Need a bookkeeper?
Try QuickBooks Live Bookkeeping
- Date Established
- New Zealand
- Unlimited users
- Numerous integrations
- Suited for large businesses
- Advanced features
- Double-entry accounting
- Learning curve
- Poor customer support
In the race to the top of the accounting software industry, QuickBooks has taken the lead for years, running laps around its competitors — that is, until now. Xero is a cloud-based accounting software based out of New Zealand that has been giving QuickBooks a run for its money since 2006.
Xero is a robust accounting solution with sophisticated accounting features, ample reports, 800+ integrations, and unlimited users. Unlike QuickBooks, Xero also has the mobility and modern UI of cloud-based software. The software has over 2,000,000 users and is the primary accounting solution for over 16,000 accounting firms. The company has recently added a project management feature, which was one of the most significant drawbacks previously.
However, some of Xero’s most recent improvements have come at a steep cost, and there has been an increase in customer complaints. Xero recently increased its prices, and it no longer includes built-in payroll with its plans. The company has also limited expense claims, projects, and multi-currency support to the most expensive plan. Since our last review, Xero’s customer support has also gone downhill.
While the price may rule out the software for small businesses, Xero still has a lot to offer for medium and large businesses or those in need of multiple users. Keep reading to see if Xero is a good fit for your business.
We've done in-depth testing of each and confidently recommend them.
Table of Contents
Xero used to offer incredibly scalable pricing. The other appeal of the software was that each plan came with unlimited users, access to every Xero feature, and payroll.
As of November 1st, 2018, Xero no longer includes payroll, and it has limited some features (such as expenses and multi-currency support) to its most expensive plan. Each plan still offers unlimited users and live bank feeds, so businesses can download, categorize, and reconcile their transactions as usual.
Xero offers three different pricing plans. Payments are made monthly. There are no annual contracts, so you can cancel your subscription at any time (although you must give a 30-day notice of your cancellation). Xero offers a free 30-day trial and even has a demo company set up already, so you can explore the software before you buy it.
Xero offers discounts for nonprofits and owners of multiple companies. Xero has been known for offering occasional discounts in the past, so be sure to check the company’s website to see if it’s having a sale. Here’s what you get with Xero’s new pricing structure:
Xero’s Early plan costs $9/month and includes:
- Five invoices and quotes
- Enter five bills
- Reconcile 20 transactions
- Live bank feeds
- Unlimited users
Xero’s Growing plan costs $30/month and includes everything in the Early plan, plus:
- Unlimited invoices and quotes
- Manage bills
- Reconcile unlimited bank transactions
Xero’s Established plan costs $60/month and includes everything in the Growing plan, plus:
- Expense claims
- Project management
- Multi-currency support
Need payroll? As we mentioned earlier, Xero no longer includes payroll in its monthly subscriptions. Instead, Xero is now pointing users to Gusto. Gusto payroll starts at $39/month plus $6/month/person. Read our full Gusto review to learn more.
Cloud-Based Or Locally-Installed
Cloud-based; no downloads or installation required.
Hardware & Software Requirements
As 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
Xero recommends the most recent version or the previous version of each browser.
There is also a Xero Accounting app for Android (Android 5.0+) and Apple products (iOS 11.0+) and separate mobile apps for Xero Expenses and Xero Projects.
Specific Size Of Business
Xero is best suited for mid- to large-sized businesses. The software is well-developed and offers strong accounting and ample features, reports, and integrations. Xero also supports unlimited users for every plan, which is almost unheard of in the accounting software world. You can set multiple levels of user permissions and control feature access as well.
Small businesses could benefit from the Growing plan, especially if they need unlimited users. But if your business needs project management or multi-currency support, Xero doesn’t come cheap. Also, the Early plan limits users to only five invoices and 20 reconciled transactions, a fact which renders it almost pointless considering the other more extensive accounting packages available for small businesses in the same price range. If you run a small business, explore all of your options by checking out the top alternatives to Xero.
Business owners with multiple companies will have to purchase a separate subscription for each business. Xero’s primary market is the US (which is the focus of this review), the UK, New Zealand, and Australia, but the software is available in over 180 countries.
Both accrual and cash-basis accounting.
Ease Of Use
Xero has an attractive, modern UI. While the software is well-organized, it does have a steep learning curve (not as steep as QuickBooks, but it is more difficult to learn than other cloud-based options). It takes quite a while to explore all of the features it has to offer, but once you get acquainted with the software, Xero is fairly easy to use.
Xero tries to throw you as many bones as possible by adding a video or help article to the top of every page you open. If you need some extra assistance in finding features or understanding the software, Xero also offers a help center. We also have a comprehensive and free How To Set Up Your Xero Account guide that teaches you how to use and optimize your Xero account.
Xero often gets praised for its robust feature selection. Here are some of Xero’s key features:
- Dashboard: The customizable dashboard features a beautiful UI with graphs labeled Bank Accounts, Invoices Owed To You, Bills To Pay, and Total Cash Flow. You can rearrange the order of these charts. A brand new navigation menu now reads Dashboard, Business, Accounting, and Contacts, and you can access a quick create button, search button, recent notifications, and an in-software help button along the top right.
- Sales Overview: In addition to a dashboard, Xero has recently added a Sales Overview page that has charts and graphs to break down your invoices and estimates.
- Invoicing: Xero only offers a single invoice template. You can create custom templates and customize them extensively, but there could be more template designs to choose from. Xero offers time-saving necessities, including recurring invoices, automatic invoice reminders, default payment settings, bulk invoicing, and replication of previous invoices. There is also a feature called Xero to Xero, which makes it easy to send invoices to and receive invoices from other Xero users. You can easily create credit notes and send customer statements straight from the invoicing screen. Customers receive estimates and invoices as PDF attachments, and payment gateways are available for invoices.
- Quotes: You can easily create quotes and convert them to invoices, purchase orders, or bills. You can duplicate past quotes and add internal notes to quotes as well. Xero uses the same invoice templates for quotes.
- Client Portal: Xero has recently added a nice client portal where customers can view, print, and pay invoices directly online. Potential customers can view, accept, decline, or comment on quotes.
- Contact Management: Xero has some of the best contact management features I’ve seen. You can add basic contact information as well as discounts and sales tax rates for customers. The company takes this feature a step further through contact groups and smart lists. Smart lists act as marketing tools, allowing you to target particular groups of contacts. For example, you can create a list for loyal customers or customers in a specific state to offer promotional deals. You can also use these lists to invoice an entire group at once. You can manage your suppliers in Xero as well.
- Expense Tracking: You can connect your bank and credit card account directly to Xero, or you can manually import your bank statements. You can easily categorize your expenses and split transactions. Xero’s smart categorization remembers the past transaction categories you used and automatically categorizes new transactions for you. (You still have to click each transaction individually to approve the categorization.) Note: Like most software using live bank feeds, Xero partners with Yodlee, which may violate some banks’ Terms and Conditions. Consult with your bank to see whether live bank feeds are a good choice for you.
- Expense Claims (Established Plan Only): To clear up any confusion, every Xero plan comes with the expense tracking features listed above. Established plan users get access to additional expense features, such as expense claims, automatic receipt scanning, extra expense analytics, and the Xero Expenses app. Note: Existing Xero users who were already using the expense claim feature will still have access to expense claims no matter which of the plans they are on.
- Bank Reconciliation: You can reconcile your accounts and run a Reconciliation Report in Xero.
- Chart Of Accounts: Xero automatically creates a default chart of accounts for you based on your organization type and industry. You can customize the default version or choose to import your chart of accounts.
- Fixed Asset Management: You can manage fixed assets and run depreciation schedules within Xero. You can choose between several depreciation schedules (fixed-rate, declining balance, a declining balance of 150%, etc.). You can add information, such as the asset’s serial number and the warranty expiration date.
- Accounts Payable: You can easily create and manage bills in Xero. You can enable recurring bills and attach relevant documents or photos of the bill to Xero. There’s a nice new Purchases Overview screen that shows you details about your bills and purchase orders.
- Checks: Xero added the ability to write, customize, and print checks directly from your account. Read our post on the top places to purchase business checks to find the best deals.
- Inventory: You can add products or services to Xero, although Xero is much better suited for product-based businesses. You can add items and record basic information, create internal notes, and add attachments to items. You can also track inventory and make inventory adjustments. With tracked inventory, Xero keeps tabs on your 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 go negative.
- Projects (Established Plan Only): The Established plan offers projects and basic job-costing, a welcome addition that Xero hasn’t had in the past. Users can create projects, attach expenses and time, monitor budgets, and easily create project invoices. You can also use progress payments and the Xero Projects app.
- Time Tracking (Established Plan Only): If you use the Established plan, you can track billable time to add to projects.
- Reports: Xero offers ample accounting reports. There are 55 reports total, covering everything from sales and budgeting to cash flow and more. Reports can be customized as needed, and you can save your favorite reports for quick access.
- Budgeting: You can use the Budget Manager report to create a three-month, six-month, 12-month, or 24-month budget. You can run a Budget Summary at any time to see if you’re hitting your financial goals.
- Journal Entries: Users with Advisor or Standard roles can create journals (so long as they have access to all reports). You can also create recurring journals.
- Class Tracking: Xero allows you to set up two tracking categories with 100 individual tracking options within each category. These categories are a way to organize your information and get more detail on your reports. Some people create categories for locations, departments, teams, manufacturing, etc.
- Purchase Orders: You can easily create purchase orders and convert them into bills. On top of the basics, you can add internal notes, delivery instructions, and expected delivery dates to purchase orders. If your supplier ships your order in parts, you can record a “part supply” to keep track of how much inventory you’ve already received.
- Packing Slips: If your business needs packing slips, you can download the Packing Slip With Invoice template from Xero’s help center. I’d like to see this template downloaded in Xero so that the feature is already built into the software.
- Default Email Templates: Xero offers eight default email templates and any number of custom templates.
- Sales Tax: You can set default sales taxes for purchases, sales, and customers. Compound and combined taxes are supported. Xero also has a sales tax lookup feature that automatically calculates sales tax based on your contact’s address.
- Tax Forms & Support: Xero used to offer great tax support. Now that Xero no longer has built-in payroll, you’ll only find help with sales tax.
- Multiple Currencies (Established Plan Only): Xero supports over 160 currencies so long as you have the Established plan. Currencies are updated hourly through XE, and reports can be customized and run in different currencies.
- Importing & Exporting: Xero has extensive import and export capabilities. Most anything can be imported and exported using multiple file forms. Importing data can be quite cumbersome and time-consuming, but Xero does give a lot of guidance on how to import data.
Customer Service & Support
Xero used to offer strong customer support, and while there are still a ton of great support resources available, getting in touch with an actual representative is a lot more difficult.
Xero has never offered phone support and has relied on email support. Users have complained about the lack of phone support forever, but this wasn’t much of a problem before, as Xero usually answered emails within an hour or two. Now, it can take up to a day to hear back from a representative. There is no good way to get a quick answer from Xero.
Another issue I have with Xero’s customer service is that it’s hard to find the support options. Before creating Xero Central, the company had a beautiful, well-organized help center. Xero Central is still well-organized, but the option to post a question or email a rep is hidden. You have to search for an article, and when you scroll down to the very bottom of that article, you’ll see options to ask or email a question. Xero Central aside, Xero’s resource page puts many of Xero’s other support resources in a single location, which is really helpful.
Luckily, Xero offers a lot of other support options. Here are the ways you can reach Xero:
- Email: Contact Xero by email with questions.
- Live Chat: A live chat feature is available on the actual Xero website. It’s mainly for sales inquiries, but representatives were usually helpful with questions about features as well (if nothing else, they know what direction to point you in).
- In-Software Help: Whenever you open a feature in Xero, you’ll find a video or an article explaining exactly what that feature is and how to use it. There’s also a help button in the top right-hand corner that will pull up relevant articles from Xero’s help center. Unfortunately, Xero removed the ability to chat with Xero representatives directly in the software.
- Help Center: Xero has a comprehensive help center called Xero Central with how-to articles and common troubleshooting issues. Xero Central also encompasses the Xero community, so you can view comments and questions from other users, and you can suggest new features as well. At the bottom of each help article, you can post questions to the Xero community or email a representative directly. When you email a rep, you can 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.
- Guides: Xero offers a ton of business guides, covering everything from invoicing and bank reconciliation to depreciation and more. There’s also a guide called “How To Start A Small Business: The Ultimate Guide” and an “Accounting Glossary” for new users.
- Xero TV: Xero TV offers hundreds of videos explaining how to use the software. It’s one of the best support resources Xero offers and is a great help to new users.
- Podcasts: If 700+ videos are not enough for you, you can check out the Xero podcasts, featuring digital marketing strategy advice and CEO talks.
- Training: Xero U is a training program offered by the company, which includes online courses, such as a “Getting to Know Xero” class.
- Blog: The Xero blog is well-developed and features business news, advice articles, ideas for success, and more.
- Social Media: Xero has Facebook, Twitter, YouTube, and LinkedIn accounts.
Negative Reviews & Complaints
In the past, Xero received predominantly positive customer reviews. And while there are still a large number of positive reviews, there seems to be an increase in negative reviews. Here are some of the recurring issues, according to Xero users:
- Limited Mobile Apps: One of the biggest issues for users is mobile access. People are disappointed with the functionality of the apps, especially compared to the desktop version. There are also reports of bugs and crashes. To put this into perspective, the iPhone app only receives 3.6/5 stars.
- Expensive: Some Xero users already found Xero expensive, but now many more users are complaining about the increase in price. Not only do users dislike the new price plans and the removal of payroll, but they also dislike that features such as project management are now limited to the most expensive plan. One user put it this way:
The pricing has started to put them out of the running for the moment, which is disheartening. There are other products that can do what they do for much cheaper.
- Not Intuitive: Many users say Xero is not very intuitive. There is a bit of a learning curve, although not as bad as QuickBooks Pro. Some also don’t like the new dashboard organization and say that features take far more clicks than they used to.
- Poor Customer Service: Several users take issue with the lack of phone support, and more and more users have complained of poor customer support and slow responses over the last few months.
Positive Reviews & Testimonials
Despite the complaints above, Xero still receives many positive reviews from users and accountants alike. Xero receives 4.5/5 stars on Software Advice (based on over 1,800 ratings), 4.3/5 stars on G2 Crowd (based on over 300 ratings), and 8.4/10 stars on TrustRadius (based on over 200 ratings).
While we may see a spike in negative reviews in the future now that the new pricing and feature changes have been implemented, for the present, users still have a lot of good things to say about Xero. Here are the most common reasons users like the software:
- 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, especially the reporting and automations.
- Strong Accounting: Users and accountants alike enjoy Xero’s strong accounting features. Several even say that they like the software better than QuickBooks.
- Mobility: A common point of praise is for the mobility this cloud-based software gives business owners, as opposed to the locally-installed QuickBooks alternative. Some users also really like Xero’s mobile apps, although the consensus is that they could use some work.
- Lots Of Integrations: Quite a few users commented that the 700+ integrations make their lives easier and make their businesses run more smoothly.
Here’s what a few users are saying:
Great support, great functionality, intuitive interface. I have zero complaints with Xero.
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.
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.
Integrations & Add-Ons
Xero offers over 800 integrations to choose from. If 800 integrations aren’t enough, Xero also integrates with Zapier, connecting the software to hundreds of additional add-ons. Some Xero integrations are country-specific, so make sure they are compatible before you make any additions or purchases. Xero also offers API for developers.
Are you interested in accepting online payments from your customers? Read our comprehensive merchant account reviews to learn the pros and cons of popular providers and see which payment processing option is best for your business.
Xero has a reputation for some of the strongest cloud security out there. Security measures include data encryption, two-step authentication, and 24/7 monitoring at multiple locations. Data is backed up daily across various servers, and regular security audits are performed. Xero also boasts an impressive record of 99.97% uptime. For more details, contact Xero.
Xero is robust, cloud-based software with strong accounting, ample integrations, and some great features. It offers tons of automations to save your business time, such as automatic sales tax lookup, group invoicing, and default email templates. The new sales overview and bills overview pages are a nice addition. Plus, Xero offers unlimited users to boot.
That said, the software does have its drawbacks. There is limited tax support, limited invoice templates, and a steep learning curve. The recent navigation bar change seems to make accessing features more difficult by requiring more clicks rather than streamlining the software.
I can also understand why Xero users are complaining about the recent price increase and feature changes. One of the things that set Xero apart was its built-in payroll and the fact that all features were accessible on all plans. Without built-in payroll, Xero also lost its great tax support, and the customer service has taken a turn for the worst.
However, there are a few things to keep in mind. First, Xero’s built-in payroll was flawed. One of the biggest complaints I had about Xero was that not all 50 states had payroll support. With Gusto, all 50 states are supported, and businesses get added functionality, such as health insurance and retirement support. Xero has also added projects, a feature for which users have been begging for years. This doesn’t forgive the fact that some features are limited to the most expensive plan, but considering that Xero offers unlimited users, the Established plan could very well still be cheaper for your business than QuickBooks Online if you have multiple users (plus it’s still slightly less expensive than QBO).
In the end, Xero is a good solution for mid- to large-sized businesses in need of strong accounting features and multiple users. Take advantage of Xero’s free trial to see if this accounting solution is right for you.
We've done in-depth testing of each and confidently recommend them.