Xero accounting software: Features, pricing, integration, and setup guide

As your business grows, relying on manual accounting methods can often lead to inefficiencies and errors in your bookkeeping. Using accounting software like Xero can save you time and improve your financial reporting accuracy. Xero automates tasks that take a lot of time, like recording transactions, sending invoices, and managing payroll. This makes your accounting processes much easier and gives you more time to focus on growing your business. 

81% of accountants also believe that the use of technology, including accounting software like Xero, has freed up their time and allowed them to take on more of an advisory role for businesses.

In this guide, we'll introduce the Xero accounting software and how it can streamline the financial processes of your business. We'll also discuss its integration with Airwallex, an end-to-end financial operations platform that automatically syncs your transactions with Xero. This integration not only saves you time on manual bookkeeping, it streamlines your invoicing process, simplifies payroll management, and automates bank reconciliation.

Xero accounting software: Overview

Xero is a cloud-based accounting software that caters to small and medium-sized businesses. It's designed to be user-friendly and is a great choice for business owners who may not have a solid background in accounting. Xero offers a comprehensive suite of tools to manage your finances, including:

• Invoicing. Businesses can easily customise their own invoice templates and send invoices through Xero. They can also embed Airwallex’s Payment Links into their invoices to make it easier for their customers to make card payments or bank transfers.

• Payroll. Xero helps small businesses keep accurate and up-to-date records for their employees. This includes calculating deductions, making pay slips, and creating payroll reports.

• Expense tracking and reimbursements. Employees can upload receipts on-the-go with Xero’s mobile app, making it easy to submit expense claims and get reimbursed.

• Financial reporting: Businesses can track their finances more accurately with Xero's report templates, which can be customised to better suit your business needs.

Why choose Xero accounting software?

There are many reasons why Xero is an ideal accounting software for SMEs. Here are some of the key benefits:

Comprehensive accounting software

From invoicing, bank reconciliation, and expense tracking to payroll management and financial reporting, Xero has all the accounting tools you need in one place. With different pricing plans available, you can choose the features that best align with your business needs and budget, and scale up as your business grows.

Reconcile bank transactions quickly

Comparing your business's financial records to bank statements can be a bit of a chore and take up a lot of time. You need to keep a close eye on company expenses and match each entry with what's on your bank statement. If you spot any discrepancies or errors, you have to fix them to keep your accounts current. By connecting your bank feed to Xero, the accounting software will suggest matches for transactions in your invoices or bill payments. You don't have to look through each entry manually. Xero also enables bulk reconciliation when you're handling a lot of unreconciled transactions, saving you even more time.

Manage finances on the go with the Xero Accounting app

With the rise of digital banks and online payment providers, many SMEs run their financial operations online, even on mobile devices. With the Xero Accounting app, you can keep your bookkeeping and business performance in check, even when you're away from your desk. The app makes it easy to create and send online invoices on the go, and you can turn quotes into invoices in just a few clicks. You can also track payments and check the invoice status to see who has or hasn’t paid you and send them a friendly payment reminder.

Streamlined payroll with the Xero Me app

Almost 50% of SMEs are using software providers to manage their payroll in 2024. The Xero online payroll software makes it easy to automate tax calculations, track employee leave balances, and pay your team on the go. With the Xero Me app, your employees can check their pay slips, request time off, and submit timesheets easily. Once they log their hours on Xero Payroll, you can approve it immediately and it'll automatically calculate their earnings. It also stores employee pay records and their payroll information. This means you can easily process salary payments and create electronic pay slips whenever you need to.

How to use Xero accounting software?

Using Xero is simple and straightforward. You can see your company's financial situation quickly on the main dashboard. It has many business performance indicators, like bank balances, cash flow, outstanding invoices and bills. You can also easily move between different parts of the platform using the top bar. It links to important features such as sales overview, account reports, and invoice templates. 

Here are the basic steps to get started with setting up your Xero account:

1. Sign up: Visit the Xero website and sign up for a free trial or choose a pricing plan that suits your business.

2. Set up your organisation: Enter your business details, including your company name, country, currency, and what your organisation does.

3. Connect your bank account: Set up a bank feed to automatically import your transactions to Xero and enable seamless bank reconciliation.

4. Set up your opening balances: Enter the conversion balances of your accounts, unpaid customer invoices and supplier bills as of your Xero start date.

5. Customise your invoices: Tailor your invoice templates with your logo and business details. Set up payment terms and automate reminders for overdue invoices. You can also set up an online payment service like Airwallex so your customers can pay you directly from the invoice.

6. Add users: Invite team members and assign roles and access levels based on their responsibilities.

7. Integrate apps: Explore the Xero App Store and integrate third-party apps like Airwallex that fit your business needs.

8. Get started: You're all ready to start using Xero for managing your finances. Start from the dashboard to monitor cash flow, generate reports, track expenses, and more.

How to use Xero to manage invoices

One of the key features of Xero is its invoicing capabilities. With Xero, you can create professional-looking invoices and send them to your clients in just a few clicks. You can even customise your invoice to add brand elements, link to payment services, set up invoice reminders, and create multiple invoice templates for different scenarios.

To create an invoice in Xero, follow these steps:

1. Create a new invoice: Click "New Invoice" to create a new invoice.

2. Create a new invoice template: Click "Invoice settings" and click "New branding theme" to add brand elements, customise your invoice's layout, or add extra fields.

3. Add payment services: Click "Payment services" and choose a payment service to link to your invoice, such as credit cards, PayPal, or Airwallex's Payment Links. This will allow your clients to pay directly from the invoice.

4. Set up automatic invoice reminders: Click "Invoice reminders" and choose when you want Xero to send reminders for overdue invoices. You can also customise the reminder message and add a link to the online invoice.

5. Fill out invoice details: Once you're done setting up your invoice template, you can start filling out your invoice details. Specify the business you are billing by creating a new contact or selecting from your existing list. Xero will then automatically generate the invoice number and dates. Be sure to fill in the description, quantity, and price accurately.

6. Preview your invoice: Click "Preview" to see how the invoice looks to your customer and make any changes if you need to.

7. Send your invoice: Click "Approve & email" to review the email subject line and message. Then click "Send" to email the invoice directly to your client. Xero will update the status of the invoice as "Awaiting payment".

Airwallex seamlessly integrates with Xero to further streamline your invoicing process. When you connect Airwallex to Xero, your transactions sync automatically into your Xero account. So, as soon as your customer pays the invoice and it is settled into your Airwallex account, the payment gets recorded in Xero without any extra effort. This not only saves you time but also keeps your financial records accurate. 

Plus, by embedding Airwallex’s Payment Links into your invoices, your customers can pay in multiple currencies using 160+ payment methods. This capability not only streamlines the whole payment process, but also makes it easier for businesses to expand to international markets.

Follow these steps to set up your Airwallex-Xero integration:

1. Sign up for Airwallex: Create a free Airwallex business account and take 5 minutes to submit the required business documents and Know Your Customer (KYC) information.

2. Integrate Xero with Airwallex: Once your account is approved, you can connect to Xero via "Connections" on the Airwallex dashboard. This allows Airwallex to automatically send your transaction records to your Xero account.

3. Complete the KYB process (optional): To use Airwallex’s Payment Links, you’ll be asked to provide additional information about your business and its finances. This information helps Airwallex meet regulatory requirements and verify the identity of your business.

How to use Xero for payroll

In addition to its invoicing capabilities, Xero also offers a payroll feature that helps SMEs streamline their online pay runs and keep their payroll records organised.

To use Xero for payroll, follow these steps:

1. Set up your payroll: Head to the "Payroll" page to add your preferred account, such as Airwallex, as the account you use for salary and wage payments. Next, set up your company's pay frequency and relevant employee payment information.

2. Process payslips: Once your payroll is set up, you can easily make and process payslips for your employees through Xero. Xero automatically calculates salaries, taxes, and other deductions based on the information you give it.

3. Pay your employees: Once your payslips are processed, you can use Airwallex to pay your employees. Airwallex supports payout to 150+ countries to help you manage your global payroll.  This is where having Xero connected with Airwallex comes in handy, as it allows for a seamless transfer of funds and automatic recording of the transactions in both platforms.

4. Manage leave requests: Employees can submit leave requests directly through Xero, which allows you to approve them easily and keep track of their employees' leave balances.

5. Run reports: Finally, Xero offers a number of payroll reports that provide valuable insights into your company's labour costs and total earnings. You can customise the information included in these reports to suit your business needs.

Businesses can integrate their Airwallex account with Xero to further streamline their payroll system. 37% of global businesses reported a lack of integration across their HR systems, in particular, many have their HR and accounting systems stuck in silos.

How to reconcile bank transactions using Xero

To help businesses keep track of their financial transactions more accurately, Xero offers bank reconciliation tools that automatically matches and categorises bank transactions with corresponding entries in its system. This makes the whole process more efficient and streamlined.

To reconcile bank transactions using Xero, follow these steps:

1. Connect your business account: The first step is to connect your business account with Xero. This allows for automatic importing of transactions into the system.

2. Match transactions: Once the transactions are imported, Xero will attempt to match them with existing records, such as invoices, bills, and expense claims. You can easily accept and reconcile these matches or make any necessary adjustments without having to manually go through each bank statement line. This saves you time and also helps to avoid human error.

3. Create new transactions: If a transaction cannot be automatically matched, you can create a new record in Xero. This will also allow you to enter additional details and attach any relevant documents, such as receipts or invoices.

Integrate Airwallex with Xero to simplify your bookkeeping

Integrating Airwallex with Xero provides businesses with a powerful, all-in-one business spend management solution to streamline their accounting processes. Here are some ways you can use the Airwallex-Xero integration:

• Xero Bank Feed: Whether you're processing salary payments or your employee is making a business purchase, this integration enables businesses to effortlessly synchronise their Airwallex transfers and card transactions in multiple currencies with their Xero account. This seamless connection simplifies account reconciliation and helps maintain accurate financial records, eliminating the need for tedious manual entries.

• Xero Expenses and Bills: Code your business expenses and employee expense claims using the Airwallex Expense Management system, and have them automatically synced with Xero to simplify the management of your expenses, saving you time.

• Xero Invoice Payment: Your customers can easily pay through Airwallex’s payment links when you issue invoices via Xero. This integration enables your customers to conveniently pay using their preferred payment methods, including credit and debit cards and 160+ local payment options, making it easier for them to settle their invoices promptly.

• Xero Online Payments Feed: This integration allows businesses to reconcile their online payments activity with a detailed breakdown of sales, refunds, and fees. If you don't connect Xero Online Payments Feed along with Xero Bank Feed, you'll only see a "batch payout" transaction in your Xero Bank Feed.

See how Singapore SME Little Blossom has streamlined their financial management and reconciliation through integrating Airwallex with Xero.

Xero pricing plan: How much does it cost?

Xero offers three pricing plans to cater to businesses of different sizes: Starter, Standard, and Premium. All plans include basic accounting features such as invoicing, bill payments, bank reconciliation, expense tracking, and reporting. They differ in terms of invoice limits, the number of bills allowed, and the ability to handle bulk reconciliation and multiple currencies.

Starter: For $39 SGD per month, the Starter plan allows businesses to send and approve up to 20 invoices, as well as track and pay 5 bills each month. It is suitable for freelancers, solo entrepreneurs, or start-ups that aren't lot of transactions yet. Just keep in mind that this plan doesn't support dealing with bulk reconciliation or reports in multiple foreign currencies.

Standard: With the Standard plan at $61 SGD per month, businesses can send unlimited quotes and invoices, manage unlimited bill payments, and bulk reconcile transactions. This plan is good for growing local businesses that don't need to deal with international transactions. It doesn't help with currency conversions or reports in foreign currencies.

Premium: At $80 SGD a month, the Premium plan offers all the great features of the Standard plan, plus the bonus of multi-currency support. If your business works with suppliers or customers from other countries, this plan makes it easy to pay and get paid in over 160 currencies. You can also track changes in exchange rates and make reports in different foreign currencies.

Xero also offers add-on features including Xero Projects, Xero Expenses, or Analytics Plus at additional costs.

Xero Projects: Xero offers add-on project tracking tools for companies that manage multiple projects simultaneously. They cost $10 SGD for one user per month, plus $8 SGD for each additional active user per month. Xero Projects makes it easy for businesses to handle project planning, budgeting, quoting, and invoicing all in the same place. This helps businesses track expenses and manage changes in project costs more effectively.

Xero Expenses: This add-on feature is great for businesses with employees who often go on business trips or have other work-related expenses. With Xero Expenses, employees can take photos of their receipts and submit their expense claims while on the go. You can easily approve claims right from your phone and keep track of employee expenses through the dashboard. Priced at $6 SGD per user each month.

Analytics Plus: Businesses can upgrade from Xero Analytics to Analytics Plus for AI-powered cash flow insights. With Analytics Plus, you get 60- and 90-day forecasts, predictions for recurring cash transactions, and analysis of past transactions to identify patterns. However, pricing information isn’t publicly available on their website.

QuickBooks vs Xero: Which one is better for your business?

Both Quickbooks and Xero offer a range of solutions catering to businesses of different sizes.

If you're a freelancer or solo entrepreneur, Quickbooks Simple Start may be a more cost-effective option as it only costs $26 SGD per month, compared to Xero's entry-level Starter plan which costs $39 SGD per month. 

For larger teams, Xero's Standard and Premium plans could be a more suitable option as it allows infinite users under the same company plan, while QuickBooks limits the number of users to 40, even on its highest-tiered plan. 

However, both Xero and QuickBooks also offer enterprise solutions for businesses with more complex organisational structures, and companies can contact their respective sales teams for customised pricing and features.

Based on publicly available information from Xero⁷ and Quickbooks¹¹.

Whether you're using Quickbooks, Xero, or other accounting software, Airwallex integrates seamlessly with these softwares to help you streamline your employee expense reimbursement, payroll management, and account reconciliation processes. With Airwallex, you can easily pay your global employees in multiple currencies, manage expense claims on the go, and track your business expenses all from a single platform. Furthermore, Airwallex enables businesses to issue free corporate cards to employees for easy tracking of company expenses. This integration with accounting software allows for automatic reconciliation of transactions, saving businesses valuable time and effort.

Conclusion

Integrating Airwallex into your business processes is essential for strengthening your accounting operations, especially as your company scales globally. The platform empowers your finance team to handle multiple currencies and manage transactions across various markets more efficiently. By connecting Airwallex with your accounting software, you can gain the ability to have a clear, real-time view of your financial transactions, automating your reconciliation processes. This integration allows for greater accuracy, speed, and control over your business's financial operations. Sign up for an Airwallex account today for a seamless accounting experience.

FAQ

Do I still need an accountant if I use Xero?

Having an accountant can be helpful for tackling more complex bookkeeping tasks like tax planning and improving your invoicing system. Even if you're using Xero for your bookkeeping, finding the time to handle these tasks can be tough when you are running your own business. A professional bookkeeper can help organise your financial records and set up Xero to make your bookkeeping process smoother, making it easier for you to manage your finances on your own down the road.

Is Xero hard to learn?

Many users find Xero to be intuitive and user-friendly, making it accessible for individuals without a strong accounting background. The platform offers a comprehensive library of resources, including tutorials, guides, and customer support, to help users navigate the software effectively.

How long will it take to learn Xero?

Learning Xero can take different amounts of time based on how familiar you are with accounting softwares and bookkeeping concepts. Typically, most users can pick up its basic functionalities in just a few hours. If you're aiming to master the more advanced features, such as custom reporting, plan on spending a few days to a couple of weeks using it regularly and exploring the resources available.

Why is Xero better than Excel?

Xero offers some clear advantages over Excel when it comes to managing your company finances. Unlike Excel, where you have to manually enter data and set up formulas, Xero automates a lot of these tasks, which saves you time on invoicing and reporting. Moreover, Xero operates on a cloud-based system, which allows for real-time collaboration among team members and ensures they are always working with the most current financial data.

Which banks are supported by Xero? 

Xero integrates with a number of banks and financial institutions, including DBS, OCBS, UOB, and Airwallex.

Is it safe to connect a bank account to Xero?

Yes, connecting a bank account to Xero is generally considered safe. Xero employs advanced security measures, including multi-factor authentication, to protect your financial data and sensitive information.

Source & references

1. https://quickbooks.intuit.com/r/small-business-data/accountant-tech-survey-2023/

2.  https://www.xero.com/hk/accounting-software/xero-accounting-mobile-app/ 

3.  https://onpay.com/payroll/process/2024-small-business-insights/ 

4.  https://www.xero.com/sg/xero-me/ 

5.  https://www.xero.com/sg/accounting-software/payroll/ 

6. https://images.adpinfo.com/Web/ADPEmployerServices/%7Bf10eab0c-9c13-4f23-9ed2-5fe5662c60cf%7D_ADP_Potential-of-Payroll-Survey-2024_SG.pdf?cid=elq_sales_enablement_44284&campaignid=44284&ecid=38418259&utm_source=eloqua&utm_medium=email&utm_campaign=ESI_APAC_New-Look-at-Pay-PoP-GP-Survey2023&elqTrackId=c0e0317f4b1a4a35a5363b8561d25123&elq=7a0537ed94a34e5495713dd94fe86fad&elqaid=227151&elqat=1&elqCampaignId=44284

7. https://www.xero.com/sg/pricing-plans/ 

8.  https://www.xero.com/sg/accounting-software/track-projects/ 

9.  https://www.xero.com/sg/accounting-software/claim-expenses/ 

10.  https://www.xero.com/sg/accounting-software/analytics/ 

11.  https://quickbooks.intuit.com/sg/pricing/ 

12. https://quickbooks.intuit.com/learn-support/en-us/help-article/accounts-payable/set-cash-flow-projector-quickbooks-desktop/L0BSJYlHq_US_en_US#:~:text=Go%20to%20the%20Company%20menu,adjustments%20to%20the%20beginning%20balance 

13. https://central.xero.com/s/topic/0TO1N0000017kmwWAA/direct-bank-feeds-for-your-region#business