When it comes to managing finances, small businesses have very different needs from their large corporate counterparts.
Often, the person managing the money at an SMB is the business owner themselves, meaning they need a simple, user-friendly tool for managing financial tasks that is built for those with even a novice level of financial knowledge.
That’s exactly what Xero is designed to do. But is it the right tool for your organization?
Let’s explore.
What is Xero accounting software ERP?
Xero is an online accounting software ERP designed for small businesses, giving users a simple way to manage essential financial tasks in one place.
It streamlines everything from bills and bank reconciliation to sales tax and reporting, while its cloud setup lets business owners, staff, and advisers work from the same up-to-date financial information at any time.
Core features of Xero
These are the main features and functions offered by Xero, specifically curated for small and medium-sized businesses:
- Cloud-based access: Xero runs completely online. That means you don’t have to worry about installing software or completing updates, and can view and manage your financial data from any device.
- Collaboration functionality: Multiple users can access and work in the same Xero account at the same time, making it easy for business owners, finance leaders, and external accountants to share information and collaborate in real time.
- Accounting tools: Xero includes built-in tools for invoicing, bill management, bank reconciliation, expense tracking, and basic payroll, helping streamline day-to-day accounting tasks.
- Financial management: The platform makes it simple to monitor cash flow, track budgets, review financial performance dashboards, and generate standardized financial reports.
- App integration: Xero connects with hundreds of third-party apps, from payment processors to inventory systems, so you can customize and extend your accounting workflow.
- Paperless record-keeping: You can store receipts, invoices, and other documents digitally within the Xero platform, reducing manual paperwork and creating an organized and searchable financial database.
How does Xero accounting software work?
The core functionality of Xero is simple at heart:
It connects your bank accounts and financial activity to a cloud-based dashboard where all of your bookkeeping, invoicing, bill payments, reporting, and reconciliation can happen in one place.
Xero pulls in transactions from your bank feed automatically, updates your records, and lets you and your account collaborate using the same data. This process helps small business owners manage finances more efficiently without relying on manual spreadsheets and physical documents.
Top benefits of using Xero for your business
So, why invest in Xero as a tool for SMB financial management?
These are the top five benefits of using Xero.
1. Time-saving automation features
Xero cuts down on manual bookkeeping and data entry by automating aspects of financial management, like:
- Bank feed data entry
- Invoice reminders
- Reconciliation
This helps speed up routine tasks, keeping your financial data with minimal human intervention.
2. Improved financial insights and reporting
You get real-time visibility into cash flow, budgets, and overall performance. Xero’s dashboards and customizable reports make it easier to spot trends, manage expenses, and make informed decisions.
3. Collaboration capabilities with financial advisors
With Xero, everything is cloud-based.
That means that business owners, bookkeepers, and accountants can work virtually from the same live data. They don’t even have to be in the same country!
This helps streamline communication and drives faster, more reliable financial reviews and report creation.
4. Scalable for growing businesses
One of the great things about Xero is that it has a wide range of features that you can continue to take advantage of as your company grows, like:
- Multi-currency support
- Advanced inventory management
- Integrated apps
5. Better document and records management
Receipts, bills, and invoices can be uploaded, stored, and matched digitally, reducing paperwork and creating a more organised, searchable record system for audits and compliance.
What is Xero used for?
Xero is used primarily to handle the core financial operations of a business in a single digital hub.
Companies use it for tasks as diverse as:
- Sending invoices
- Collecting payments
- Managing bills
- Tracking everyday expenses
- Preparing financial statements, like the income statement
Xero automatically pulls in transactions from your business bank account. This makes tasks like bank reconciliation and cash flow monitoring easier and more accurate, with fewer human errors.
Xero is also used for payroll, budgeting, and generating financial reports that help owners understand performance and stay compliant.
Is Xero different from QuickBooks?
Yes, Xero is different from QuickBooks, though the two offer similar features and are generally considered competitors.
Both are popular accounting platforms, with the main difference being that Xero is known for its simple interface and focus on collaboration, while QuickBooks has deeper functionality, but can have a steeper learning curve for those with limited finance experience.
These are the main differences between the two:
- Xero offers unlimited users on every plan, while QuickBooks charges for additional users.
- Xero is completely cloud-based, whereas QuickBooks has both online and desktop versions available.
- QuickBooks includes more advanced native features, such as payroll and inventory. Xero typically relies on integrations for more advanced functionality such as this.
- Xero tends to be simpler and more user-friendly, while QuickBooks can feel more powerful but more complicated.
Is it easy to learn Xero?
Yes, Xero is generally considered very easy to learn—that’s one of its key selling points.
It is designed especially for small business owners who don’t have an accounting background.
Most importantly for those who don’t have technical experience, Xero’s interface is clean and straightforward, and most essential tasks (like sending invoices or uploading receipts) are designed to be super intuitive.
While more advanced features, such as reporting or payroll, may take some practice, most users are able to get comfortable with the basics quickly, especially if they work alongside a bookkeeper or accountant.
Xero also provides built-in guides, tutorials, and help articles that make onboarding and ongoing learning smooth and user-friendly.
Does Xero integrate with BILL?
Yes, BILL offers a powerful integration for connecting to Xero.
With BILL’s Xero integration, you can pay supplier bills via BILL directly from within Xero.
Importantly, the data sync between the two platforms is automatic and bi-directional. If you make a change in one tool, that change is automatically reflected in the other. Bills, invoices, payments, vendors and related details entered in one platform get reflected in the other, eliminating double-entry.
With the Xero integration for BILL, small business leaders gain powerful, streamlined accounts payable and receivable processes: invoices and bills flow into BILL for payment, then payment status and history sync back into Xero.
