Xero Invoicing Guide: Professional Invoicing with Powerful Accounting
Master Xero's sophisticated invoicing platform with unlimited users, multi-currency accounting, and enterprise-grade features at small business prices
Team Cost Savings Calculator
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Xero Pricing Plans
Growing Plan
Unlimited invoices & bills
- Everything in Early
- Unlimited invoices & bills
- Multi-currency
- Projects & quotes
- Purchase orders
- Expense claims
- Unlimited users
9-Step Invoice Creation Wizard
Navigate to Invoices
Click Business → Invoices → New Invoice
Multi-Currency Accounting Calculator
See how Xero tracks foreign exchange gains/losses automatically
Platform Comparison: Xero vs Competitors
See how Xero stacks up against QuickBooks, FreshBooks, and Wave across key features
| Feature | Xero $42/mo (Growing) | QuickBooks $95/mo (Advanced) | FreshBooks $60/mo (Plus) | Wave Free (limited) |
|---|---|---|---|---|
| Unlimited Users | ||||
| Multi-Currency Accounting | ||||
| Bank Reconciliation | ||||
| Projects Tracking | ||||
| Purchase Orders | ||||
| Quotes/Estimates | ||||
| Expense Claims | ||||
| Batch Invoicing | ||||
| Audit Trail | ||||
| Accountant Collaboration |
Is Xero Right for You?
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Bank Reconciliation Time Savings
Calculate time saved with Xero's intelligent bank reconciliation tools
Xero is a cloud-based accounting platform that combines sophisticated accounting features with streamlined invoicing workflows. Popular with growing businesses, accountants, and bookkeepers, Xero offers enterprise-grade features in an intuitive interface that scales from solopreneurs to multi-national businesses with thousands of employees.
This comprehensive guide covers everything you need to know about Xero invoicing, from creating your first invoice to leveraging advanced features like batch invoicing, project tracking, multi-currency support, and accountant collaboration.
What Makes Xero Different from QuickBooks and FreshBooks
Xero occupies a unique position in the small business accounting market:
Accountant-Friendly by Design
While QuickBooks and FreshBooks target business owners, Xero was built with accountants in mind. Features like comprehensive audit trails, practice manager integrations, and detailed permissions make it the platform of choice for accounting firms managing hundreds of clients.
True Multi-Currency Accounting
Xero doesn't just invoice in multiple currencies - it handles full multi-currency accounting with automatic revaluation, foreign exchange gain/loss tracking, and proper accounting treatment across all reports. This makes it ideal for import/export businesses and companies with international operations.
Bank Reconciliation Excellence
Xero's bank reconciliation tools are widely considered the best in the industry. The platform's intelligent matching, bank rules automation, and bulk reconciliation capabilities make month-end closing significantly faster than competitors.
Fixed Pricing with All Features
Unlike QuickBooks (which gates features across 4+ pricing tiers), Xero includes nearly all features in the mid-tier plan. You get projects, quotes, purchase orders, multi-currency, and expense claims without paying for expensive add-ons.
Unlimited Users on All Plans
Xero includes unlimited users even on the cheapest plan. QuickBooks charges $5-30/user/month for additional users, making Xero significantly more affordable for businesses with team members or contractors.
Getting Started: Creating Your First Invoice
Setting Up Your Xero Account
- Sign up at xero.com (30-day free trial, no credit card required)
- Connect your bank account (optional but recommended)
- Import existing customers, invoices, and chart of accounts (if migrating from another system)
- Upload your logo and customize branding
- Set up tax rates (sales tax, VAT, GST depending on your region)
- Configure invoice defaults (numbering, terms, footer text)
Creating an Invoice in Xero
The 9-step invoice creation process ensures professional, accurate invoices every time. Use the interactive wizard above to walk through each step, from selecting your customer to sending the final invoice.
Step 1: Navigate to Invoices - From the Xero dashboard, click "Business" in the top menu, then "Invoices", then "+ New Invoice".
Step 2: Select Customer - Start typing the customer name. Xero auto-completes from your contacts. If it's a new customer, click "+ Add Contact" and enter name, email, billing address, credit terms, and contact person details.
Step 3: Set Invoice Details - Configure the invoice number (auto-generated), reference field for PO numbers, invoice date (defaults to today), and due date (specific date or calculated from customer's payment terms).
Step 4: Add Line Items - Choose from manual entry, saved items from your product catalog, unbilled time and expenses from projects, or convert from an accepted quote. Xero automatically calculates line totals.
Step 5: Apply Discounts - Add item-level discounts using the discount icon, or add invoice-level discounts as negative line items. Xero displays discounts clearly so clients see the savings.
Step 6: Add Branding Theme - Select from multiple branding themes (useful for different brands or client types). Create themes in Settings > Invoice Settings > Branding Themes with custom logos, colors, fonts, and layouts.
Step 7: Attachments - Attach supporting documents like contracts, delivery confirmations, timesheets, or expense receipts. Clients can access attachments from the invoice view or PDF.
Step 8: Add Notes - Include a message to customer at the top of the invoice (thank you message, project notes) and terms and conditions at the bottom (payment terms, late fees, legal disclaimers).
Step 9: Approve and Send - Choose to save as draft (for approval workflows), approve (marks as "Awaiting Payment"), approve and send (emails customer immediately), or approve and print (generates PDF for manual delivery).
When you click "Approve and Send", Xero emails the customer with a professional template, includes a "View and Pay Invoice" button, attaches PDF copy, tracks when email is opened and invoice is viewed, and records all activity in invoice history.
Advanced Invoicing Features
Repeating Invoices
Xero's repeating invoice system handles recurring billing automatically. Create a standard invoice template, click "Save as Repeating", and configure frequency (weekly, monthly, quarterly, yearly, or custom), start date, end date (specific date, after X invoices, or never), and when to generate (X days before due date).
Enable auto-send to automatically email invoices when generated (perfect for subscription billing). If you use Xero's payment services (GoCardless for UK/EU, Stripe for US), enable auto-collect to automatically charge the customer's saved payment method.
Batch Invoicing
Create and send multiple invoices at once. This is perfect for consulting firms billing 20 clients for monthly retainers. Create the first invoice with all details, click "Copy to", select multiple customers, review each invoice (make customer-specific adjustments if needed), then select multiple invoices and click "Bulk Actions" > "Send". Xero sends personalized emails to each customer automatically.
Project Tracking and Invoicing
Xero's project feature (Growing plan and above) tracks time and expenses by project and converts to invoices. Set up projects with name, customer, budget, tasks/phases, and team members. Record time entries via web or mobile app tagged to specific project and task with billable rates. Record expenses tagged to project with optional markup for reimbursable costs.
When ready to invoice, open the project, click "Create Invoice", select which time entries and expenses to bill, and Xero generates an invoice with line items automatically. Xero tracks project profitability (revenue vs costs) in real-time.
Quotes (Estimates)
Create professional proposals with Xero's quote system. Customers receive emails with "View Quote" button, can accept or decline online, and you receive notification. Convert accepted quotes to invoices with one click - all line items transfer automatically. Xero tracks quote conversion rates and shows pipeline value.
Purchase Orders
Create purchase orders to track what you've ordered from suppliers. When goods arrive, convert to bill for 3-way matching compliance. Purchase orders appear in reports and help track committed costs.
Payment Collection
Xero Payment Services
Xero partners with payment processors to enable online payments:
United States: Stripe - Credit cards: 2.9% + $0.30, ACH bank transfers: 0.8% per transaction (capped at $5)
United Kingdom & Europe: GoCardless - Direct debit: 1% + £0.20 per transaction (capped at £2), SEPA transfers: €0.25 + 1%
Australia & New Zealand: Stripe and GoCardless - Credit cards: 1.75% + $0.30, Direct debit: 1% + $0.30
Setup takes 1-2 days for verification. Once connected, payment buttons appear on all invoices automatically. Clients click "Pay Now", enter payment details, receive instant confirmation, and Xero automatically marks invoice as paid.
Payment Reminders
Xero can automatically send payment reminders. Configure in Settings > Invoice Settings > Invoice Reminders to set due date reminders (X days before), overdue reminders (X days after), and multiple escalating messages. Customize email templates and set different schedules per customer. Xero logs all reminders in invoice history.
Multi-Currency Invoicing
Xero's multi-currency features are enterprise-grade. Add currencies in Settings > General Settings > Currencies (supports 160+ currencies). Xero pulls daily exchange rates from XE.com automatically.
Set each customer's default currency when creating their contact. When you create an invoice for that customer, Xero automatically uses their currency. Line items are entered in customer currency, customer pays in their currency, and Xero records payment in their currency.
When payment is received, Xero converts to your home currency using the exchange rate on payment date and tracks currency gain/loss automatically. All reports show amounts in your home currency with option to see original currency.
Multi-Currency Accounting
Xero handles complex multi-currency accounting automatically with monthly foreign exchange revaluation, unrealized gains/losses tracking for unpaid invoices when exchange rates change, realized gains/losses recorded when payment is received at different rate than invoice date, and support for bank accounts in multiple currencies with proper accounting treatment.
This level of sophistication makes Xero ideal for businesses with significant international operations.
Reporting and Analytics
Xero's reporting capabilities exceed most competitors:
Aged Receivables - Shows all unpaid invoices grouped by age (current, 30 days, 60 days, 90+ days), essential for collections management.
Invoice Activity Report - All invoices over date range with invoice date, due date, amount, and payment status. Filter by customer, project, or tracking category.
Sales by Customer - Total sales to each customer, identify top customers, spot revenue trends.
Sales by Item - Revenue by product or service, identify best-selling items, profitability analysis.
Profit & Loss (Income Statement) - Revenue from invoices, expenses from bills and purchases, net profit/loss, compare period over period, budget vs actual.
Balance Sheet - Assets, liabilities, equity, point-in-time snapshot.
Cash Flow Statement - Operating, investing, and financing activities, net cash flow.
Budget Manager - Create monthly budgets by account, compare actual vs budget, variance analysis.
Mobile App Features
Xero's mobile app (iOS and Android) provides comprehensive functionality including full invoice creation, receipt capture with OCR, bank reconciliation, expense claims, quotes, dashboard access, and team collaboration features.
Team Collaboration and Permissions
Xero's user management is sophisticated and flexible with roles including Standard User (full access except billing), Invoice Only (invoices and customers only), Purchase Only (bills and suppliers only), Read Only (view-only), Payroll Admin (payroll features only), Advisor (accountant access), and Custom Roles (granular permissions).
Xero includes unlimited users on all plans - a huge advantage over QuickBooks. Use cases include sales teams creating quotes, operations teams submitting expenses, accountants reviewing transactions, contractors tracking time, and managers accessing reports.
Xero maintains comprehensive audit trails tracking who created/edited/deleted each transaction, date and time of every action, previous values, email sent/viewed events, and login activity. Audit trails meet SOC 2, GDPR, and financial audit requirements.
Accountant Collaboration
Xero was built for seamless accountant collaboration. Add your accountant in Settings > Users > Invite User with "Advisor" role (free, doesn't count toward user limits). Accountants using Xero Practice Manager can manage hundreds of clients from single dashboard, switch between client files instantly, track time spent on each client, and create invoices directly.
Collaboration features include notes and comments on transactions, flagging of unusual transactions, custom management reports, direct export to tax software, and real-time data access (no more emailing spreadsheets).
Integrations and Add-Ons
Xero has a robust app marketplace with 1,000+ integrations including payment processing (Stripe, GoCardless, Square), e-commerce (Shopify, WooCommerce, Amazon), CRM (HubSpot, Salesforce, Pipedrive), time tracking (TSheets, Harvest, WorkflowMax), expense management (Expensify, Dext), inventory (Unleashed, TradeGecko), payroll (Gusto, ADP, Xero Payroll), and reporting (Fathom, Spotlight Reporting).
Xero provides a developer API for custom integrations with REST API, OAuth 2.0 authentication, comprehensive documentation, SDKs for multiple languages, and webhooks for real-time events.
Tips for Getting the Most from Xero
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Connect Bank Accounts Immediately - Import bank feeds from day one. Xero's bank reconciliation is its killer feature.
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Set Up Invoice Defaults - Configure default payment terms, numbering format, branding themes, email templates, and automatic reminders.
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Create Branding Themes for Different Client Types - If you serve B2B and B2C clients, create separate themes.
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Use Tracking Categories - Tag transactions to departments, projects, or locations for multi-location businesses.
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Enable Two-Factor Authentication - Security best practice in Settings > Users.
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Review Dashboard Daily - Spend 2 minutes checking bank balances, outstanding invoices, overdue invoices, and recent transactions.
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Set Up Bank Rules - Auto-categorize recurring transactions (subscriptions, rent, utilities) to save hours during month-end.
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Invite Your Accountant Early - Give your accountant Advisor access from day one to review your setup.
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Use Projects for Client Work - Tag invoices and expenses to projects for easier profitability analysis.
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Export to Excel for Custom Reports - All reports have "Export" buttons for custom analysis.