Staying on top of invoices and cash flow is vital for any business, but it’s rarely straightforward. Between chasing payments, reconciling transactions, and keeping books accurate, manual bookkeeping can quickly drain time and focus. That’s why many U.K. businesses are turning to Xero invoice software.
Xero brings invoicing, expense tracking, and reporting together in one place, helping small and mid-size businesses (SMBs) manage their finances with less effort and more accuracy.
In this guide, we’ll explore how Xero software works, the key benefits it offers, and how integrating it with Moss can take accounting automation and efficiency to the next level.
What is Xero software?
Xero is a cloud-based accounting platform that helps small and medium-sized businesses manage their finances with ease. It brings together key accounting tasks like invoicing, bank reconciliation, expense tracking, and reporting in one simple dashboard.
With real-time access to your financial data, you can send invoices, track payments, and monitor cash flow from anywhere. Built-in collaboration features make it easy for business owners and accountants to stay aligned without endless spreadsheets or manual updates.
So, what is Xero used for?
Xero is used to simplify day-to-day financial management. It allows you to set payment terms, manage bills and expenses, and stay compliant with tax rules, all in one place.
Through integrations with tools like Stripe, GoCardless, and Moss↗, you can accept online payments, automate expense tracking, and reduce manual admin. Because it’s cloud-based, updates happen automatically, keeping your books accurate and up to date.
Whether you’re a freelancer managing cash flow, a small business scaling operations, or a finance team looking to streamline processes with software tools for CFOs↗, Xero offers the flexibility, integrations↗, and automation needed to keep your finances in sync as you grow.How to use Xero software for your business
Getting started with Xero invoice software is straightforward, even if you’re new to online bookkeeping. Here’s how to make the most of it for your business accounting needs.
Setting up your account
Start by creating a Xero account and selecting the subscription plan that best fits your business needs. Xero will then guide you through an easy onboarding process: enter your business details, upload your logo, add tax information, and connect bank accounts for automatic transaction syncing.
Once you connect the Xero accounting software to your bank, it will begin importing new transactions for quick approval and reconciliation. While past transactions aren’t pulled in automatically, you can manually import existing data to keep your books accurate from day one.
Sending invoices in Xero
Creating and sending invoices with Xero software is one of the platform’s core features. Simply go to “Sales” → “Invoices” → “Create invoice.” From there, you can choose an invoice template, add your company logo, list items or services, and specify payment terms and the due date. Once it’s ready, you can send it directly from Xero by email or share it via a secure online link.
To make payments easier, you can integrate payment options, allowing customers to pay automatically online. Once sent, Xero helps you track the status of every invoice — from “awaiting approval” to “paid” — and even nudge customers with gentle email reminders for overdue payments.
Managing expenses and receipts
With Xero software, managing expenses and receipts is quick and stress-free. You can upload or photograph receipts directly through the Xero mobile app, and the system automatically captures and records the details.
Each expense is categorised, matched to the correct supplier or project, and reconciled with your bank transactions in real time. This automation helps small business owners and finance teams keep accurate records and stay compliant during tax season.
You can also set up recurring payments, monitor spending patterns, and get a clear view of where your money goes — all from one dashboard.
Generating reports and insights
Beyond everyday bookkeeping, Xero software provides powerful reporting tools that give you a clear view of your company’s financial performance.
You can instantly generate key reports — including profit and loss, balance sheet, and cash flow statements — to make informed decisions in real time.
For CFOs and business owners, these insights highlight trends, reveal growth opportunities, and strengthen cash flow forecasting without the need for manual data entry or spreadsheets.
Xero benefits for small & mid-size businesses
Xero invoice software takes the stress out of daily bookkeeping by bringing all your financial tasks into one place. From creating and tracking invoices to managing finances, it keeps you organised and in control.
Cloud-based accessibility
Xero is cloud-based, so you can access your system from anywhere. Whether you’re in the office or on the go, you can create invoices and review bank transactions in real time.
Multiple users can access the same data at the same time, making collaboration between business owners and finance teams seamless.
HMRC and tax compliance
Xero accounting software integrates directly with His Majesty’s Revenue and Customs (HMRC) regulations, making value-added tax (VAT) submissions and other tax filings straightforward. Bills and invoices are organised automatically, reducing the risk of errors and late submissions.
This enables small businesses to spend less time on compliance and stay confident their books are accurate and audit-ready.
Cash flow visibility and forecasting
Xero provides clear, real-time visibility of your cash flow, so you can see which invoices are still owed, track recurring payments, and reconcile bank transactions automatically.
Its reporting tools also help forecast future cash flow and plan for upcoming expenses, keeping your business finances healthy and predictable.
Time savings through automation
One of Xero’s biggest advantages is the time it saves. Xero invoice software can categorise expenses and handle recurring invoices without manual effort.
The result is smoother business accounting, fewer errors, and more time to focus on growing your business.
Xero pricing in the UK
Xero offers a range of pricing plans tailored to meet the diverse needs of SMBs in the UK These plans are designed to provide essential accounting tools, with options to scale as your business expands.
Ignite plan
Best for: Startups and sole traders
Price: £16/month
Key features:
- Create and send up to 20 invoices per month
- Enter and manage up to five bills
- Reconcile bank transactions
- Capture bills and receipts with Hubdoc
- View short-term cash flow snapshot
Grow plan
Best for: Growing businesses needing more automation
Price: £37/month
Key features:
- Access everything in the Ignite plan
- Create and send unlimited invoices and quotes
- Enter and manage unlimited bills
- Bulk reconcile bank transactions
- Handle multiple currencies
Comprehensive plan
Best for: Businesses with employees needing payroll
Price: £50/month
Key features:
- Access everything in the Grow plan
- Manage employee payroll with Xero Payroll
- Make bill payments in GBP
- Analyse performance with advanced reporting and analytics
Ultimate plan
Best for: Established businesses needing advanced tools and forecasting
Price: £65/month
Key features:
- Access everything in the Comprehensive plan
- Forecast cash flow with advanced planning tools
- Track projects in greater detail
- Improve decision-making with enhanced analytics and reporting
Optional features and add-ons
- Xero Expenses: £2.50/active user/month (included for up to 10 users in the Ultimate plan)
- Xero Projects: £5/active user/month (included for up to 10 users in the Ultimate plan)
Note: All pieces are in GBP and exclude VAT. Xero reserves the right to update pricing at any time.
Who should (and shouldn’t) use Xero software?
Best-fit businesses
Xero invoice software is a great fit for SMBs, freelancers, and startups that want to keep their finances organised without spending hours on spreadsheets. It’s especially handy for service-based businesses that send invoices and get paid online.
If you need a solution that scales with your business and streamlines everything from invoicing to cash flow, Xero is a smart choice.
When Xero may not be ideal
Xero may be too limited for larger companies that require advanced, multi-entity reporting or for specialised industries like manufacturing. Because it’s entirely cloud-based, it’s also less suitable for businesses that operate mostly offline or prefer manual bookkeeping.
Xero software UK 2025: Trends and what’s next
Looking ahead, Xero is evolving alongside key business shifts, including the rise of generative AI, increasing demand for personalised customer experiences, and stronger focus on cybersecurity.
For U.K. SMBs, this means accounting tools like Xero need to support smarter automation, real-time forecasting, and seamless integrations designed for flexible, hybrid work. Embracing these capabilities will help businesses to stay agile and protect their financial health in a fast-changing economy.
Moss & Xero: Smarter accounting together
Moss works seamlessly with Xero software, automatically syncing expenses, receipts, and payments to keep your books up to date. This integration removes the need for manual data entry and ensures every transaction is matched and categorised correctly in real time.
By connecting Moss with Xero, finance teams gain a single source of truth for company spending. Expense data flows directly into Xero, speeding up reconciliations and making month-end closing faster and more accurate.
The result is greater control and transparency over your cash flow — with automated reports, clearer audit trails, and less time spent chasing receipts or correcting errors.
Together, Moss and Xero software streamline bookkeeping, improve compliance, and free your team to focus on more strategic finance tasks.
Learn more about Moss integrations↗ and how they simplify accounting with Xero.
