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In this blog post, I dive into the top 5 disadvantages of Xero that you must know about before buying.
Chances are you’ve heard of Xero, a popular cloud-based accounting and bookkeeping software for all types of small-medium-sized businesses.
Xero is widely praised for its user-friendly interface, comprehensive accounting features, and powerful integrations with third-party apps.
But while there’s a lot to love about Xero, it’s not without drawbacks!
Before you decide to use Xero for your small business accounting needs, it’s crucial to carefully consider its potential downsides.
So, let’s jump in!
What Is Xero?
Xero is an online accounting solution tailored for small to medium-sized businesses looking to streamline their financial management.
Additionally, Xero can be used by accountants and bookkeeping professionals!
However, for this article, I’ll focus on the top five disadvantages of Xero for small business use only.
With a robust set of tools, Xero can effortlessly manage everything from expenses and income to invoices and overall financial operations.
Originally launched in 2006 in New Zealand, Xero has since expanded its reach, now being used in over a whopping 180 countries worldwide!
Xero’s key features include:
- Online invoicing.
- Payroll management.
- An easy-to-use mobile app.
- Inventory control.
- Expense tracking.
- Seamless bank reconciliation.
And thanks to its wide variety of integrations, powerful automations, and intuitive interface, Xero has become a go-to choice for business owners and accountants alike.
Read more: How To Use Xero?
For a visual walkthrough of this process, check out my video guide on How to use Xero below.
Top 5 Disadvantages Of Xero
Undoubtedly, Xero’s wide range of features can help simplify and improve the entire accounting process for many businesses.
But to determine whether Xero is the right accounting solution for your business, it’s essential to look at the areas where the platform falls short.
What are the top 5 disadvantages of Xero? It’s time to find out.
1. Pricing Plans
Compared to other Xero competitors such as QuickBooks, FreshBooks, or Zoho Books, Xero’s pricing structure is on the steeper side.
With pricing plans ranging from $20-$80 per month, this may deter small businesses or startups on a tight budget.
Subscription costs also increase as you add more users (or require more advanced features), which can quickly add up!
It’s worth mentioning that Xero offers a generous one-month free trial for all plan types and often offers special discounts for plans.
However, there’s unfortunately no free plan option.
Additionally, Xero’s pricing plans differ depending on which country you’re in, which is confusing, to say the least!
Luckily, I’ve written a blog post clarifying Xero’s current pricing plans and discounts for all countries, which you can check out here.
2. Lack Of Phone Support
While the handy help center, community forums, and range of online resources offer extensive support for users, Xero’s dedicated support is pretty limited.
You can email a Xero support member by clicking the ‘Contact Xero support’ button at the bottom of any article within the help center.
However, one of the most significant drawbacks of using Xero is that there’s no direct phone line option.
Unfortunately, you can only request a callback from Xero by submitting your contact details through the platform.
And some users report that this email and callback system is often slow or difficult to access.
This in-direct customer support approach can be challenging for those requiring immediate assistance for technical issues or urgent queries.
If direct customer support is important to you, I suggest exploring other Xero competitors that offer immediate phone support for users, such as QuickBooks.
This could potentially save you money and provide the support you need!
Read more: 5 Best Xero Alternatives For Small Business.
3. Limited Payroll Features
Did you know that Xero only offers built-in payroll management features in Australia, New Zealand, or The United Kingdom?
Business based in the US or outside the above regions can still pay their employees with Xero, however, you’ll need to use the third-party payroll app Gusto.
Not to mention, Gusto also costs an additional $40-$135 per user per month on top of your Xero subscription!
This can be a significant drawback (not to mention expensive!) for businesses operating outside Xero’s supported countries.
Additionally, certain payroll features, like advanced leave management or compliance with local tax laws, may require third-party integrations or manual workarounds.
4. Integration Issues
One of the best things about Xero is its impressive app marketplace, which allows users to integrate with over 1,000 third-party apps.
However, sometimes these integrations don’t work as seamlessly as expected!
For example, many have reported occasional syncing issues with payment gateways, CRM systems, or inventory management software.
Additionally, some users say the data transfer between Xero and other tools is pretty slow, which can significantly disrupt workflows.
Considering Xero is known for its impressive app marketplace, this is pretty disappointing to say the least!
5. Basic Plan Limitations
Xero’s lowest-tiered ‘Early’ plan is undoubtedly the best option for individuals and small businesses just getting started.
While there’s a lot of love about this plan (including unlimited users), it unfortunately also comes with significant restrictions.
For instance, you can only make 20 invoices and five bills per month, which, let’s be honest, most small businesses will quickly outgrow!
Once that happens, you’ll be forced to upgrade to a more expensive plan.
Additionally, many of Xero’s advanced features, such as multi-currency support and time tracking, are only available on the ‘Established’ plan, which costs $80 monthly.
Plus, you must upgrade to the highest-paid plan to access project management and expense claim tools.
This means businesses looking for these features must be prepared to pay a premium price!
Read more: Xero vs QuickBooks.
Is Xero The Best Accounting Software For You?
As highlighted in this top 5 disadvantages of Xero list and review, you can see that Xero certainly isn’t perfect.
If you’re seeking affordable project tracking, multi-currency capabilities, and advanced accounting features, Xero may not be the best choice for you.
This is because these features are only available on the highest-tier plan, which will set you back $80 per month.
Additionally, businesses that rely on immediate phone support may find Xero’s limited phone support options a drawback, as it primarily offers one-way phone support.
In saying that, Xero is an excellent choice for many small businesses!
Xero offers the flexibility and convenience that small and growing businesses crave to effectively streamline and manage their finances.
With an intuitive interface, feature-rich mobile app, and comprehensive tools to manage payments, expenses, invoices, and more, Xero is still a top-notch choice!
Read more: How Much Does a Bookkeeper Cost For Small Business?
Stews Final Thoughts
And that brings me to the end of this top 5 disadvantages of Xero list and review!
So, the real question is: do the cons outweigh the pros?
Although I’ve focused on Xero’s top 5 disadvantages, I believe Xero is one of the best accounting and bookkeeping solutions for small-medium-sized businesses on the market.
In saying that, it’s essential to remember that every tool has its own strengths and limitations.
And what works perfectly for one user may not be the best choice for someone else!
So, will you be using Xero? Or has this top 5 disadvantages of Xero article steered you away from using the cloud-based accounting tool?
Let me know below!
Frequently Asked Questions
What Is Xero Used For?
Xero is a cloud-based accounting and bookkeeping solution designed to help growing small-medium-sized teams manage their finances effectively.
How Much Is Xero?
Depending on your chosen plan, Xero’s pricing ranges from $20 to $80 per user per month.
Does Xero Offer a Free Trial?
Yes! You can try all of Xero’s impressive features for free for 30 days.
Is Xero Easy To Use?
Absolutely! Designed specifically for small businesses and beginners, Xero’s web and mobile interface is sleek, minimalistic, and easy to use and navigate.
