Xero

General Overview

Xero is a cloud-based accounting software designed specifically for small to medium-sized businesses (SMBs), with a focus on providing a user-friendly experience and scalability for growing enterprises.

Founded in 2006 in New Zealand, Xero has grown into a global platform, serving over 3 million subscribers worldwide as of early 2025. It’s particularly popular among businesses that need more than basic bookkeeping but aren’t ready for the complexity of enterprise-level solutions like NetSuite. 

Xero offers a comprehensive suite of tools for financial management, including invoicing, expense tracking, payroll, and reporting, all accessible from any device with an internet connection. Its emphasis on automation and integrations makes it a go-to choice for businesses looking to streamline their accounting processes while maintaining flexibility as they expand.

Pros and Cons

Usability and Setup

Xero is designed with ease of use in mind, making it a great choice for smaller business owners who may not have extensive accounting experience. The setup process is straightforward: after signing up online and selecting a plan, users are guided through an onboarding process that includes connecting bank accounts, setting up a chart of accounts, and customizing invoices.

Xero offers a 30-day free trial, which includes free onboarding support to help new users get started. The dashboard is clean and well-organized, providing a snapshot of cash flow, outstanding invoices, and upcoming bills at a glance. 

For those new to accounting software, Xero provides in-app tutorials and a knowledge base to assist with setup and navigation. The mobile app, available for both iOS and Android, allows users to manage finances on the go, from sending invoices to reconciling transactions.

Pricing and Plans

Xero offers three main pricing tiers in the U.S., with costs increasing based on features and transaction limits. As of April 2025, the plans are as follows:

Main Features and Integrations

Xero offers a robust set of features tailored to the needs of small and medium-sized businesses, with a focus on automation, collaboration, and financial visibility. Here’s an in-depth look at its capabilities:

• Bank Reconciliation: Xero automatically imports bank transactions (typically 90 days’ worth) and uses smart matching tools to reconcile them with your records. It can suggest matches for transactions, reducing manual effort, though users may need to reconnect occasionally due to tightened bank security protocols.

• Invoicing and Quotes: Users can create and send professional invoices with payment options like PayPal or Stripe (transaction fees apply). The Growing and Established plans allow unlimited invoices, while the Early plan caps at five. Quotes can be created and converted into invoices with a single click.

• Expense Tracking: Xero’s expense management feature allows users to capture receipts via the mobile app, categorize expenses, and submit claims for reimbursement (available in the Established plan).

• Financial Reporting: Xero provides a range of reports, including profit-and-loss, balance sheets, and aged receivables. The Established plan adds advanced reporting options, such as custom reports and budget tracking.

• Project Tracking: Available in the Established plan, this feature lets users track time and costs for specific projects, making it ideal for service-based businesses like consultants or contractors.

• Multi-Currency Support: Also exclusive to the Established plan, multi-currency functionality allows businesses to invoice and pay in different currencies, with automatic exchange rate updates.

• Automation: Xero automates tasks like payment reminders, recurring invoices, and bank reconciliation. Its AI-driven expense categorization learns from user behavior to improve accuracy over time.

• Mobile App: The Xero mobile app, updated in March 2025, allows users to manage invoices, reconcile transactions, and generate reports on the go. It now includes the ability to customize profit-and-loss statements directly from the app.

• Security: Xero uses enterprise-grade security, including two-factor authentication, encryption, and regular backups, ensuring your financial data is protected.

Integrations

Xero integrates with over 1,000 third-party apps, making it highly customizable. Key integrations include:

• Payroll: Gusto for U.S. users, offering payroll processing and tax filings.

• E-commerce: Shopify and WooCommerce for syncing sales data.

• CRM: HubSpot and Salesforce for managing customer relationships.

• Payment Processors: Stripe and PayPal for accepting online payments.

• Inventory Management: Cin7 Core and DEAR Inventory for product-based businesses.

A detailed plan comparison highlights the feature set across Xero’s plans:

Support Options

Xero provides a range of support options to assist users. All plans include access to 24/7 online support via email and live chat, though response times can vary depending on the complexity of the issue. The platform also offers an extensive help center with articles, video tutorials, and setup guides. 

Xero Central, the community forum, allows users to connect with other business owners and Xero experts for advice. For new users, the 30-day free trial includes free onboarding support to help with setup. Additionally, Xero partners with accountants and bookkeepers who can provide personalized assistance, often at an additional cost. 

While support is generally reliable, some users have noted that complex issues may take longer to resolve, suggesting that businesses with urgent needs might benefit from having an accountant familiar with Xero on hand.

Conclusion

Xero is a versatile and scalable accounting solution, making it an excellent choice for small to medium-sized businesses looking to streamline their financial management. Its unlimited user access, user-friendly interface, and extensive integrations set it apart, particularly for collaborative teams or businesses with diverse operational needs. 

The mobile app and automation features further enhance its appeal for owners who need flexibility and efficiency. However, the limitations of the Early plan and additional costs for payroll may deter some budget-conscious startups, and the learning curve for advanced features could be a hurdle for less experienced users. 

For businesses anticipating growth or needing robust reporting and project tracking, the Established plan offers significant value. Overall, Xero is a strong contender especially for SMBs prioritizing scalability and collaboration in their accounting software.