Xero Review – Online Accounting & Bookkeeping System

Xero Review – Online Accounting & Bookkeeping System

Xero is a full-service online accounting and bookkeeping system that caters to freelancers, solo entrepreneurs, and small to midsize business owners. Its easy-to-use bookkeeping tools make it a simple solution for people who can’t afford an in-house accounting team to keep track of corporate finances.

Xero bills itself as an alternative to QuickBooks. It shares many of the same features, including bank account integration, invoicing and expense tracking, payroll services, and tax tracking. Like QuickBooks, it also targets accounting and bookkeeping professionals, providing generous incentives that enable independent professionals to grow their own businesses.

Of course, Xero isn’t the only online accounting software option for small and midsize businesses. In addition to QuickBooks, the platform competes with alternatives like FreshBooks, Kashoo, Zoho Books, Brightbook, and Wave, as well as online scheduling and accounting tools like Simplifythis.

Xero’s features vary by plan.

All Xero plans allow unlimited users and come with a 30-day free trial. After the trial ends, you must enter your credit card information to continue your subscription. Thereafter, you’re billed every month on the calendar date of your original signup, unless you cancel.

The Starter Plan costs $9 per month. Unlike all other plans, Starter doesn’t include unlimited invoicing, bill payment and tracking, or bank transaction reconciliation. Instead, you’re limited to 5 invoices, 5 bills, and 20 reconciled bank transactions per month. These limitations mean Starter isn’t suitable for businesses that frequently send invoices or make multiple account transactions each month.

For $30 per month, this plan includes all the features that come with the Starter Plan, plus the following:

For $70 per month, this plan includes all the Standard Plan features, plus payroll for 10 employees in the states listed above, as well as the following:

For companies with larger payrolls, Xero offers two additional plans that are identical to the Premium Plan, with the exception of payroll size:

1. PayPal and Credit Card Payments Accepted
Xero’s invoicing system accepts direct client payments via PayPal and credit cards. This substantially simplifies the payment process, shortens the average length of time it takes clients to pay, and reduces the likelihood of an invoice falling through the cracks. Some competing software platforms don’t accept direct payments.

2. Offers Tools for Accounting and Bookkeeping Professionals
Xero has an attractive partner program for professional accountants and bookkeepers. Partners are expected to sell Xero subscriptions to solo entrepreneurs and small to midsize business owners. In return, they get free Xero subscriptions to manage their own finances, marketing support, a dedicated Xero account manager, a variable cut of the monthly fees for subscriptions they sell, and practice management software. The partner program is potentially lucrative for independent accountants and bookkeepers who might otherwise struggle to connect with clients.

3. Integrates With Hundreds of Third-Party Apps
Xero seamlessly integrates with more than 300 third-party apps, including ADP (payroll, HR, and compliance outsourcing), SquareSpace (e-commerce services), and BodeTree (small business financing). By contrast, Zoho Books only integrates with a handful of mostly well-known apps, most of which focus on payment processing and tax documents. Wave doesn’t integrate with external apps, though it does develop a handful of useful apps in-house.

4. 30-Day Free Trial
The 30-day free trial offers ample opportunity to try out the full range of Xero’s features. The trial period is more than twice as long as FreshBooks’ 14-day free trial, and isn’t accompanied by that platform’s persistent upselling attempts.

5. No Need to Pay for Customer Service
Xero doesn’t charge subscribers to use its customer service and support system, regardless of the nature of their queries or how much help they need. By comparison, Wave and Zoho Books either charge for each customer support incident, or require customers to upgrade to a higher-priced plan to access support.

1. No Free Version or Long-Term Discount
Though it does come with a lengthy free trial, Xero doesn’t have a totally free version. That’s a significant disadvantage to FreshBooks, which has a limited free version, and a major disadvantage to Wave and Brightbook, which are completely free.

Xero has also done away with its long-term discount, which once slashed monthly plan costs by more than 30% on commitments of 6 months or longer. Beyond the free trial and periodic promotions targeted at specific buyer groups, there’s no way to get a discount on any Xero plan.

2. Lowest-Priced Plan Is Very Limited
Xero’s low-priced Starter Plan seems more like a way to get clients in the door than a legitimate option for long-term accounting needs. With monthly allowances for just 5 invoices, 5 bills, and 20 reconciled bank account transactions, it’s only suitable for freelancers and solo entrepreneurs without heavy accounting needs. Kashoo’s lowest-priced plan includes all major features, as does Wave’s free plan.

3. Multi-Currency Invoicing Is Expensive
Though Xero does allow you to invoice in multiple currencies, the lowest-priced plan that allows it is $70 per month. By contrast, all FreshBooks plans, including the free version, allow you to invoice in multiple currencies and automatically convert from your home currency at current rates.

4. Full Payroll Functionality Isn’t Available Everywhere
Xero’s payroll functionality adds value to its higher-priced plans, but the offering is seriously limited by geography. As of mid-2018, Xero’s electronic payroll services are only available in a handful of states, and a few holdouts have no payroll options at all. If you don’t live in a covered state, you need to invest in an add-on app, such as ADP, or you can pay for a separate payroll system such as QuickBooks Payroll.

5. Live Chat Prompts Are Aggressive
Xero’s website is generally pleasant and easy to use, but its onsite chat prompts are persistent to the point of annoyance. Within a few minutes of navigating any page on the site, a pop-up live chat window appears, accompanied by a high-pitched repetitive pinging sound. You may want to mute your computer’s volume completely while browsing Xero.

If you’re on the fence about accounting software for your own freelancing operation or small to midsize business, the best thing you can do is look past the similarities that many platforms share, and find the handful of critical differentiators that speak directly to your needs. With powerful, affordable accounting software at its foundation, there’s no telling where your business could go.

Do you use Xero to handle your company’s accounting needs?

Updated: October 12, 2018

Xero is a powerful online accounting program that competes directly with QuickBooks and other full-service options. Though it’s more expensive than Wave, Kashoo, and other competitors, it’s far better suited for larger operations. Xero also comes with lucrative tools for professional bookkeepers. That said, it lacks a free version, has limited functionality in the lowest-price version, and can’t compete with QuickBooks in the payroll department.

Xero is a tight, versatile accounting system with great introductory trials and pricing, smooth integration with a huge app library, and sweet tools for financial professionals. Overall, it’s an awesome account software for growing businesses.

Categories: Reviews, Small Business

Brian Martucci writes about frugal living, entrepreneurship, and innovative ideas. When he’s not interviewing small business owners or investigating time- and money-saving strategies for Money Crashers readers, he’s probably out exploring a new trail or sampling a novel cuisine. Find him on Twitter @Brian_Martucci.

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Xero Review – Online Accounting & Bookkeeping System

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