Like Xero Payroll, Xero Expenses is a simple, no frills, option for allowing employees to capture expenses, send the information to the accounting system and have them reimbursed.
As with other competing apps it uses digital receipt scanning to estimate expense amounts and categories. However in our experience issues with the speed and reliability of the scans mean that many employees prefer to enter data manually.
Xero introduced it's expenses module in 2018. At the time the move was considered controversial as Xero owed much of it's earlier success to it's app partners like Expensify and Receiptbank, and this was the first time it directly competed with them. Since then Xero has introduced
that compete with several app partners.
Before Xero introduced it's expenses module in July 2018 it's mobile app already contained a simpler expenses module.
This system had no approval limits and it was accessed in the same place as the rest of the business information, so it was only really appropriate for owner-managers.
In July 2018 Xero originally removed this free subscription, before U-turning and leaving it free after customer backlash.
Advantages of Xero expenses
It lives within Xero - no need to set up a new integration or enter manual journals
You can mark where several expenses have been reimbursed in one payment, making life easier when reconciling the bank (some other systems assume that all expenses are reimbursed individually, adding an additional layer of manual intervention).
At the time of writing Xero expenses costs £2.50 per user per month. This is relatively cheap compared to Expensify for example which charges from £4 per month.
Triggers for switching to something more complex
You need multiple different approval flows for different members of staff (eg expenses approved by team leads)
You want to add automatic accept / reject rules
Sophisticated approval process
Ability to create expense rules where only expenses above a certain amount needs to be reviewed and approved
Integrates to most accounting systems
Not as cost competitive as Xero Expenses and Receipt Bank
We've already discussed Receipt Bank in
as a data extraction tool.