Xero Review 2017 - Online Accounting Software

Xero review (image of a retro calculator accompanied by Xero logo)

In this Xero review, we take an in-depth look at an increasingly popular cloud-based accounting solution. We’ll examine its features, go through its pros and cons, and help you decide whether it’s the right accounting tool for your business.

Our overall rating: 4.5/5

What is Xero?

Xero is a web application (a piece of software that runs in your browser) that lets you manage your business accounts in the cloud. Based on a ‘software as a service’ (SaaS) model, users pay a monthly fee to use it. It is chiefly aimed at small to medium-sized businesses.

Xero allows you to perform a variety of key accounting tasks online - these include running a payroll, generating financial reports, reconciling items and managing expenses. You can both import data manually to Xero and connect a bank account to it to view and manage financial transactions in real time. We’ll go through its key features in more depth later in this review - but first, a quick look at pricing.

How much does Xero cost to use?

Pricing for Xero varies by country; in this review we’re going to mainly look at the US pricing and features. 

(If you're outside the US, you can still use Xero - there are dedicated sites available for Australia, Canada, Hong Kong, Ireland, Malaysia, New Zealand, Phillipines, Singapore, South Africa and the UK. There's also a 'global site' where users from any country not listed above can sign up. The pricing plans and features vary slightly by country, but you can use core features like invoicing, quotation generation, bank reconciliation, multi-currency handling, reporting etc. wherever you live.)

In the US, there are five plans available:

  • Starter - $9 per month
  • Standard - $30 per month
  • Premium 10 - $70 per month
  • Premium 20 - $90 per month
  • Premium 100 - $180 per month

A 30-day free trial of Xero is also available.

In terms of the key differences between these plans, the things to look out for are as follows:

  • The ‘starter’ plan heavily limits the number of invoices you can send (to 5), does not permit you to run a payroll or work in multiple currencies, and only allows 20 transactions per month.
  • The ‘standard’ plan allows you to run a small payroll (5 people), but doesn’t facilitate transactions in multiple currencies.
  • The ‘premium’ plans allow you to run larger payrolls (as the plan names suggest, for 10, 20 or 100 people depending on whether you’re on the Premium 10, 20 or 100 plans respectively). They also allow you to work with transactions in multiple currencies.

One thing worth noting about the 'Premium 20' and 'Premium 100' plans is that they're a little bit tricky to locate on the Xero website: by default, only information about the Premium 10 and Premium 20 plans is shown, and you have to nose about for information regarding the other plans. Xero should, in my view, make the pricing structure a bit more transparent.

In terms of how competitive Xero's pricing is, the key product to compare it against is Quickbooks Online, arguably the most similar product to Xero currently on the market. 

Using Xero will for many users will be cheaper than Quickbooks Online, because Quickbooks charges a premium to enable payroll services, and then a per-user payroll fee on top of that. This means that the Quickbooks Online ‘Essential’ plan, which is broadly equivalent to Xero’s $30 ‘Standard’ plan will cost $79 once 5 payroll users are factored it; and the Quickbooks Online ‘Plus’ plan, with 10 payroll users added on, comes in at $89. Of course, there’s more to compare between Xero and Quickbooks than just the payroll user count - prospective users of both products should compare their feature sets fully - but if do you need to run payroll you will usually find Xero to be the cheaper option.

The limited number of invoices and transactions available to users of the Xero ‘Starter’ plan is a bit of a concern however - this, alongside the lack of payroll functionality, will render it a fairly pointless option for many people. In reality, most users will need to plump for the more fully-featured ‘Standard’ plans and up.

What features do you get in Xero?

You get the following key features in Xero:

  • Invoicing
  • Inventory tracking
  • Payroll (depending on plan)
  • Bank reconciliation
  • Reporting
  • Expense claims
  • Bill payments
  • Purchase order creation
  • Quote generation
  • Multi-currency handling (depending on plan)
  • File management
  • Contact management
  • Sales tax

Let’s take a look at these in more depth.

Invoicing in Xero

Invoicing is extremely straightforward in Xero. If you want to keep things simple you can simply add a logo to the standard Xero invoice template and start whizzing them over to your clients. Or if you’re more adventurous, and would prefer that your invoice design matched your brand more closely, you can use Word templates (DOCX format) as the basis for your invoice layouts.

If you like, you can include an immediate payment option on your Xero invoices - Paypal or credit card - on the invoice; alternatively, you can just list your bank details so that funds can be wired manually into your account.

All paid and outstanding invoices are viewable in Xero’s sales dashboard, making it very simple to see which of your creditors are on your nice and naughty lists. 

In terms of the actual mechanics of sending your invoices to invoices, this can either be done

  • in a traditional manner (by emailing it to a client or, if you’re very old school, by sending it to them in the post) 
  • using ‘Xero to Xero’ invoicing. 

The latter option allows two companies that both use Xero to join the ‘Xero Network’ and send invoices to each other directly from Xero to Xero. This bypasses the need for the recipient of the invoice to add it manually to Xero - it will appear automatically in the software’s Purchases section and can be edited or approved easily.

For me, the strongest aspect of Xero’s invoicing functionality probably involves its automated reminders. You can set up invoicing in Xero so that when your clients fail to pay a bill within a set period, they automatically receive a follow-up either before or after the due date. This makes credit control very straightforward. A nice feature of this functionality is that you can exclude certain invoices from this - this can be based on a particular customer, or an invoice amount threshold (i.e., you can instruct Xero not to send invoices out if the amount involved is less than $X).

An overview of invoicing in Xero.

Inventory tracking

Inventory tracking is a useful feature for any prospective users who sell goods rather than services. With Xero’s inventory tracking functionality you can keep tabs on how much stock of particular items you have, your best selling products, and your most profitable goods. 

However, a word of caution here: there is a limit on the number of products you can track - 4000. This is generous, but there will inevitably be some businesses that might need inventory tracking for a greater number of items; Xero recommend using one of their app integrations to handle this.

Another thing to watch out for with Xero’s inventory tracking is negative inventory - where you sell goods before you stock them. Xero doesn’t support this, and again recommend using a third party app. 

The full list of situations where Xero suggest an app is more appropriate for inventory tracking are as follows:

  • if your business has more than 4000 inventory items you want to track
  • if you manufactures goods for sale
  • if you operate with negative inventory, that is, you sell goods before you've purchased them
  • if you requires purchase order receipting
  • if you needs to use a different inventory accounting method than average cost, for example, FIFO (first in, first out) or LIFO (last in, first out).


Xero permits you to run a payroll on its more expensive plans: ‘Standard’, ‘Premium 10’, ‘Premium 20’ and ‘Premium 100’. One these plans you can pay your employee and manage your taxes through Xero.

There are some really nice features here, including a ‘Xero Me’ app for employees (which allows your team to view their own paystubs, add time sheets, and request time off); you also have flexibility about payment types - you can print checks via Xero or arrange direct deposits into your employees’ bank accounts. Tax calculations are are all automated and you can file your taxes from within Xero.

There are a couple of things to watch out for here however. First, a slightly frustrating aspect of Xero’s pricing structure is that if the number of employees in your organisation is between 20 and 100 you are stuck with the most expensive monthly plan. It would be good to see some additional plans which cater for companies with say 40, 60 or 80 employees. Secondly, if you’re a US user you’ll need to note that Xero’s payroll functionality is not available in all states.

But overall, payroll is going to be one of the features of Xero that will convince many business owners of its usefulness.

Bank reconciliation

Reconciliation is made very straightforward in Xero by virtue of the fact that the tool is connected to your bank account. Every time money is deposited in or withdrawn from your bank account, this transaction appears in Xero. You can then enter in the transaction details, ensuring everything is accounted for correctly.

A really nice feature to help you with this is Xero’s ‘bank rules’. A typical use of these might be for reconciling regular parking or train travel expenses quickly - so long as you instruct Xero correctly (based on account numbers and transaction description), Xero can identify these and pre-populate your reconciliation descriptions with pre-defined information about the transactions. You can then approve these quickly, or edit them where necessary.

The only thing you’ll need to be aware of is that you can only avail of this real-time functionality if you can get a bank feed into Xero. Fortunately many of the major banks facilitate this and if not, you may be able to make use of a Yodlee feed (a type of bank feed sent to Xero by a third-party, Yodlee) to get your transactions into Xero. But in the worst case scenario, you may need to change your bank account in order to use Xero.

An overview of bank reconciliation in Xero, including bank rules.


There is a plethora of reports available in Xero. The standard reports cover everything from standard profit and loss figures to tax to fixed assets - but if you can’t find what you need, you can create custom reports to meet your requirements.

In addition to in-depth reports, you can also make use of the standard Xero ‘dashboard’. This is shown as soon as you log into the product and highlights key information such as outstanding invoices, bank account summaries and expense claims. 

All in all reporting is comprehensive and flexible in Xero. And the advantage of using a tool like Xero is that reporting is real-time: because it’s connected to both your bank account and invoicing system there’s no collating figures, or hanging about for data.

Expense claims

Businesses that handle a lot of expense claims are going to find Xero very useful. Expenses can be submitted via a mobile app (which allows users to scan receipts with their smartphone camera and upload them to the cloud) or a browser.

Once in Xero, expenses can be reviewed, approved or rejected, and reconciled. It’s also possible to assign expenses to a particular client. There’s not a lot to say about Xero’s expenses-related functionality other than it’s great and will prove a big time saver for both employees and the organisation they work for.

Approving and declining expenses in Xero is very easy.

Approving and declining expenses in Xero is very easy.

Bill payments, purchase orders and quote generation

As with expenses, the bill payments functionality in Xero is also strong. Creating bills - either one-off or repeating - is straightforward. You (or your suppliers) can also email bills directly into Xero, which can streamline the whole file management aspect of billing. Once you’ve added bills to Xero, you can use various reporting features to see how much you owe, when and to whom. 

Purchase orders and quotations are also easy to create in Xero. They can be formatted to match your brand, and they can be converted to a bill or invoice if necessary. A nice feature of the quotation generation functionality is an ‘accept, reject or comment’ option that is presented to prospective clients. If you generate all your quotations in Xero, you can track the status of each and generally keep tabs on your sales pipeline. Businesses that typically create very similar quotations for goods or services will benefit from the fact that you can easily re-use old quotes.

Multi-currency handling

If you need to work with multiple currencies, there is good and bad news for you. The good news: you can work with over 160 currencies. The bad news: you’ll need to be on one of the most expensive ‘premium’ plans to access this functionality. If you can live with the higher monthly fees, then you’ll be able to avail of some very useful features, namely

  • automatic currency conversion via xe.com
  • assignment of a standard currency to individual contacts
  • reporting in any currency you like.

File management

Accounting generates a lot of paperwork and fortunately Xero is well equipped from a document management point of view. There are a few different ways that you can get a file into Xero:

  • by uploading it
  • by emailing it to a Xero address
  • by taking a photo of it (you can either use your desktop machine’s webcam or your mobile device’s camera) and adding it to the file library

Once your file is in Xero you can either attach it to a transaction (for example, you can associate an invoice with a a particular transaction on your bank statement) or you can do things the other way round - i.e., create a transaction, expense or bill based on a file in your library.

You can use your webcam to scan files straight into Xero.

The file management system in Xero is very easy to use: by default, you are given two folders: ‘inbox’ and ‘contracts’, but you can create your own additional ones. However, you can’t create subfolders, which may prove slightly annoying in certain contexts, particularly where you are working on multiple projects for one client and need to file paperwork according on a per-project basis. It’s by no means a show-stopper but it a little more flexibility in this regard would be helpful for some users.

Finally, you can assign user permissions to files - allowing some team members to access one file, and not another etc.

Contact management

Customers and suppliers are referred to as ‘contacts’ within Xero, and it’s easy to manage them. It’s straightforward to add, classify and update contacts; and clicking on a contact reveals not only their contact details but

  • a history of all your previous financial details with them
  • any relevant files associated with them 
  • a list of all your past email communications with them (so long as you have a Google or Outlook 365 account and have connected it to Xero)

All in all, contact management is well-thought out in Xero, but there is one area where I feel improvements could be made: contact uploads. As things stand, importing all your contacts from an email client like Gmail or Outlook is a pretty cumbersome process: you have to export all your contacts from your email client, download a template file from Xero, populate it with your exported contacts and then re-upload the whole thing to Xero. Depending on the number of contacts you have, this could take some time; a tool that allowed you to connect to your email accounts to Xero and map fields during an import process would probably make for a better solution, certainly where Gmail or Outlook 365 accounts are involved.

Sales tax / VAT

Adding sales tax in Xero is a straightforward affair. Xero automatically calculates rates for you and these rates are updated automatically to reflect changes to tax rates and tax boundaries. Additionally you can create and apply your own custom rates. US users of Xero can prepare and submit sales tax returns using Xero’s integration with Avalara TrustFile. UK users can file their VAT returns online through Xero too.

Xero integrations

A major benefit of using cloud-based solutions like Xero is the potential they bring for integrations with other tools. Using Xero’s ‘app marketplace’ you can extend its functionality significantly by integrating it with a range of third party apps. Some key examples include:

These are just a few examples; there are hundreds of integrations available with many of the leading products in the world of eCommerce, CRM and online payments. The chances are that if you work with another mainstream web application, you’ll find that a Xero integration is available for it.

A wide range of integrations are available for Xero

A wide range of integrations are available for Xero

Importing and exporting data

As discussed above you can get data in and out of Xero using bank feeds, third party apps and Xero invoicing to invoicing, but you can also import and export data using files. This is important to any business with a sales or purchase history that needs to be brought across to Xero.

Importing data

You can import the following data into Xero:

  • Bank statements
  • Budget
  • Chart of accounts
  • Contacts
  • Fixed assets
  • Inventory items
  • Invoices, bills and credit notes
  • Manual journals
  • Paypal statements

All of the above can be imported in CSV format; they can also all be imported in TXT format, with the exception of bank statements, budget and Paypal statements. You can also use OFX (Open Financial Exchange) files and QIF (Quicken Interchange Format) files to import bank statements.

Exporting data

For some users, moving their accounts to a web application will feel like a big move. What happens if Xero goes bust? (With 1 million users, this is a rather unlikely scenario - but it’s always good to think ahead). How do I get my data out?

Fortunately, Xero lets you export your data into a variety of formats - the following items can be exported:

  • Batch payments (various)
  • Budget (CSV, XLS, Google sheets)
  • Chart of accounts (CSV, XLS)
  • Contacts (CSV, XLS)
  • Fixed assets (CSV, XLS)
  • GL data (CSV, XLS, MYE, TXT, XML)
  • Inventory items (CSV, XLS, PDF)
  • Invoices and bills (CSV, XLS)
  • Reports (CSV, XLS, Google Sheets, PDF)

Interface / ease-of-use

The desktop version of Xero works in the latest version of the following desktop browsers:

  • Google Chrome
  • Internet Explorer (IE) 11
  • Microsoft Edge
  • Mozilla Firefox
  • Safari 8 or later

The interface itself is well thought-through. A horizontal navigation bar lets you access the key features, and it’s well laid out and intuitive to use. There are 7 main tabs: dashboard, accounts, payroll (depending on whether your plan provides access to this feature), reports, adviser, contacts and setting - and everything is pretty much where you’d expect to find it. In addition to these tabs there are some handy shortcut icons:

  • a plus icon which allows you to do something ‘new’ (raise an invoice, prepare a quote, transfer money etc.)
  • a folder icon which allows you to access your file storage
  • an envelope icon which allows you to view notifications from Xero
  • a magnifying glass icon which allows you to search for items within Xero
  • a question mark icon which allows you to search the Xero help resources.
The Xero main menu

The Xero main menu

All in all the Xero interface is straightforward and, assuming users are familiar with the basics of accounting, very user-friendly. It is not responsive however, which means that those using it on smaller mobile devices may struggle with it a bit (users of larger tablets should be okay, but if you’re using anything smaller than a standard iPad, you will have to occasionally indulge in a bit of pinching and zooming). The alternative option when using a smartphone or tablet with Xero is to download its dedicated mobile app. And speaking of which...

Xero’s mobile app

As with most popular cloud-based software, mobile apps are available for Xero. Two apps are available - the main Xero app and a payroll-related app, Xero Me.

The functionality that the main Xero app provides is very limited by comparison to the browser version: you can view a limited version of the main Xero dashboard; reconcile transactions; view or create invoices, scan receipts and view contact information for your suppliers and creditors. I suspect its most useful application for many would reconciling payments on the go, or scanning receipts and pinging them straight into Xero. Any team member in an organisation can use the mobile app - with access rights determined by the main admin - this is particularly useful I think for handling expenses.

Reviews of the main Xero iOS app by its users have not been terribly positive: it has received an average rating of 2.5 star out of 5 by its users. The Android version seems to be more popular, averaging at 3.6 stars out of 5. The main gripes from users seem to be that the functionality on the app is extremely limited by comparison to the desktop version of Xero, and to be fair, they have a point.

In addition to the standard Xero app, a 'Xero Me' app is also available for businesses that use Xero's payroll functionality. This allows users to submit timesheets, manage leave requests, check pay dates and access / download pay slips. This hasn't been rated enough times on the iOS app store for iTunes to provide a rating, but the Android version has been rated at an average of 3 stars out of 5 by its users.

I'm not entirely sure why two apps are necessary here - it seems to make more sense to just have one Xero app which provides both accounting and payroll functionality. 

A screengrab from the the 'Xero Me' mobile app.

A screengrab from the the 'Xero Me' mobile app.


Given how confusing the world of accounting can be, and particularly since this product is aimed at people who may not have an accounts background (sole traders and so on) the quality of support for Xero is going to be a key concern for some users. 

First the good news: the Xero support materials that are available online are excellent. A comprehensive set of videos and web pages is there to navigate users through the processes involved in setting up and maintaining their accounts with Xero - and all are very easy to understand. If these resources don’t answer your questions, you can avail of 24/7 support from the company. 

However - and here’s the bad news - this support is via email only, which will not please users of the product who prefer a bit more human interaction when it comes to support. Even a live chat option would be helpful.

On the plus side - and unlike many cloud-based productivity and e-commerce tools - there’s a highly visible email address that you can use to contact the Xero support team (sales@xero.com). In other words, there’s no wading through pages of help resources and FAQs before you are finally allowed access to a support email.

Xero review conclusions

Xero has become a hugely popular online accounting solution over the past few years, recently passing the 1 million users mark. It’s pretty easy to see why: with a comprehensive feature set that can be accessed online anywhere and anytime, it has the potential to make life a lot easier (and quicker) for its users.

You will still need to invest time in using it - particularly when setting it up for the first time and bringing all your old financial data across - but once everything is in place most users will find that Xero is a massive time-saver. The key thing is to ensure you’re making full use of its automated features - automatic invoicing and bank rules in particular. These for me represent its strongest features.

Less useful are Xero's starter plan (probably best avoided unless your accounting needs are extremely basic), its pretty basic mobile app and the lack of phone support, but on the whole Xero gets a big thumbs up from me.

Finally, as with all our reviews, we always suggest that you try before you buy, to make sure that Xero is a suitable product for your business. A 30-day free trial is provided by Xero here.

Pros and cons of using Xero

Below you will find a summary of some key pros and cons of the Xero.


  • Xero provides comprehensive accounting features that you can access online 24/7.
  • Its automated invoicing features make credit control easier.
  • Its automated bank rules can speed up reconciliation significantly.
  • Its mobile app is useful for on-the-go reconciliation and for scanning receipts.
  • It integrates with a very wide range of applications - including key e-commerce products such as Shopify, Bigcommerce and Squarespace.
  • There are a good range of import and export options available.
  • Its file management functionality is on the whole excellent.
  • The online support resources are comprehensive and easy to understand.
  • Support is 24/7.
  • It’s very user-friendly.


  • Xero's starter plan is not terribly useful - its limit of 5 invoices and 20 transactions per month will make it unusable for all but the most casual of casual traders.
  • Its interface is not responsive, which means using it on mobile devices is harder than it should be.
  • Support is email-only.
  • Payroll functionality is not available in all US states.
  • The main mobile app is rather feature-light and has not received particularly good reviews from its users (the iOS app in particular).
  • A separate mobile app, Xero Me, is required if you want to make use of payroll functionality on the go.
  • Companies with very large inventories (4000+ items) won’t be able to use Xero’s inventory tracking functionality without recourse to a third-party app.
  • Importing contacts is arguably harder than it should be.
  • You may need to set up new bank accounts to use Xero if your bank does not facilitate direct or Yodlee fees into Xero.

Alternatives to Xero

The main alternative to Xero is probably Quickbooks Online - a similar cloud-based accounting web application. Other cloud-based options include Zoho Books, Freeagent, Saasu and Wave; and if you’re looking for a standalone app, Quickbooks Pro is worth considering.

Got any thoughts or queries on Xero?

If you're an existing Xero user, or have any queries on the product, we'd love to hear them - please scroll down and leave your thoughts in the comments section below.