What is Xero? A complete guide to features, pricing, and use cases

Xero is one of the most widely used cloud accounting platforms in the world, but most people outside the accounting space aren't quite sure what it does, or whether it's the right fit compared to QuickBooks or FreshBooks. This guide covers what Xero is, how it works, what it costs, and how it compares to FreshBooks. If you're already using Xero and want to take it further, we'll also show you how IFTTT connects Xero to your broader business stack, automatically alerting you when invoices go overdue, logging payments to spreadsheets, and syncing contact data across your tools without manual entry.

IFTTT is an automation platform that connects over 1000 apps and services, so instead of checking Xero manually for payment updates or copying invoice details between tools, you build the connection once and it runs automatically.

What is Xero?

Xero is cloud-based accounting software designed for small businesses, bookkeepers, and accountants. It handles the core financial operations of a business: invoicing, bills, bank reconciliation, expense tracking, contacts, and financial reporting, in a single platform that keeps your books current and accessible from any device.

Founded in New Zealand in 2006, Xero now serves millions of subscribers across more than 180 countries. It became widely adopted because it solved a real problem for small businesses: accounting software that previously required local installation, manual data entry, and significant accounting expertise could finally run in a browser, pull in bank transactions automatically, and be accessed by both the business owner and their accountant at the same time.

What is Xero used for?

Small business owners use Xero to manage day-to-day bookkeeping without needing a dedicated finance team. They create and send invoices, track which ones have been paid or are overdue, record bills from suppliers, categorize expenses, and generate reports that show how the business is performing financially.

Bookkeepers and accountants use Xero to manage multiple client accounts in one place. Xero's advisor tools, practice management features, and client-facing dashboard make it a common choice for accounting firms that need to work across dozens of small business clients simultaneously.

eCommerce and retail businesses use Xero for inventory tracking alongside accounting, connecting it to platforms like Shopify to keep sales data and financial records in sync.

Service businesses like agencies, consultants, tradespeople use Xero primarily for invoicing and cash flow visibility, tracking which projects have been invoiced and which payments are outstanding.

How does Xero work?

Xero connects to your bank accounts through direct bank feeds or imported statements, pulling transactions into the platform automatically. From there, you reconcile those transactions, matching them to invoices, bills, or expense categories you've created in Xero, and the software builds an accurate picture of your financial position in real time.

Invoicing is created and sent directly from Xero. When a client pays, Xero matches the incoming payment to the invoice and marks it as paid. Automated payment reminders can be set to go out at intervals if invoices aren't paid on time.

Bills work in the opposite direction, they're amounts your business owes to suppliers. You record incoming bills in Xero, schedule payment dates, and Xero tracks what's due and when.

Bank reconciliation is where Xero does most of its work automatically. Smart matching rules learn how you categorize transactions over time, so routine entries like subscription fees, payroll, and regular supplier payments can be reconciled in bulk rather than one by one.

Reports, profit and loss statements, balance sheets, cash flow summaries, aged receivables, are generated from your reconciled data and can be shared directly with your accountant or exported for tax filing.

Is Xero free?

Xero doesn't offer a free plan, but it provides a 30-day free trial with access to all features. After the trial, three paid plans are available:

The Starter plan costs $29/month and covers basic invoicing, bill entry, bank reconciliation, and reporting for businesses with lower transaction volumes. There are limits on the number of invoices and bills you can create per month.

The Standard plan costs $46/month and removes transaction limits. It includes unlimited invoices and bills, bank reconciliation, expense claims, and most reporting features, this is the most common plan for growing businesses.

The Premium plan costs $69/month and adds multi-currency accounting and payroll (in supported regions). It's designed for businesses that operate internationally or that need payroll processing built into the same platform as their accounting.

All plans include unlimited users, Xero doesn't charge per seat, which makes it cost-effective for businesses that need to give access to a bookkeeper, accountant, and business owner simultaneously.

Xero vs. FreshBooks: what's the difference?

Xero and FreshBooks are both cloud accounting platforms for small businesses, but they're built for different types of users. Here's how they compare:

Bottom line: If you work with a bookkeeper or accountant, run a team of any size, or need strong bank reconciliation and inventory features, Xero is built for that use case. If you're a freelancer or solo service provider who primarily needs polished invoicing, a client-facing portal, and built-in time tracking, FreshBooks is a better fit. Both platforms have IFTTT support, so you can automate workflows across Slack, Google Sheets, Stripe, and more regardless of which one you choose.

What are Xero's limitations?

Xero's double-entry accounting model is accurate and comprehensive, but it assumes some baseline bookkeeping knowledge. New users without an accounting background often find the reconciliation workflow confusing at first, especially the distinction between categorizing a transaction and matching it to an invoice or bill. Most people get comfortable after a few weeks, but it's not as immediately intuitive as simpler tools like Wave or FreshBooks for someone who has never done accounting before.

Payroll is only available in select regions: the US, UK, Australia, and New Zealand. Businesses outside those markets need a third-party payroll integration.

At the Standard and Premium plan levels, Xero covers most needs, but the Starter plan's transaction limits can feel restrictive for businesses that invoice regularly. It's not really designed as a long-term tier for growing businesses.

Time tracking is not a core Xero feature. It exists in the Projects add-on, but it's not as polished or integrated as dedicated time-tracking tools. Businesses that bill by the hour often pair Xero with a separate time tracking tool.

Finally, Xero's pricing doesn't include a free tier. For very small businesses or sole traders testing the waters, the monthly cost requires a committed investment compared to free tools like Wave.

How IFTTT works with Xero

Xero keeps your books current. IFTTT makes sure that what happens in Xero doesn't stay siloed there, routing invoice alerts to the right people, logging payments to spreadsheets automatically, and connecting Xero's data to the other tools your business already runs on.

IFTTT's Xero integration works through five triggers, two Pro+ queries, and three actions:

• - New sales invoice: fires when a new sales invoice is created in your organization
• - Invoice paid: fires when a sales invoice is fully paid
• - Invoice overdue: fires when a sales invoice becomes overdue
• - Bill due soon: fires when a bill is due within the number of days you specify
• - New contact: fires when a new contact is created in your organization
• - Look up an invoice (Pro+): returns the details of a sales invoice by number
• - Get cash balance (Pro+): returns the current balance of a specified bank account
• - Create a sales invoice: creates an invoice in Xero for a contact you specify
• - Create a bill: creates a bill payable to a contact you specify
• - Create or update a contact: creates or updates a contact in your organization

Get alerted on overdue invoices and bills

Don't let overdue invoices or upcoming bills slip through. IFTTT can push a notification or SMS the moment an invoice goes overdue or a bill is coming due, so you stay on top of cash flow without refreshing Xero manually.

Create invoices and contacts from other tools

Xero's actions let you create invoices and contacts from outside the platform entirely. When Stripe records a payment, IFTTT can create a corresponding Xero invoice automatically. A spreadsheet row can trigger a new invoice. Your accounting records stay current without anyone logging into Xero to enter data manually.

Share accounting updates with your team

Route invoice activity and cash balance updates to Slack automatically, so your team always has visibility into what's been invoiced, what's been paid, and what the day's balance looks like, without needing access to Xero directly.

Log paid invoices and track your cash flow

Every paid invoice and daily cash balance can be logged to a Google Sheet automatically. Set it up once and you'll have a running record of payment history and account balance over time, useful for spotting trends, preparing for tax season, or sharing with a financial advisor.

Explore Xero integrations

Slack to Xero

Keep your team informed about invoice activity and cash position without giving everyone access to Xero. Useful for founders and finance managers who want financial visibility routed into the channels where their team already works.

• - Post a Slack message when a new sales invoice is created
• - Share invoice details with your team automatically when they're sent
• - Push daily cash balance updates to a Slack channel each morning

Set up Slack → Xero

Google Sheets to Xero

Log paid invoices, create new invoices from spreadsheet rows, and track your daily cash balance in a spreadsheet automatically. Useful for businesses that do financial analysis outside of Xero, share data with stakeholders who don't have Xero access, or want a simple external record of key metrics.

• - Log every paid invoice to a spreadsheet as payments come in
• - Create a Xero invoice from each new row added to a Google Sheet
• - Append your daily cash balance to a running log automatically

Set up Google Sheets → Xero

Stripe to Xero

Connect your payment processing to your accounting automatically. Useful for businesses that collect payments via Stripe and want each transaction reflected in Xero without manual invoice creation.

• - Create a Xero invoice automatically when Stripe records a new payment
• - Create a Stripe customer record when Xero adds a new contact
• - Keep your payments and accounting records in sync without manual data entry

Set up Stripe → Xero

Pipedrive to Xero

Sync your CRM and accounting so that contact and deal data flows between Pipedrive and Xero automatically. Useful for sales-led businesses where new contacts need to exist in both systems without duplicate data entry.

• - Create a Pipedrive deal when Xero adds a new contact
• - Create a Xero contact when Pipedrive closes a deal
• - Keep client records consistent across your CRM and your books

Set up Pipedrive → Xero

8 more ways to automate your business finances

If you're already connecting Xero with IFTTT, these Applets extend automation to the other financial and eCommerce tools in your stack. Stripe and Pipedrive are two of the most common tools Xero users run alongside their accounting, and both are on IFTTT.

Xero and IFTTT: better together

Xero keeps your books accurate. IFTTT makes sure that accuracy isn't locked inside your accounting platform, connecting invoice events, payment data, and cash balance updates to Slack, Google Sheets, Stripe, and every other tool your business depends on, automatically.

Ready to connect Xero to your workflow? Get started on IFTTT today, no code required.

Frequently asked questions about Xero

Does Xero support multiple currencies?

Yes, Xero supports multi-currency accounting, but it's only available on the Premium plan and above. With multi-currency enabled, you can create invoices, record bills, and reconcile bank accounts in foreign currencies. Xero applies exchange rates automatically and tracks currency gains and losses. Businesses on the Starter or Standard plans that need to invoice clients in foreign currencies will need to upgrade to access this feature.

Does Xero have a mobile app?

Yes, Xero has a mobile app for iOS and Android that covers core accounting tasks on the go, creating and sending invoices, capturing receipts, approving expense claims, and viewing financial reports. The mobile app is particularly useful for business owners who need to send invoices immediately after a job or review their cash position without opening a laptop. Some features, particularly detailed reconciliation and complex report customization, are better suited to the desktop version. Xero also offers a separate Xero Expenses app for streamlined receipt capture.

Can I manage multiple businesses in Xero?

Each Xero subscription covers one business organization. If you need to manage multiple businesses, as an accountant, bookkeeper, or owner of several companies, each requires its own separate Xero subscription. However, Xero's accountant and bookkeeper platform, Xero HQ, is designed specifically for managing multiple client organizations from a single login. It provides a centralized dashboard across all client files, making it practical to switch between businesses without logging in and out of separate accounts.

Explore more blogs on IFTTT

Xero is one of over 1000 services you can connect with IFTTT. Whether you're automating your small business, streamlining project management, or just trying to stay on top of your notifications, IFTTT works across the tools you already use. Here are a few more blogs to help you get started.

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