Xero Review: Features, Pricing & Alternatives in 2023

Xero has three pricing plans, and all accommodate unlimited users. That’s why it’s our best ecommerce accounting software for companies needing to include multiple users in the accounting software program. Before subscribing, you can access all of Xero’s features for free for 30 days to help you decide which plan best suits your needs.

Xero Accounting Features

In our expert evaluation, we found that Xero has many great, useful features that can work with different businesses. Overall, it did an excellent job in most of the areas we examined, even though it fell short in customer service and the mobile app. Let’s look at our accounting expert’s walkthrough, analysis, and evaluation of Xero’s accounting features.

We like how easy it’s to set up your business on Xero. The chart of accounts has default accounts set up, but you can modify existing accounts or add new ones. The most accessible general feature is the user-friendly conversion balances window, which allows you to input your beginning balances while clearly distinguishing if you’re entering a debit or credit. You can also invite an additional user and set limits to their access.

Xero General Features Video

Accounts payable (A/P) management is one of Xero’s strongest features in our evaluation. From vendor creation to recording of payments, Xero can help in keeping your billing system organized. It also has an outstanding PO system to convert POs into bills, track unpaid bills, record e-payments, and apply vendor credits.

Bills window in Xero

The bills window is presented in a tabular format, wherein you can see pertinent billing details like vendor, invoice date, due date, amount paid or due, and the status of the bill. Navigation is very user-friendly—everything is laid out neatly, and it’s not complicated, even for first-time users.

However, Xero cannot record recurring expenses automatically. It can create recurring bills, but you’ll need to record the payment of that bill manually. It would be nice to have an option for a recurring expense to be deducted from your checking account automatically.

We also found a minor problem in POs and inventory. In Xero’s system, inventory on a PO isn’t reduced automatically when only a portion of a PO is received. Instead, you’ll need to edit the original PO and adjust the quantity not yet received. Otherwise, the number of units available and in a PO will be overstated. Although it can work this way, we still don’t see it as a great solution since there’s no paper trail or change log when editing POs.

Aside from those minor issues, the A/P management system is outstanding, easy to use, and comprehensive. Overall, we gave it a high score since it performs well in most of the A/P aspects we want to see in accounting software.

Xero A/P Video

In the accounts receivable (A/R) management portion, we evaluated major aspects like invoice creation, inventory adjustments, and customer payments. For invoice creation, we found that Xero doesn’t give users the ability to customize the invoice in terms of invoice color, layout, and font. Although it lets you customize invoice elements, such as invoice line items, we wanted to see some personalization in creating invoices.

However, we’re satisfied with how Xero takes into account COGS and inventory adjustments when creating invoices. It can accommodate short payments, which is a great feature, and can issue sales receipts for immediate payments:

Invoices Window on Xero

The invoices window of Xero is similar to the billing window. We like its advanced search feature, which you can use to search invoices using multiple fields and filter them appropriately. In summary, Xero’s A/R management is competitive when compared to applications like QuickBooks and FreshBooks. Its ease-of-use score is also high, making it a great software for A/R.

Xero A/R Video

Xero’s banking and cash management features score high in our evaluation because they include all the functions we want to see in accounting software. We like the side-by-side layout when reconciling transactions because it’s easy to match transactions and spot bank statement items that haven’t yet been recorded.

Users can also upload files like bank statements to register the transactions in the books. The only setback we see here is that users can’t enter ending balances of checking accounts—they have to upload the bank statement first before reconciling.

We also found that it’s impossible to combine multiple checks along with cash into a single deposit entry. Xero does provide an account to hold undeposited checks, but the feature doesn’t track when checks are removed and deposited and doesn’t allow cash to be added to the deposit. Though such a feature doesn’t impact the overall performance of Xero that much, not being able to group payments into bank deposits makes it difficult to reconcile your bank account.

Xero Banking & Cash Management Video

Xero got a perfect score for project accounting. In our rubric, we emphasized heavier weights on project estimate assignment, labor cost assignment, and the recording of inventory used in projects. We saw all of these features in Xero, and we’re satisfied with how it can help companies stay on top of projects in terms of income, expenses, and profitability.

Xero Project Accounting Video

In this area, we gave more weight to certain features like creating inventory items, viewing inventory levels, adding inventory to invoices, and calculating COGS automatically. Xero has all of these features alongside minor features that can help in inventory management, like viewing inventory cost information and POs.

To reiterate our point in Chapter 2 (Accounts Payable) of our case study, the only shortcoming we see is with viewing inventory in the PO. Overall, we’re satisfied with how Xero’s inventory features performed based on our rubric. We evaluated inventory as part of our A/P and A/R testing, so there’s no separate video.

In evaluating the reporting features of Xero, we set 16 necessary reports that every accounting software should have. Xero has 14 of the reports we want to see, such as basic financial statements, specialized reports, and other accounting reports. It’s missing two special reports: income/loss by customer and unbilled time. But even though it doesn’t have these, it doesn’t affect the overall experience.