Xero vs NetSuite: Upgrade from Accounting to ERP

Xero vs NetSuite: two very different tools for two very different stages

Comparing Xero and NetSuite is a bit like comparing a sedan to a commercial truck. Both get you from A to B, but they're built for fundamentally different purposes and scales. Xero is excellent small business accounting software. NetSuite is an enterprise resource planning platform. The fact that both handle invoices and bank reconciliation doesn't make them competitors — it makes them sequential chapters in a growing company's story.

TL;DR: Xero works well for businesses under $5M revenue with simple operations ($15-75/month). NetSuite makes sense once revenue hits $5M-15M and you need multi-entity management, real inventory control, or workflow automation. First-year NetSuite cost for a 15-person company runs $60,000-100,000 including implementation, so time the switch when operational complexity justifies it.

That said, the comparison matters because plenty of businesses running Xero are asking themselves whether it's time to move on. We've helped many of them make that decision, and the answer isn't always "yes, switch to NetSuite right now."

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What Xero does well

Xero deserves credit for making accounting approachable. The interface is clean, the bank feed integration works reliably, and most business owners can manage their books without an accounting degree. Invoicing, expense tracking, bank reconciliation, basic reporting — Xero handles the financial fundamentals competently.

For companies under $5M in revenue with simple operations — service businesses, consultancies, small eCommerce shops, freelancers — Xero is often the right tool. It costs $15-75/month, setup takes hours rather than weeks, and your bookkeeper probably already knows it.

Xero's app marketplace extends its capabilities into areas like inventory (with plugins like Dear Inventory or Cin7), project tracking, and payroll. These work well for small-scale operations. A company selling 50 products and shipping 20 orders a day can run on Xero plus a few add-ons without much trouble.

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Where Xero breaks down

The cracks start showing when your business gets operationally complex. We see the same patterns repeatedly in companies that have outgrown Xero.

Multi-entity and multi-currency is where things get messy first. Xero handles basic multi-currency transactions, but managing multiple legal entities, intercompany eliminations, and consolidated reporting across subsidiaries requires workarounds that quickly become unsustainable. If you've opened a second entity — whether for international expansion, a new business line, or regulatory reasons — Xero starts fighting you.

Inventory management beyond the basics becomes painful. Xero's native inventory is rudimentary. The add-ons help, but now you're managing inventory in one system, financials in another, and praying the sync doesn't break. When it does break — and it does — you're left with inventory counts that don't match your balance sheet and no clear way to figure out which system is wrong.

Reporting is fine for standard financial statements but falls apart for operational analysis. Try pulling a report that shows profitability by product line, by customer segment, by sales channel in Xero. You can't, at least not without exporting to Excel and spending half a day manipulating data. That's fine when you're small, but growing companies need this kind of analysis to make informed decisions.

Workflow automation barely exists. Approval workflows, automated billing, purchase order routing — the operational processes that mid-market companies need to run efficiently aren't part of Xero's DNA. You end up building these in email, Slack, or spreadsheets, which is how things fall through the cracks.

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What NetSuite adds

NetSuite isn't just "better Xero" — it's a different category of software. The core difference is that NetSuite is a unified platform where finance, operations, CRM, inventory, and eCommerce share a single database. Everything is connected because everything lives in one system.

Your sales team closes a deal in the CRM. The sales order creates an inventory allocation. The warehouse picks and ships the order. The invoice generates automatically. Revenue recognition rules apply. The customer can check their order status in a portal. All of this happens in one system with one set of data. No integrations, no sync jobs, no reconciliation.

For growing companies, this operational unification is the real value — not any single feature. The ERP handles what you'd otherwise need 5-8 separate tools to accomplish, and it does so without the integration headaches that come with stitching those tools together.

Beyond the platform architecture, NetSuite provides capabilities that Xero simply doesn't have: proper multi-entity consolidation, advanced revenue recognition (ASC 606), sophisticated inventory management with demand planning, role-based access control, SuiteScript customization, and a mature integration framework for connecting to other enterprise systems.

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The migration question: When is it time?

There's no perfect moment to switch from Xero to NetSuite, but there are clear signals that the moment is approaching.

Revenue between $5M and $15M is typically where the conversation starts. Below $5M, the operational complexity usually doesn't justify NetSuite's cost. Above $15M, you're probably already feeling significant pain from Xero's limitations.

Adding a second entity is often the trigger. Whether it's a new subsidiary, international expansion, or a spin-off, the moment you need consolidated financial reporting across entities, Xero becomes a liability.

Spreadsheet proliferation is a reliable indicator. When your team is maintaining Excel files to track things that should be in your accounting system — inventory by location, project profitability, commission calculations, customer-specific pricing — you've outgrown your tools.

Integration fatigue shows up when you're paying for and maintaining 6+ SaaS tools that all need to sync data. If you're running Xero plus Dear Inventory plus HubSpot plus a shipping tool plus an expense app plus a project tracker, the total cost and complexity often exceeds what NetSuite would cost as a unified platform.

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The cost reality

Xero costs $15-75/month. NetSuite starts at roughly $999/month for the platform plus $99-199/month per user, and implementation runs $25,000-150,000 depending on complexity. That's a significant jump, and it should be.

For a 15-person company, a realistic first-year NetSuite budget is $60,000-100,000 including implementation, with ongoing costs of $35,000-50,000/year. Compare that to Xero at $900/year plus $3,000-5,000/year in add-on tools. The cost difference is real.

The question isn't whether NetSuite costs more — it obviously does. The question is whether the operational efficiency, data accuracy, and decision-making capability justify the investment. For companies growing past $10M with increasing operational complexity, the answer is almost always yes. For a $3M service business with simple operations, it's almost always no.

We've written a detailed breakdown of NetSuite pricing if you want to understand the full cost picture.

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Planning the migration

If you've decided to make the move, resist the temptation to rush it. Xero-to-NetSuite migrations are straightforward compared to legacy ERP migrations, but they still require careful planning.

Data cleanup comes first. Your Xero data will migrate to NetSuite, and any mess you bring along will haunt you in the new system. Clean up your chart of accounts, reconcile outstanding balances, and archive inactive customers and vendors. The time you spend cleaning data before migration saves double that time in post-migration troubleshooting.

Process redesign matters more than data migration. The biggest mistake we see is companies that replicate their Xero processes in NetSuite. That's like buying a truck and only driving it to the grocery store. NetSuite can automate workflows, enforce approval processes, and eliminate manual steps that Xero forced you to do. Take the time to redesign your processes for the new platform, not just move the old ones over.

Training determines success. NetSuite is more complex than Xero. Your team needs proper training, not just a "here's your login, good luck" handoff. Budget time and money for this — it's the difference between an implementation that sticks and one that creates a year of frustration.

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The bottom line

Xero is a great product for the stage of business it serves. NetSuite is a great product for the stage that follows. The transition between them is a natural part of company growth, not a failure of either platform.

If you're currently on Xero and wondering whether it's time, the honest answer is probably "not yet, but start planning." Understanding NetSuite's capabilities and costs now — before you're in crisis mode — gives you the luxury of a thoughtful transition rather than a rushed one.

Frequently Asked Questions

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