Xero Review

Xero's straightforward accounting software is well-suited for sole proprietors and small and growing businesses. Its intuitive design makes it easy for businesses to link their bank accounts and start sending invoices and paying bills in no time.

Xero has plenty of features that small business owners love, including an accounting dashboard, invoicing, quotes, bill payment, analytics, and data capture and storage.

Dashboard

Xero's user-friendly dashboard is one of its best features. The dashboard is where you can get a snapshot of your accounting information all in one place. Users can access their bank balances, invoices, bills, and more with just a few clicks.

Your dashboard can display:

• Bank balances
• Unpaid invoices
• Cash flow
• Bills due
• An accounts watchlist (shows the budgets for different accounts plus monthly and year-to-date expenditures)
• Expense claims
• Tax and reporting
• Info from integrated apps

You can turn the sample dashboard on to get an idea of how your dashboard could look once it's populated with your business's data.

The Organization menu option enables users to access settings and files or add new organizations.

Clicking the "+" button takes users to a quick actions menu where they can quickly create invoices or bills or add new contacts.

Xero is compatible with over 1,000 apps and has its own app store. Users can access connected apps or add new ones by clicking on the app launcher icon.

Invoicing

Xero's invoicing feature is where it really shines. Xero's online invoicing tool makes it easy to bill customers and receive payments online.

Let's take a look at some of the benefits of Xero's invoicing feature.

Create invoices

With Xero, you can either create invoices from scratch or copy and edit invoices to save time. If a client accepts an estimate, you can create an invoice directly from the quote. You can also generate repeating invoices for recurring jobs. Sales tax is automatically calculated and included in each invoice.

Xero allows users to attach documents to the invoice (such as a summary of the job or associated receipts). What's more, Xero's mobile accounting app allows users to create invoices directly from their mobile devices.

Customize invoices

Xero allows you to add your logo and a personalized message to your invoices, which conveys a sense of professionalism and helps customers trust that it's you they're receiving the invoice from.

You can use Xero's demo company to create sample invoices using fictional data. A sample invoice can give you an idea of what an invoice will look like from a customer's perspective.

Collect payments directly from invoices

Xero lets you add your payment terms to an invoice so customers know when it is due (due dates must be at least one day after the invoice's date). After you connect a payment service to Xero, a "pay now" button is automatically added to your invoices so customers can pay you directly from the invoice.

Adding a "pay now" button is free; however, you may be charged a transaction fee for each payment made via card or digital wallet.

Customers can pay straight from their invoices via:

• Credit card
• Debit card
• ACH bank transfer
• Digital wallet (such as Apple Pay or Google Pay)
• PayPal
• Windcave
• eWave
• Stripe ACH credit transfer
• Custom payment URL for service providers that don't integrate with Xero

One limitation is that if you use a custom payment URL, you will need to manually apply the payment to the invoice once you receive it.

Automate payment reminders

You can turn on automatic payment reminders to save time otherwise spent pursuing overdue invoices. You can choose how often customers receive reminders, and turn off reminders for specific customers or invoices.

You can also include a link on your invoice that shows all outstanding bills for that contact.

Track invoices

Xero enables you to easily view the payment status of your invoices to see who has paid and what is overdue. You can also bulk import invoices from other accounting software to Xero so all your invoices are accessible from one place.

Quotes

Xero makes it easy to create estimates by breaking down jobs into billable chunks and attaching written details, images, or documents (such as legal agreements) to the quote. You can also copy quotes to quickly create new quotes.

All you have to do to create a quote is click on the Business menu in the dashboard, select Quotes, then click on New quote.

If you have multiple items for one quote, you can click the Add row button, and if you need to rearrange items you can drag and drop item lines by left-clicking on the icon to the left of the item line.

With Xero's quote tool, you can:

• Add an expiration date to quotes that are time sensitive
• Include tags so you can easily find the quote for similar future jobs
• Quote in multiple currencies (only with the Established plan)
• Assign the quote to a specific project
• Set a branding theme so all quotes automatically include the same terms
• Add supporting files to the quote

The quote form includes multiple fields, enabling you to provide a thorough description of everything your estimate entails.

Bill pay

You can add unpaid bills and purchase orders to Xero via desktop or mobile app, making it simple for small businesses to keep track of what they owe.

With Xero's bill pay features, you can:

• Schedule batch payments
• Organize and store bills all in one place
• Set up repeat bills
• Run an aged payables detail report to see how long bills go unpaid
• Add bills and record payments from the mobile app

Businesses on Xero's Established plan can pay bills in over 160 currencies.

You can use Xero's demo company to create a sample bill, which contains a payment status bar, the description and cost of the purchased item, and an Add Payment button.

Payroll integration with Gusto

While Xero doesn't offer payroll directly, it does integrate with Gusto. Gusto is cloud-based payroll software that can support businesses of all sizes, from contractors to enterprise organizations.

Gusto offers the features small businesses need, including:

• Unlimited payroll runs
• Automatic tax filing
• Direct deposit
• International contractor payments in over 80 countries
• Time tracking
• Financial and health benefits
• HR tools

Gusto's plans for small businesses start at $40/month, plus $6/month per person. Its contractor-only plans start at $35/month, plus $6/month per person.

Data capture and online file storage

All of Xero's plans come with a data capture and online file storage feature, making it easy to store information from receipts and scanned documents.

Xero uses Hubdoc, a platform that enables you to import financial data by:

• Taking a picture from your phone and submitting it
• Uploading scanned files from your desktop
• Forwarding invoices from your email

From there, Hubdoc converts the information from the documents into data that can be automatically synced with and stored by Xero.

To get started with capturing and storing data, users can navigate to Xero's Organization menu to either set up a new Hubdoc organization or connect an existing Hubdoc account.

Analytics

Xero's analytics features show business owners short-term cash flow projections and a business snapshot to help them keep a pulse on how their companies are performing.

Xero's analytics feature for the Early and Growing plans includes a summary of important financial trends, the ability to run the dashboard based on either cash or accrual, and cash flow projection for the next seven to 30 days.

The Established plan includes Analytics Plus, advanced analytics that provide custom reporting date ranges, cash flow projections for the next 60-90 days, and predicted cash transactions, bills, and invoices based on your transaction history.

The business snapshot table shows some of the key differences between Xero's analytics and Analytics Plus features.

Inventory

Xero's inventory feature helps business owners track and report on the quality and value of existing stock.

You can use Xero's inventory tracking service as long as your company meets the following criteria:

• Has less than 4,000 products or services
• Purchases items before they are sold
• Calculates the average cost of items

For businesses that have larger amounts of stock, do business via an eCommerce channel, or operate with negative inventory, Xero offers Inventory Plus --a full-service inventory management system.

With Inventory Plus businesses can reconcile payouts, integrate with eCommerce platforms, and fulfill up to 1,500 orders per month from multiple sales channels.

Business owners on Xero's Growing or Established plans can purchase Inventory Plus for an additional $39/month.

This comparison table shows the differences in capabilities between Xero's built-in inventory tool and Inventory Plus.

Accounting app

Xero's highly rated accounting app enables you to create and send invoices, monitor cash flow, and reconcile bank transactions directly from your phone.

Xero Accounting's dashboard displays outstanding invoices and bills, a profit and loss report, and a cash flow graph.

Xero uses double-entry accounting, but it's mostly done behind the scenes. As the program operates on the very real premise that, as a business owner, you may not know a lot about accounting, it suggests that if you need to enter a manual journal entry, you farm that process out to your bookkeeper or accountant.