Xero Premium review

Powerful small business accounting in the cloud

Flag outside a redbrick building with the Xero logo
(Image: © Shutterstock)

CloudPro Verdict


  • +

    Excellent online documentation and guided setup; Polished mobile app for invoicing in the field


  • -

    Limited contact import options

Xero is one of the big names in online accounting, with its primary focus on providing a complete accounts system for small businesses. As well as a wide range of tools, Xero provides plenty of information and advice about accounting, as well as making it easy to give an external accountant access to your books.

It’s available in Starter, Standard and Premium versions. The Starter version, priced at $20 (£13) per month, is limited to just five invoices, five bills and 20 bank reconciliations every month. If you’re running a micro-business with just a handful of clients that you invoice monthly, then it could be a good option, but most UK businesses will want the Standard package, which costs $30 (£20) per month and doesn’t limit your invoices, bills or reconciliations. If you do business internationally, then you’ll need the Premium version, which costs $40 (£30) per month and is the only subscription that gives you multi-currency support.

Beyond these differences, all three versions work in the same way and have the same features, including live bank feeds via Yodlee, mobile apps for iOS and Android, and integration with a wide range of external applications and services. You can give an unlimited number of users access to your account, and give each various permissions. By default, your master account has sole access to user management, payroll admin, and the ability to edit bank account details for customers.

You can also invite your accountant and give them an Advisor account, which they can use to access additional functions such as the ability to publish annual reports and lock accounts to prevent transactions from being added retroactively, such as after the close of the financial year. Although Xero strongly recommends involving an accountant in your workflow, you can assign Advisor access to anyone, including your own main account.


When you first connect to Xero, a video tutorial and a series of prompts helps get you up and running quickly. The first step is to link a bank account. Like most online accounting tools, Xero uses Yodlee to link to a wide range of banks and automatically import your transactions. If you use foreign-denominated accounts, you’ll first have to add the relevant currencies via the settings screen before you can link accounts denominated in those currencies. Xero keeps track of the exchange rate between your native currency and any foreign currencies you’ve added.

If your bank isn’t supported by Yodlee, you’ll have to import statements manually. Xero supports adding personal bank accounts, allowing as sole traders, for example, to add any personal accounts they might also use for business purposes. Be aware that, when setting up automatic feeds from your accounts, you’re giving Xero and Yodlee your online banking login details, and that they are not liable for anything that might go wrong as a result of doing so. The system is used by many businesses, but you should make sure that it’s appropriate for both your business and allowed by the terms and conditions of your bank account.

Whether you link your bank or manually upload data, you’ll probably want to start by entering the balance on the day you begin using Xero and only importing transactions from that point onwards. Otherwise, you’ll have to immediately reconcile all your old transactions. There are circumstances under which you might wish to import all your old transaction and accounting data, but a clean start generally means much less work in any accounts package. You should take the time to open the main Settings tab and use the Conversion Balances option to enter the current balance of each account. As transactions are imported from your bank account, you’re prompted to reconcile them against your transactions in Xero, linking them to a contact name and account from your Chart of Accounts.

Accounts, payroll and invoicing

Your Chart of Accounts (COA) is the backbone of your business’s bookkeeping, whether you’re a sole trader service provider, or an international company with multiple departments and income streams. Xero’s default Chart of Accounts lists not only the bank accounts you added in the previous step, but also a wide range of income, expense, asset, liability and equity categories, from cleaning services to corporation tax, each of which has a code that you can assign to related invoices and bills. You can customise your COA according to your business’s needs and it’s possible to import a COA in CSV format, although you’ll have to make sure that it’s set up correctly for Xero’s requirements. Working with your COA within the interface is easy, and you can add and remove categories as required by your business.

Xero has a powerful payroll system, which supports detailed payment period and holiday calendars, easy insertion of your PAYE and other reference information from HMRC, support for pension auto-enrolment, and pay item categories including benefits, deductions and reimbursements, with the ability to add your own custom entries to each category and associate them with a COA entry.

During the configuration process, you’re also prompted to customise your account and paperwork by adding your business’s logo, business type, and contact information. The invoice customisation screen compares poorly to the WYSIWYG experience of products such as Zoho Invoice, but covers the basics, such as allowing you to make the unit price and quantity fields invisible. You can also download DOCX template files and use Microsoft Word to create fully customised invoices. Xero supports a range of online payment services, including PayPal, Stripe, and GoCardless, and your invoice emails can include links to these for easy payment by your clients. You can also link to a custom payment URL if you use a different payment provider.

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Contacts, add-ons and mobile

Further guided configuration steps prompt you to add contacts. Xero’s own contact importation standard is very specific and requires you to download and populate a CSV file - simply exporting your existing contacts from most services won’t work. There are third party apps that allow you to, for example, connect your Google Apps for Work or Outlook contacts, but Xero doesn’t direct you to any of these when you’re in the process of adding contacts, and the apps proved to be limited and awkward to use during our tests. As it stands, Xero is in serious need of better contact integration.

Whether you import contacts or populate your list by hand, Xero’s contact entries are richly detailed, allow you to link default sales and purchase accounts to individual contacts, and add appropriate European tax rates for each client, making it easy to conform with the recently introduced VAT MOSS system for sales across the EU.

Xero’s add-on directory includes over 350 services and applications, the choice can be bewildering, but add-ons are categorised by type and industry, and can be searched by keywords, making it easy to find the right tools for the job. Many of these services are paid-for SaaS in their own right, such as Zapier, which allows you to import data from one cloud-based service to another, while some popular free web apps such as Evernote also provide integration, in this case by allowing you to create invoices from notes and vice-versa. A number of industry-specific services can be linked, too, such as the Vinsight winery management tool, and cloud-based property management suite Re-Leased.

The mobile app allows you to configure a four-digit password for fast, secure access. The app has a slick, simple interface that allows you to view the status of your bank accounts, quickly create invoices and expenses claims, and view your contacts. You also use the app to access anything stored in the Xero’s shared File Inbox document storage directory, making it easy to view documents relating to a client account while you’re on the move. It’s more polished than the mobile apps of many rivals services, making Xero a strong choice for businesses whose staff need to invoice on the move.

Xero is easy to use but provides heavy-duty features, and is well suited to small businesses that work with an external accountant. Xero can even help you find an appropriate accountant via its directory. We were pleased with the ease of linking our accounts, getting started with our invoicing, and reconciling transactions. The mobile app is also excellent. However, we’d have liked integrated options for importing contacts from Outlook or Gmail, as are found in rivals such as Intuit QuickBooks Online, as well as easier invoice customisation. Setting up Xero is also more complex than dealing with some rival products, particularly those aimed at micro-businesses, but plenty of documentation is available, and once it’s up and running, Xero is low-maintenance and extremely capable.


Xero is easy to use but provides heavy-duty features, and is well suited to small businesses that work with an external accountant.

K.G. Orphanides

K.G. is a journalist, technical writer, developer and software preservationist. Alongside the accumulated experience of over 20 years spent working with Linux and other free/libre/open source software, their areas of special interest include IT security, anti-malware and antivirus, VPNs, identity and password management, SaaS infrastructure and its alternatives.

You can get in touch with K.G. via email at reviews@kgorphanides.com.