Xero Review: Pricing & Features in 2022

Xero is a cloud-based accounting software that works well for small businesses, freelancers and sole traders. It has made its way into the top 10 of our best personal finance apps list. Find out what sets it apart from other options within this review to find out if Xero can be your new digital accountant in 2022

Xero is a cloud accounting software that’s been around since 2006. It has been used by over 100,000 businesses worldwide. The company offers a free trial and the pricing starts at $30 per month for up to 20 users. Xero was named the best small business accounting software in 2017 and 2018. Read more in detail here: xero pricing.

Xero is an online accounting software tool that provides accounting services to independent contractors, small enterprises, and developing organizations. This program allows you to keep track of and pay bills, claim expenditures, manage inventory, save files, and handle invoices, among other things. It can also work with Gusto to handle your payroll. You may check out Xero’s services for free for 30 days before committing to one of the three Xero subscriptions. The monthly fee begins at $11.

For What We Recommend Xero

For most small companies searching for a less costly alternative to QuickBooks, Xero is a good option. Its inventory capabilities are ideal for product-based firms that need inventory monitoring on a small to medium scale. Its excellent project accounting will assist service-based organizations.

Xero Accounting Software Is Particularly Beneficial For

• A QuickBooks alternative: Xero is our top choice for the finest QuickBooks alternatives. It has many of the same capabilities as QuickBooks, but it is far less priced and allows for unlimited users.
• E-commerce: Xero’s inventory management tool is great for e-commerce businesses since it automatically calculates your cost of goods sold (COGS) and keeps track of your consumers. Xero also allows you to track client payments and orders, making it ideal for online transactions. It is one of our most highly recommended e-commerce accounting software applications.
• Fixed asset management: Xero provides a fixed asset manager that maintains track of fixed assets and automatically calculates depreciation costs. It’s the only general accounting tool with a fixed asset management function that we’ve looked at. Xero received an honorable mention on our list of the best small company accounting software because of this unique feature, as well as its general performance.

The Accounting Software Xero Isn’t Suitable For

• Xero’s one-account, one-organization subscription rule applies to many enterprises. This means you’ll be invoiced individually for each company you manage, and you won’t be able to add organizations to current Xero subscriptions. If you’re a bookkeeper who oversees the finances of various customers or a company owner with several firms, Xero isn’t the right fit for you. Instead, have a look at our list of the finest multicompany accounting software.
• Nonprofits: The main architecture of Xero’s accounting process is designed specifically for for-profit businesses. Although Xero provides some reporting flexibility via custom tags, obtaining the data that a charitable organization wants would necessitate a significant amount of customisation. QuickBooks Premier Plus 2022 Nonprofit Edition is recommended for organizations since it includes features like as end-of-year donation statements, statement of functional costs, and donor contribution reports.
• Xero’s customer assistance is exclusively available through email. You may utilize a chatbot or self-help information if you need quick assistance. If you’re searching for excellent customer service, we don’t suggest Xero. Instead, pick Zoho Books, which is by far the finest accounting software on our list with outstanding customer service.

Overview of Xero

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Case Study: Xero

In our Fit Small Business case study, we examined accounting software based on criteria devised by our specialists. Xero outperformed the competition in almost every category, but particularly excelled in fixed assets and project accounting. Customer service and the mobile app were both lacking for Xero. If you’re looking for something specific in these two categories, we propose Zoho Books.

Xero Costing

Xero offers three different price options. You can try out all of Xero’s features for free for 30 days before deciding which plan best matches your requirements.

• $12 per month for up to 20 invoices and five bills if paid early.
• Growing: $34 for unlimited invoices and bills each month
• Setup: $65 per month includes limitless invoices and bills, as well as project accounting.

Features of Xero Accounting

Xero provides several terrific, helpful features that can work with a variety of organizations, according to our expert study. Overall, Xero performed well in the most of the categories we tested, with the exception of customer support and the mobile app. Let’s take a look at how our accounting expert walked through, analyzed, and rated Xero’s accounting features.

We enjoy how simple it is to get your company up and running using Xero. The chart of accounts comes with default accounts set up, but you may change them or add new ones. The most accessible aspect of Xero is its user-friendly conversion balances window, which enables you to enter your starting balances while clearly identifying whether you’re inputting a debit or credit. You may also invite another user and establish access restrictions for them.

Video of Xero’s General Features

In our review, Xero’s accounts payable (A/P) administration is another of their greatest features. Xero can assist you in keeping your billing system structured, from vendor creation through payment recording. In addition, Xero includes an excellent PO system for converting POs into bills, tracking unpaid bills, recording e-payments, and applying vendor credits:

In Xero, there’s a window for bills.

The bills window in Xero is organized in a tabular fashion, allowing you to access important billing information such as the vendor, invoice date, due date, amount paid or outstanding, and bill status. Even for first-time users of Xero, the navigation is quite user-friendly: everything is cleanly put out and it’s not difficult.

Xero, on the other hand, is unable to automatically capture recurrent costs. Xero can establish recurring invoices, but you’ll have to manually record the payment. It would be convenient to have the option of having a recurrent cost withdrawn automatically from your checking account.

In addition, we discovered a small issue with purchase orders (POs) and inventories. When just a part of a PO is received, inventory on the PO is not immediately lowered in Xero’s system. Instead, you’ll have to go back and update the original PO to alter the amount that hasn’t arrived yet. Otherwise, the number of available units and those on a PO will be exaggerated. Even while this method can work, we don’t think it’s a fantastic answer since there’s no paper trail or change record when updating POs.

Aside from those two small flaws, Xero’s AP management system is excellent, user-friendly, and thorough. Overall, we awarded Xero’s AP a good rating since it excels at most of the A/P features we look for in accounting software.

Xero A/P has a video feature.

We considered significant factors including invoice production, inventory modifications, and client payments in the accounts receivable (A/R) management section. In terms of invoice production, we discovered that Xero does not provide customers with the same level of customization as other accounting software in terms of invoice color, style, and font. We expected to see some customisation in the invoice creation process, even though Xero allows you to alter invoice aspects like invoice line items.

However, we’re happy with the way Xero accounts for COGS and inventory changes while generating invoices. Xero accepts short payments and can generate sales receipts for rapid payments, which is a terrific feature.

Xero’s Invoices Window

Xero’s invoices window resembles the billing window. Its sophisticated search option is one of our favorites, since it allows you to search invoices by several fields and filter them properly. In conclusion, when compared to apps like QuickBooks and Freshbooks, Xero’s AR management is competitive. It also has a high ease-of-use score, making it ideal for A/R.

Xero A/R has a video feature.

Banking & Cash Management

The banking and cash management capabilities of Xero get good marks in our review since they contain all of the cash management elements we look for in accounting software. When reconciling transactions, we appreciate the side-by-side layout since it’s easier to match transactions and detect bank statement items that haven’t yet been entered.

Users may also upload information such as bank statements to immediately record transactions in the books. The only drawback we can see is that users are unable to input checking account closing balances. Before reconciling, users must first submit their bank statement.

However, we discovered that combining numerous checks and cash into a single deposit entry is difficult. Although Xero offers a check-holding account, it does not monitor when checks are taken and deposited, nor does it enable cash to be added to the deposit. Though not being able to aggregate payments into bank deposits has little influence on Xero’s overall performance, it makes reconciling your bank account more complicated.

Xero Banking & Cash Management Features Video

Xero features a specific fixed assets management page, which is a unique feature. With Xero’s fixed asset manager, every facet of fixed asset accounting and depreciation is simple. You can keep track of fixed assets, create depreciation entries, and account for gains and losses on fixed asset sales.

You can compute book depreciation but not tax depreciation in Xero, which isn’t a big deal since your tax preparer or tax software will do it for you.

Video is a feature of Xero Fixed Assets.

For project accounting, Xero received a perfect score. We gave project estimate assignment, labor cost assignment, and the documentation of inventory utilized in projects greater weights in our criteria. We noticed all of these capabilities in Xero and are pleased with how it can assist businesses in staying on top of projects in terms of revenue, costs, and profitability.

Video is a feature of Xero Project Accounting.

We highlighted capabilities such as generating inventory items, checking inventory levels, adding inventory to invoices, and allocating COGS in this section. All of these tools, as well as smaller features that might aid inventory management, such as seeing inventory cost information and POs, are available in Xero.

The only flaw we perceive is the challenge of displaying inventory in the PO, as we mentioned in Chapter 2 of our case study. Overall, based on our evaluation, we’re pleased with how Xero’s inventory features fared. There is no separate video since we analyzed inventories as part of our A/P and A/R testing.

We identified 16 essential reports that any accounting software should include during our evaluation of Xero’s reporting capabilities. Xero includes 14 of the 16 reports we need, including basic financial statements, specialized reports, and other accounting reports, however two special reports are missing: client income/loss and unbilled time. However, the absence of these reports has no effect on the overall experience. Xero’s customer assistance was lacking. Accounting software businesses should, in general, maintain open channels of contact with their clients. Unfortunately, Xero only provides a chatbot, an email address for customer assistance, and self-help resources. Sending invoices, inputting bills, receiving payments, and entering vendor payments are all functions we’d want to see in a mobile app. The Xero mobile app is simple. Receipt scanning, invoice emailing, and expenditure classification are among the fundamental mobile app functionalities. The Xero mobile app, on the other hand, does not allow users to collect payments from clients, track time worked, allocate billable hours, or produce reports.

Video on the Xero Mobile App

Options for Assisted Bookkeeping

In Xero’s Advisor Directory, you can find Xero-certified independent accountants and bookkeepers, as well as accounting companies. Aside from Xero consultants, Bookkeeper360 also provides Xero customers with assistance bookkeeping services. Learn how to link Bookkeeper360 to Xero in our Bookkeeper360 review.

Integrations

Xero has a large app library that can be integrated with accounting software. The Xero App Store has over a hundred applications to choose from. It’s simple to connect Xero with your current software services, from accounting tools to CRM.

Alternatives to Xero

Comparisons of Alternative Software

Now that you’ve learned all there is to know about Xero, we’d want to assist you in selecting the finest accounting software for your small company. We’ve put up a list of articles that compare Xero to other accounting software to assist you assess its capabilities and suggest software options that could be a better match for your requirements than Xero.

• If you’re searching for a Xero alternative, check out Xero versus QuickBooks Online.
• For a comparison of inventory and project accounting capabilities, see Xero versus Zoho Books. Zoho Books has stronger customer support.
• If you’re seeking for a free accounting software option, check out Xero versus Wave.
• For a comparison of project accounting capabilities, see Xero versus FreshBooks, with FreshBooks lacking inventory management.

Conclusion

For small companies on a tight budget, Xero is an excellent alternative to QuickBooks Online. With Xero’s comparatively low cost, you gain capabilities that are only available in higher-priced accounting software subscriptions. However, we discovered that Xero isn’t appropriate for charity organizations or corporations that need multicompany accounting services. Overall, it’s excellent accounting, inventory management, and project management software. Because of its adaptability, we suggest it for project- and product-based businesses.

In 2022, Xero will be the best accounting software for small businesses. It offers a lot of features and has a low price tag. Reference: is xero good for small business.

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