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Xero Online Accounting Software Review

Xero Accounting Software LogoXero (www.xero.com) is online accounting software for small businesses and, according to the product website, is the World’s easiest accounting software. The software lets you see your cashflow in real time, lets you automatically import bank transactions, create and send invoices, and use a large selection of add-ons.



Xero’s dashboard gives you an at-a-glance overview of your bank balances, bills, invoices, and expense claims, enabling you to see the big picture of your business at any time. Interactive graphs show revenue coming into your business and money going out, and a ‘watch list’ lets you keep an eye on specific accounts.

Mobile – Xero Touch
Xero Touch enables you to use the Xero accounting software from any mobile device. You can keep track of bank transactions, check bank balances, create invoices, enter expenses, and communicate with your accountant,

Inventory Items
If you have services and products that you buy or sell on a regular basis, you can set these up as inventory items. You can then use these items in repeating invoices or bills by referencing the associated inventory code. You can either add inventory items individually, or you can import a batch of items from a .csv file.

Purchase Orders
Purchase orders enable you to keep track of purchases you make from your suppliers. This lets both you and your supplier know what has been ordered, its cost, when it should be delivered, and the delivery address.

Expense Claims
Xero can easily handle expense claims when you have used your own money to buy items for your business. You simply enter the details of the expense and then scan or take of a photo of the receipt and add it to the expense record.

Free Online Support
Free, around the clock, online support is available from experts in the Xero product.

Multi-Currency Financial Accounting
Xero provides real-time conversions with exchange rates for over 160 currencies. You can also add foreign currency bank accounts and create foreign currency invoices. The software keeps track of foreign currency gains and losses to enable you to have an accurate picture of your company’s finances.

With Xero, you can easily enter a pay run, make bulk payments and email or print payslips for your employees. Detailed reports give you an overview of all your salary expenses. You can combine the pay run functionality with the HMRC’s RTI compliance tools to create a fully-compliant solution for up to 9 employees. With online payroll you are always using the latest tax tables.

Supporting Files
To compliment Xero as being a cloud accounting solution, you are able to store supporting files in the cloud as well, rather than needing to keep them on your computer’s hard drive. This enables you to keep source documents right next to the financial data, making it easier for you and your accountant to keep track of the numbers.

Financial Reporting
Xero has an extensive selection of financial reports, ranging from a simple profit and loss report to advanced management reporting. All reports can be exported in as PDF, Microsoft Excel or Goggle Docs. Xero’s reporting functionality is very good, giving it an edge over its competitors.

Bill Payment
Managing bills helps you to keep on top of cashflow and ensure that your suppliers are paid on time. From the Purchase area of the software, you have a complete overview of your bills and purchase orders.

Fixed Asset Depreciation
The software also lets you keep track of fixed asset depreciation.


Xero offers three pricing models:

  • Starter – £9+VAT per month
  • Standard – £20+VAT per month
  • Premium – £25+VAT per month

According to the Xero website, the Standard accounting package is the most popular. Due to the limitations in the number of bank transactions that can be reconciled (20), and the number of invoices and bills that can be generated (5 each), I would imagine that the Starter package is only suitable for micro businesses that only have one or two clients, for example, IT contractors.

For companies that carry out international trade where multi-currency capability is necessary, the Premium package will be necessary, but for most small businesses, the Standard package will be sufficient.

Free Trial

As with most online accounting software solutions, Xero offers a free trial of its software. Registration takes a few seconds and, once you’ve responded to the activation email sent to you, you can begin using the application.


Initially, you are prompted to set up your business, but there is a help video and links to assist you with this task. This can be quite a time-consuming exercise if you want to set everything up properly, but you can skip through the screens if you want to, and also save and quit at any time. You may also require the assistance of your accountant in order to complete some of the screens.

Once you’ve gone through the setup process, you can start to use the software properly, and create invoices, run reports, and so on.


Xero is a powerful accounting solution with great reporting functionality, and will be a good choice for many small businesses. As is often the case through, it’ll be down to personal preference as to whether Xero is the right choice for you.

Other Accounting Software Reviews

You might also be interested in reading the following review(s):

Clear Books



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