Xero Is the Accounting Software I Use to Manage Business Finances Online
Xero, from a UK limited company run from a browser
Accounting software gets judged on one thing, which is whether your accountant complains at year end. Mine does not, and that is most of what I have to say in its favour.
Envico Limited's books run through Xero. I am not a bookkeeper and I have no interest in becoming one, so what I want from this category is quarterly VAT that submits without drama, bank transactions that reconcile in an evening, and a year end where the accountant asks me three questions instead of thirty.
Why I use it
Accounting is the one category where I would actively argue against the cheaper option. Not because the cheap ones do not work, but because the thing you are really buying is that your accountant already knows the software. An accountant fluent in your system fixes a problem in ten minutes. An accountant learning your system bills you for the education.
Xero and QuickBooks are both fine and most UK practices are comfortable with either. That is genuinely the deciding factor. Ask your accountant which they would rather receive, and if they have a preference, take it — the difference in monthly cost between the two will never match what a mismatch costs you in fees and friction.
What I actually get out of it day to day is visibility. Not the accounting, the seeing. What has come in, what has gone out, what is owed and what is still sitting unreconciled, available at any point rather than reconstructed in a panic at year end. Bookkeeping left to the last minute is not just unpleasant, it means you spent the whole year making decisions without knowing the numbers.
It also runs entirely in a browser, which is not a small thing if you work from a Chromebook in whichever country you happen to be in. There is nothing to install and nothing tied to one machine.
What you get
Bank feeds and reconciliation
Transactions arrive automatically and Xero suggests the match. Once you have taught it your regular suppliers, a month of reconciliation is a short sitting rather than a lost afternoon. This is the feature the whole thing lives or dies on.
Making Tax Digital VAT
HMRC-recognised, so the quarterly return is prepared and submitted from inside the software. For a VAT-registered UK company this is not a nice extra, it is the compliance requirement, and doing it any other way is now the hard path.
Invoicing and chasing
Branded invoices, online payment, and automated reminders. The reminders are the part worth switching on: unpaid invoices are usually a memory problem rather than a money problem, and the software has a better memory than you do.
Multi-currency
Invoice and record in foreign currencies with the gains and losses handled properly. Only on the higher plans, and worth checking whether you need it before choosing a tier.
Expenses and receipt capture
Photograph a receipt on the phone and it is read, filed and attached to the transaction. Solves the specific problem of a shoebox of paper appearing eleven months after the expense it documents, and it means categorising spend is something you do in a queue rather than in April.
Your accountant works in it with you
They log into the same live ledger rather than waiting for a file. Questions get answered against what is actually there, which removes most of the back and forth that used to make year end tedious.
What I would flag before you sign up
The price goes up, most years
Xero has raised UK prices repeatedly, and the increases land on existing customers rather than only new ones. Budget for the subscription drifting upward rather than holding at whatever you sign up at. It is still small against an accountant's hourly rate, but it is not a fixed cost.
The entry plan is more limited than it looks
The cheapest tier caps how much you can do each month and leaves out multi-currency and other features people assume are standard. Payroll is priced separately per employee. Work out which tier you actually need, then compare on that number rather than the headline one.
Bank feeds need re-authorising
Open banking connections expire on a fixed cycle and have to be reconnected. If you are not looking, a feed can sit disconnected for weeks and you find out when a month of transactions is missing. Check the feed status before you start reconciling, not after.
It does not do the bookkeeping
Automation moves the work, it does not remove it. Someone still has to categorise correctly and query the things that look odd, and if nobody does, you get a tidy-looking ledger that is wrong. That is a worse position than an obvious mess, because nothing about it looks like it needs attention.
Leaving is not a weekend job
You can export your data, but migrating a live ledger with history, reconciliations and VAT periods into another system is a real project. Choose as though you are choosing for several years, because in practice you are.
Who it suits
- ✓VAT-registered UK limited companies filing under Making Tax Digital
- ✓Sole traders, freelancers and consultants who have outgrown a spreadsheet
- ✓Businesses whose accountant already works in Xero
- ✓Anyone invoicing or paying in more than one currency
- ✓Owners who want the books visible during the year rather than reconstructed after it
- ✓Remote operators who need the accounts reachable from any machine
- ✓Anyone still keeping company records in a spreadsheet and a folder of receipts
Getting started
Ask your accountant which system they prefer before you subscribe to anything. If the answer is Xero, or they have no preference, there is a free trial and the connection to your bank is the first thing to set up.
Visit XeroReferral link. I may receive a benefit if you subscribe through it, at no cost to you. Envico Limited pays for its own Xero subscription, and nobody at Xero has reviewed or approved this page.
Paying or invoicing in other currencies?
Xero will record a foreign currency transaction correctly. What it will not do is stop your bank taking a margin on the conversion in the first place, which is a separate problem with a separate answer.
Why I use Wise