Xero Accounting Review 2023: Features, Pricing, Alternatives

Are you tired of dealing with clunky, outdated accounting systems? If you're looking for a modern, cloud-based solution to streamline your bookkeeping and financial management, look no further than Xero. In this guide, we'll take you through all you need to know about Xero accounting software, including what it is, its features, benefits, use cases, pricing, and how to use it.

What is Xero?

Xero is a cloud-based accounting software that simplifies bookkeeping and financial management for businesses of all sizes. Here's a closer look at the history and unique features of Xero.

History of Xero

Xero was founded in 2006 in New Zealand and has since become a leading accounting software in over 180 countries. With its cloud-based platform, Xero has revolutionized the traditional accounting space by providing businesses with real-time data access and collaboration.

How Xero Differs from Traditional Accounting Systems

Unlike traditional accounting systems, Xero is entirely cloud-based, meaning you can access your financial data anywhere with an internet connection. Xero also integrates with various financial and business apps, allowing for seamless workflows and improved efficiency. Additionally, Xero's user-friendly interface and real-time reporting capabilities make it an accessible and valuable tool for businesses of all sizes.

Xero's Target Market and User Demographics

Xero is designed for small businesses, freelancers, and sole traders. Still, its features and capabilities also make it a valuable tool for non-profit organizations, remote teams, and service-based businesses. Xero's user-friendly interface and real-time reporting capabilities make it an accessible and practical tool for businesses of all sizes.

Xero Features

Xero offers a variety of features to help businesses manage their financials, including:

• Bank reconciliation
• Invoicing and billing
• Expense tracking
• Reporting and analytics
• Mobile app and integrations
• Payroll management
• Time tracking

Xero Benefits

By using Xero, businesses can enjoy several benefits, including:

• Streamlined accounting processes
• Improved data accuracy and access
• Increased productivity and efficiency
• Better financial insight and decision-making
• Real-time reporting and collaboration
• Improved cash flow management

Xero Use Cases

Xero is designed to meet the needs of a variety of businesses, including:

• Small business owners
• Freelancers and sole traders
• Non-profit organizations
• Remote teams and remote workers
• Retail and e-commerce businesses
• Service-based businesses

Xero Pricing

Xero offers several pricing plans to meet the needs of different businesses. Here's an overview of Xero's pricing options:

• Starter: $25/month
• Standard: $40/month
• Premium: $54/month

Each pricing plan includes different features and capabilities, so choosing the plan best fits your business needs is essential. Additionally, Xero's flexible billing options allow you to select a monthly or annual payment schedule.

Xero Alternatives

While Xero is a popular and highly-rated accounting software, it may not be the right choice for everyone. If you're looking for alternative options, here are some top contenders in the accounting software space:

• Layer: If you run your accounting and FP&A processes on top of Google Sheets, Layer would be the perfect fit for you. Layer is a free Google Sheets add-on that equips you with the tools to increase the efficiency and data quality of your processes on top of Google Sheets.
  
  • Share parts of your spreadsheet, including sheets or even cell ranges, with different collaborators or stakeholders.
  • Review and approve edits by collaborators to their respective sheets before merging them back with your master spreadsheet.
  • Integrate popular tools and connect your tech stack to sync data from different sources, giving you a timely, holistic view of your data.
• QuickBooks: QuickBooks is another popular accounting software that offers a range of features, including invoicing, payroll, and financial reporting. It is also available in multiple versions, making it suitable for businesses of all sizes.
• Wave: Wave is a free accounting software offering invoicing, expense tracking, and financial reporting features. It's a great option for small businesses and freelancers looking for an affordable accounting solution.
• Zoho Books: Zoho Books is another comprehensive accounting software that offers features like invoicing, expense tracking, and payroll management. It's a popular choice for small and medium-sized businesses.
• FreshBooks: FreshBooks is a cloud-based accounting software for small businesses and freelancers. It offers features like invoicing, expense tracking, and time tracking.
• Sage: Sage is a well-established accounting software that offers a range of features, including invoicing, payroll, and financial reporting. It is suitable for small to medium-sized businesses.
• Kashoo: Kashoo is a cloud-based accounting software that offers features like invoicing, expense tracking, and financial reporting. It's a popular choice for small businesses and freelancers.
• AccountEdge: AccountEdge is a desktop-based accounting software that offers features like invoicing, payroll, and financial reporting. It's an excellent option for businesses that prefer a local software solution.
• Xero Cashbook: Xero Cashbook is a simplified accounting software that offers features like invoicing, expense tracking, and financial reporting. It's ideal for small businesses and freelancers with basic accounting needs.
• MYOB: MYOB is a well-established accounting software that offers a range of features, including invoicing, payroll, and financial reporting. It is suitable for small to medium-sized businesses.

When choosing an accounting software, it's important to consider your specific business needs and requirements. Take some time to evaluate the features, pricing, and customer reviews of different options to find the right accounting software for your business.

How to Use Xero Accounting System?

Getting started with Xero is easy. Here's a step-by-step guide to setting up and using Xero:

• Setting up a Xero account: Sign up for Xero and complete the setup process.
• Connecting bank accounts and other financial sources: Connect your bank accounts and other financial sources to Xero to streamline your bookkeeping.
• Navigating the Xero dashboard and menus: Familiarize yourself with Xero's dashboard and menus to find the features and tools you need.
• Recording transactions: Start recording transactions in Xero, including invoices, bills, expenses, and bank transactions.
• Reconciling accounts: Reconcile your accounts regularly to ensure the accuracy of your financial data.
• Creating reports: Take advantage of Xero's reporting and analytics features to gain valuable insights into your business's financial performance.
• Collaborating with team members and advisors: Invite team members and advisors to access your Xero account and collaborate on financial tasks and decision-making.

Payroll Reports and Records in Xero

Xero's payroll management features allow you to keep track of your payroll reports and records, including:

• Employee records: Manage employee information, including salaries, deductions, and benefits.
• Payroll reports: Generate reports on payroll data, including payroll summaries, tax reports, and employee statements.

How to Add and Remove a User to Xero?

To add or remove a user from your Xero account:

• Adding a user: Invite a user, like your accountant, to access your Xero account and collaborate on financial tasks.
• Removing a user: Remove the from your Xero account if they no longer need access.

How to Add and Remove a Bank Account from Xero?

To add or remove a bank account in Xero:

• Adding a bank account: Connect a new bank account to Xero to expand your financial management capabilities.
• Removing a bank account: Disconnect a bank account from Xero if it's no longer necessary or relevant to your business.

How to Edit Accounts in Xero?

To make changes to your accounts in Xero:

• Editing account names: Change the name of an account in Xero to better reflect its purpose.
• Moving accounts: Reorganize your accounts by moving them to different categories or groups.
• Deleting accounts: Remove accounts that are no longer necessary or relevant to your business.

How to Invoice on Xero?

To create and send invoices in Xero:

• Creating an invoice: Use Xero's invoicing features to create and send customer invoices.
• Customizing invoice templates: Personalize your invoices by using Xero's customizable invoice templates.
• Sending invoices: Send invoices directly from Xero to your customers' email addresses.

How to Add Credit Notes in Xero?

To create and issue credit notes in Xero:

• Creating a credit note: Use Xero's credit note feature to issue refunds or adjustments to customers.
• Sending credit notes: Send credit notes directly from Xero to your customers' email addresses.

Tips for Effective Payroll Management in Xero

Here are some tips to help you effectively manage your payroll in Xero:

• Keeping employee records up-to-date: Regularly update employee information in Xero to ensure the accuracy of your payroll reports and records.
• Streamlining payroll processes: Automate payroll processes to reduce the time and effort required to manage payroll.
• Using payroll reports and analytics: Take advantage of Xero's payroll reports and analytics to gain valuable insights into your payroll data.

Time Tracking in Xero

Xero's time tracking features allow you to accurately track and bill for time-based services, including:

• Setting up time tracking: Enable Xero's time tracking features and configure the settings to meet your business needs.
• Recording time entries: For each employee or project, log time entries to track billable hours accurately.
• Invoicing for time-based services: Create invoices based on time entries to accurately bill customers for your services.
• Running time reports: Generate reports on time tracking data to gain valuable insights into your business's performance and billing accuracy.

Tips for Effective Time Tracking in Xero

Here are some tips to help you effectively manage your time tracking in Xero:

• Keeping time entries accurate: Ensure that time entries are accurate and up-to-date to ensure proper billing and reporting.
• Automating time tracking: Automate time monitoring processes to reduce the time and effort required to manage time entries.
• Integrating with other tools: Integrate Xero's time-tracking features with different tools and systems to streamline your workflow.

Conclusion

Xero is a comprehensive accounting software offering various features and tools to help you manage your finances and grow your business. With Xero, you can easily keep track of your financial data, create invoices, manage payroll, and collaborate with your team and advisors.

Whether you're a small business owner, freelancer, or startup, Xero can help you achieve your financial goals. However, if you run your accounting and budgeting processes on Google Sheets, Layer might be the better option and the easiest way to automate your existing workflows.