Xero Inventory Software vs Xero with Inventory Add-On: Choosing the Right Solution for Your Business

6 minute read

In today’s fast-paced business environment, managing inventory efficiently is crucial for the success of any company. To streamline and optimise inventory management processes, businesses often turn to specialised software solutions. Two popular options are Xero Inventory Software and Inventory Management Systems. This article aims to compare and contrast these two options, highlighting their features, benefits, […]

Published on: Jun 12, 2023

Datapel is a leading inventory management system trusted by thousands of businesses for critical functions & processes.

In today’s fast-paced business environment, managing inventory efficiently is crucial for the success of any company. To streamline and optimise inventory management processes, businesses often turn to specialised software solutions. Two popular options are Xero Inventory Software and Inventory Management Systems. This article aims to compare and contrast these two options, highlighting their features, benefits, and potential drawbacks.

1. Overview of Xero Inventory Software

Xero Inventory Software is a comprehensive inventory management solution offered by Xero, a leading provider of cloud-based accounting software. It is designed to help businesses efficiently track, manage, and optimise their inventory processes. Xero Inventory Software offers a range of features such as real-time inventory tracking, purchase order management, stock level alerts, and integration with Xero’s accounting tools.

2. Overview of Inventory Management System

Inventory Management Systems, on the other hand, are third-party software solutions specifically focused on inventory management. These systems are often designed to work seamlessly with various accounting systems, including popular ones like MYOB and Xero. They provide businesses with tools to handle inventory control, order management, supplier tracking, and more.

3. Key Features of Xero Inventory Software

Xero Inventory Software offers several key features that make it a popular choice for businesses:

  • Real-time inventory tracking: Xero Inventory Software provides up-to-date visibility into inventory levels, allowing businesses to avoid stockouts and overstocking.
  • Purchase order management: The software enables businesses to create and track purchase orders, ensuring smooth procurement processes.
  • Stock level alerts: Xero Inventory Software notifies users when inventory levels reach a specific threshold, facilitating timely reordering.
  • Integration with Xero’s accounting tools: Xero’s inventory solution seamlessly integrates with its accounting software, enabling streamlined financial management.

4. Key Features of Inventory Management System

xero inventory software

The primary purpose of inventory management software is to streamline and automate your processes, leading to enhanced accuracy in tracking and managing stock levels.

Inventory Management Systems offer a wide range of features tailored to the specific needs of inventory management:

  • Order management: These systems streamline the entire order fulfilment process, from order creation to shipment tracking.
  • Supplier tracking: Inventory Management Systems provide tools to manage supplier information, track deliveries, and maintain strong relationships with suppliers.
  • Reporting and analytics: These systems offer advanced reporting capabilities, allowing businesses to gain insights into inventory performance, sales trends, and more.
  • Barcode scanning: Many inventory management systems support barcode scanning, making it easier to update inventory records accurately and quickly.
  • Integrations: These systems integrate with your accounting software, eCommerce platforms and transport management system for a seamless order fulfilment experience.

5. Benefits of Xero Inventory Software

Xero Inventory Software brings several benefits to businesses:

  • Seamless integration: Since Xero’s inventory solution is part of its larger accounting ecosystem, data flows seamlessly between inventory and financial records, eliminating the need for manual data entry.
  • Scalability: Xero Inventory Software can accommodate the needs of growing businesses, allowing them to scale their inventory management processes as they expand but only up to a certain point. 
  • Accessibility: Being a cloud-based solution, Xero Inventory Software provides users with the flexibility to access their inventory data from anywhere and at any time.

6. Benefits of Inventory Management Systems

Inventory Management Systems offer their own set of advantages:

  • Compatibility with multiple accounting systems: These systems are often compatible with different accounting software, providing businesses with the flexibility to choose the accounting platform that best suits their needs.
  • Customisability: Inventory Management Systems usually offer customisable features and workflows, allowing businesses to tailor the software to their specific requirements.
  • Specialised functionality: Since inventory management is the primary focus of these systems, they often provide more advanced and specialised features compared to broader accounting software solutions.

7. Drawbacks of Xero Inventory Software

xero inventory software manufacturing

Businesses in food production or manufacturing are more likely to require sophisticated inventory management software.

While Xero Inventory Software has its merits, there are a few potential drawbacks to consider:

  • Complexity: Some users may find Xero Inventory Software to be complex, especially if they are not already familiar with Xero’s accounting tools.
  • Limited customisation: Compared to specialised inventory management systems, Xero’s inventory solution may offer fewer customisation options for certain businesses with unique needs.
  • Additional cost: Xero Inventory Software is a separate subscription from Xero’s accounting software, which means additional costs for businesses already using Xero’s accounting tools.

8. Drawbacks of Inventory Management Systems

Inventory Management Systems also have some potential drawbacks:

  • Integration challenges: While these systems often offer integration with various accounting systems, the integration process can sometimes be complex and require additional configuration.
  • Learning curve: Switching to a new inventory management system may require time and effort for users to become familiar with the new software and its features.
  • Reliance on third-party vendors: Using third-party systems means relying on the system developers for support and updates, which may not always align with a business’s specific needs and priorities.

9. Choosing the Right Solution

xero inventory software choosing

When choosing between Xero Inventory Software and Inventory Management Systems, businesses should consider their specific requirements, budget, and existing software ecosystem. Assessing the key features, benefits, and drawbacks of each option is crucial in making an informed decision. Other factors to consider include:

Integration with Other Systems

Integration with existing systems, such as accounting software and e-commerce platforms, is an important aspect to consider. Businesses should ensure that their chosen solution seamlessly integrates with the other tools they use to avoid data silos and manual data entry.


Pricing is another vital factor in the decision-making process. Xero Inventory Software and Inventory Management Systems have different pricing models, including subscription-based plans and pricing tiers based on the number of users or features required. Businesses should evaluate the cost-effectiveness of each option in relation to their budget and expected return on investment.

Pricing of Inventory Management Systems like Datapel is usually user based and highly configurable according to your business requirements.

Customer Support and Training

Reliable customer support and training resources are crucial, especially during the implementation and onboarding phases. Before making a decision, you should assess the level of customer support offered by the software provider and determine whether it aligns with their expectations and requirements.

Reporting and Analytics

Xero Inventory Software provides basic inventory reporting capabilities within the Xero platform. Users can generate reports on stock levels, sales orders, and purchase orders to gain insights into inventory performance.

In contrast, Xero with an Inventory Add-On offers more extensive reporting and analytics features, allowing businesses to dive deeper into inventory data. Advanced analytics tools provide detailed metrics, demand forecasting, cost analysis, and other valuable insights for making informed inventory decisions.

Datapel Xero Inventory Add-on

Discover the power of Datapel, the go-to inventory solution for businesses leveraging Xero for their bookkeeping needs.

Experience unrivalled customer support and a comprehensive range of functionalities seamlessly integrated with Xero, simplifying data centralisation like never before.

Say goodbye to manual inventory management processes. With Datapel, manufacturers and producers can automate tedious tasks involved in stock management, from raw materials to works-in-progress to finished products.

xero inventory software add on

Unlock the following benefits with Datapel Xero inventory software:

  • Unparalleled visibility over products: Gain complete traceability across the entire inventory life cycle with advanced batch and serial number tracking.
  • Seamless integrations: Expand beyond Xero and effortlessly connect Datapel to your shipping system and e-commerce channels, ensuring accurate data synchronisation across your entire business.
  • Empowering upgrades: Elevate your operations with ease. Datapel offers powerful in-app upgrades, from your personalised B2B store to robust business intelligence reporting and precise customer demand forecasting. Streamline your workflow by reducing the need for multiple tools.

Ready to revolutionise your inventory management? Visit our product page to explore the exceptional features of Datapel.


In conclusion, both Xero Inventory Software and Inventory Management Systems offer valuable features and benefits for businesses seeking to streamline their inventory management processes. The choice between these options depends on factors such as integration needs, customisation requirements, budget constraints, and the specific needs of the business. By carefully evaluating these factors, businesses can select the solution that best aligns with their objectives and contributes to their overall success.

Frequently Asked Questions:

1. Can Xero Inventory Software integrate with other accounting software? 

Yes, Xero Inventory Software integrates seamlessly with Xero’s accounting software. However, integration with other accounting software may require additional configuration or the use of third-party tools.

2. Can Inventory Management Systems handle multiple warehouses? 

Yes, many Inventory Management Systems support multi-warehouse management, allowing businesses to track inventory across different locations.

3. Is Xero Inventory Software suitable for small businesses? 

Yes, Xero Inventory Software is suitable for small businesses. However, as soon as you need to track higher quantities or your business grows more complex, you’ll probably out-grow the platform.

4. Can Inventory Management Systems generate custom reports? 

Yes, Inventory Management Systems provide advanced reporting capabilities, allowing businesses to generate custom reports based on specific metrics and parameters. With Datapel, you can keep your entire team informed right from their inbox or browser, and use reliable business intelligence data for future forecasts with confidence. 

5. Do Inventory Management Systems support barcode scanning? 

Yes, many Inventory Management Systems support barcode scanning, which helps streamline the inventory tracking and updating process. Datapel allows you to Introduce barcoding at your pace with our best-practice scan, pick, pack and ship workflows. Scan inners, outers, variants, supplier codes or your own internal product codes with our barcode scanning system.




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