists. Smart lists act as marketing tools, allowing you to target certain groups of contacts. For example, you can create a list for loyal customers or customers in a specific state in order to offer promotional deals. You can also use these lists to invoice an entire group at once. Learn more about how to optimize smart lists here.
Accounts Payable – Adding bills is very similar to creating invoices. You can easily create recurring bills and purchase orders (that can later be converted into bills with a few clicks). If your supplier also uses Xero, simply save the invoice as a draft bill and save yourself some time. You can also make batch payments, enable recurring bills, and attach important documents or photos of the bill to Xero.
Bank Reconciliation – Xero’s smart categorization remembers the past transaction categories you used and automatically categorizes new transactions for you. Xero has a strong bank rules feature and makes it easy to split payments and transactions when needed. The only downside is that you still have to click each transaction individually to approve it. You can either set up live bank feeds or import bank statements manually (although you must connect to your bank account before you can import anything, which seems contradictory). Note: Like almost all software using live bank feeds, Xero partners withYodlee, who may violate some banks’ Terms and Conditions. Consult with your bank to see whether live bank feeds are a good choice for you.
Inventory – Items can be saved with the following information: item code, price, account, tax rate, and picture. The track inventory option will record stock levels, average purchase costs, and the number of items committed to quotes. There are no email reminders for low stock and Xero does not allow your tracked items to ever go negative.
Payroll (Standard and Premium Only) – Xero payroll is available in New Zealand, Australia, the UK, and 35 US states (but only seven of these states have electronic filing and tax payment options). Many customers love the payroll feature. It’s simple to use and incredibly extensive. You can customize pay schedules and keep track of benefits, deductions, overtime, bonuses, sick days, paid vacations, time off requests, and employee earnings all in one place.
User Permissions – Xero has some of the most extensive user permissions I have seen. There are five levels of permissions, as seen in the picture below. You can also require users to send completed invoices, bills, etc. in for approval rather than granting them access to send things freely.
Reports – Xero offers 65 reports (including 20 that are specific to payroll). These include everything from basic balance sheets and aged payables to detailed budgets and depreciation schedules. If you are looking for a profit and loss statement, however, you won’t find one; instead, you’ll find similar information with the income statement report. All reports are completely customizable and can be run with various time periods as well. You can star your favorite reports for quick access.
Default Emails – They’re everywhere! You can set default email messages for almost anything, which is a huge time saver.
Tracking – Xero allows you to set up two tracking categories, with 100 individual tracking options within each category. These categories are basically ways of organizing your information. Some people create categories for locations, teams, manufacturing, and more. Check out this article to learn more about how tracking can benefit your business.
Expense Claims – Xero allows you and your employees to file expense claims for reimbursement. Admin has the ability to view and approve all claims. This feature is far more advanced than most accounting software options, which usually allow you to deduct mileage alone.
Tax Forms and Support – Xero allows you to easily fill out W2s and 1099s by keeping all of your tax information in one place. You can also use the automatic asset depreciation feature to make your life a little bit easier.
Sales Tax –You can set default sales taxes for purchases, sales, and customers. Compound and combined taxes are supported. Xero also makes it easy to differentiate between inclusive and exclusive tax and partners with Avalara to automatically calculate sales tax based on addresses given. Watch this video to learn how it works.
Multi-Currency – Xero supports over 160 currencies. Currencies are updated hourly through XE, and reports can be customized and run in different currencies.
API – Xero has an open API for developers. Learn more here.
Imports and Exports – Xero has extensive import and export capabilities, but as I mentioned above, manually importing is often cumbersome and tedious, especially when using a .csv file. Here is a full list of all import and export options.
Customer Service and Support:
Customer service is available 24/7. Xero does not offer phone support, a fact which can turn people off at first, but the company has some of the best customer service and support I have ever seen, so don’t be too quick to reject the software on this basis.
Xero operates primarily on email support. Emails are supposedly answered within a 24-hour period, though in my experience response times were much faster. The longest I waited for a response was a grand total of sixty minutes – pretty impressive if you ask me. Responses were always friendly and direct. Some were a bit short, but I never found myself needing more information.
To top it all off, Xero has an incredible amount of additional resources. These include:
Email – Contact Xero at [email protected] or [email protected] depending on the inquiry.
Live Chat – A live chat feature is available on the actual Xero site. This is best for sales inquiries, but representatives were usually helpful with questions about features as well (if nothing else, they would know what direction to point you in).
In-Software Help Button – As mentioned and pictured above, the in-software help button is a godsend. The search bar will pull up relevant help articles and videos. If you can’t find what you are looking for, you can message a representative directly from within Xero. You can also choose to let a Xero customer service agent have read-only access to your account so that they can better assist you with any problems you may be experiencing.
Help Center – Xero has a comprehensive Help Center with how-to articles and common troubleshooting issues for each feature.
Community Forum – Xero’s community forum is a place for users to answer each other’s questions and learn how other businesses are making use of Xero. Additionally, the forum has a section for update suggestions. Users can vote for different suggestions, and Xero claims that they will listen, although there are a few complaints that this is not the case (more on this in the Negative Reviews and Complaints section).
Guides – Xero has guides, guides, guides galore. There are small business guides,business type guides, and an accounting glossary—all of which are very informative and helpful.
Xero TV – Via the very extensive Xero TV, there are hundreds of well-categorized videos to choose from, though I personally found it a bit easier to find the videos I was looking for on YouTube (where the same videos are featured).
Podcasts – If 700+ videos are not enough for you, you can check out the Xero podcasts, featuring digital marketing strategy advice and CEO talks.
Accountant Messaging – You can send messages and questions to your accountant directly from within the software.
Xero U – Xero U is a sort of university or training program offered by the company. It includes online courses and occasional events.
Blog – The Xero blog is basically a full-fledged business newspaper that features business news, advice articles, ideas for success, etc.
Social Media – Xero has Facebook, Twitter, and LinkedIn accounts, though none of them are very active. I’d recommend checking out the support options above before looking at these.
Negative Reviews and Complaints:
For the most part, Xero receives positive reviews, but there are some recurring complaints:
Mobile App Lacking – One of the biggest issues for users is the mobile app. People are disappointed with the functionality of the apps, especially compared to the desktop version. Users particularly want to be able to send quotes, convert quotes to invoices, and see their bank balances. There are also reports of bugs and crashes.
Limited Payroll – This is another major issue for US owners. Currently, there is only payroll support for these 35 states, and only seven of those have electronic filing and tax payment options. Many users complain that the process of adding the rest of the states is taking longer than they expected (though Xero did add 12 new states in 2016). Hopefully, this process will speed up.
Slow to Update – Along those same lines, some users say Xero is not quick to respond to user requests. The company does update their software frequently, in all fairness, but this complaint seems valid as there is yet no feature roadmap and still no sign of a payroll feature.
Not Intuitive – I am in the same boat with the users who say Xero is not very intuitive, or at least not as intuitive as they had hoped. There definitely is a bit of a learning curve, though I didn’t encounter any users who rejected the software for this reason.
Poor Customer Service – A few users take issue with the lack of phone support, although it is worth noting that QuickBooks offers phone support and even still can’t hold a candle to Xero when it comes to customer service.
Positive Reviews and Testimonials:
Most users are happy with Xero, and a few even say it is genuinely “fun” to use.
Easy to Use – The biggest response by far is that Xero is easy to use. Many accountants like Xero for this reason as well because they can teach their customers how to use the software quickly.
Large Feature Selection – Users like the large feature selection including payroll and reports.
Good User Settings – The extensive user permission settings are a big hit for quite a few users.
Mobility – A common point of praise is the mobility cloud-based software gives business owners. Some users also really like the mobile apps, though the general consensus is that they could use some work.
Lots of Integrations – Quite a few users commented that the 500+ integrations make their lives easier and make their businesses run smoother.
Better Than QuickBooks – Most users say Xero is the winner for them because it is easier to use and has better customer support. (Are you one of these users? I’d love to hear from you in the comments below.)
Here’s what a few users are saying:
“Great support, great functionality, intuitive interface. I have zero complaints with Xero.” – Tammi DeVille Merrell
“Xero is a phenomenal platform that has dramatically impacted how we serve our clients. Xero is incredibly user-friendly, intuitive and collaborative. With Xero we know we can truly serve clients anywhere, anytime and become their trusted advisor” – Rickey Sanchez | Chaney Associates
“We tried so many other online accounting systems for our small business and none of them fitted the bill. The free ones were light on functions that you actually need. Xero was right on. It’s not super simple, but once you get the hang of it, it’s very quick and powerful.” – Tal Ziv | Silver Lining
Integrations and Add-Ons:
Xero has 500+ integrations, which almost makes up for the lack of a project or job-costing feature in my mind. If 500 integrations aren’t enough, Xero also integrates with Zapier, connecting the software to hundreds of additional add-ons. Some of these integrations are country specific, so make sure they are compatible before you make any additions or purchases.
Xero has all of the staple integrations you’d expect, but some of the most notable are:
Paypal – Accept online payments and enable electronic payment of invoices. Read our review here.
Stripe – Payment platform for both web and mobile payment methods. Read our full review here.
Shopify – E-commerce platform for online stores. Read our full review here.
Insightly CRM – Free project and contact management software.
Receipt Bank – Easy receipt data entry.
WorkflowMax – A much-needed project management tool that is owned by Xero.
Vend – A web-based POS system and retail management tool. Read our full review here.
Security:
Xero has a reputation for some of the strongest cloud security out there. Security measures include data encryption, 2-step authentication, and 24/7 monitoring at multiple locations. Data is back up daily across various servers and regular security audits are performed. Xero also boasts an impressive record of 99.97% uptime. For more details about Xero’s security, go here.
Final Verdict:
With a robust feature set and strong customer service, it is easy to see how Xero is a leading contender in the world of accounting software. I am blown away by the customer support the company offers. Features like unlimited users, strong permissions settings, bulk invoicing, and inventory tracking, along with hundreds of integrations and time-saving touches like default emails, put this software leaps and bounds ahead of most of the competition and make it a good match for many businesses.
What’s even more impressive is that Xero is only ten years old. QuickBooks has had a decade-long head start and yet Xero is still able to give the company a run for their money
However, at the current moment, Xero is still lagging a bit behind QuickBooks Pro with limited invoicing choices, no project management or job-costing features, weak mobile apps, and incomplete payroll support. The pricing could also be considered steep for smaller businesses when compared to other accounting packages. It’s not all bad news, though. If Xero keeps updating their software as rapidly as they have in the past, it seems likely that the company will lap QuickBooks in the near future and bring home the trophy as the best accounting software.
To see if Xero is right for you, give their 30-day free trial a spin. And stay tuned for the results of this race to the top!
