What Is Xero Accounting Software and How It Works with ProSpend

TL;DR

Xero accounting software is a cloud-based platform widely used across Australia and New Zealand for core accounting, invoicing and reporting. When integrated with ProSpend, Xero is extended with advanced accounts payable automation, purchase orders, expense management and real-time budget control — giving finance teams control over spend before it reaches the ledger.

See how ProSpend works with Xero

What Is Xero Accounting Software? 

Xero is a cloud-based accounting platform designed for small and mid-market businesses. Originally founded in New Zealand, Xero is now used by thousands of organisations across Australia and the broader ANZ region.

At its core, Xero provides:

• A general ledger for financial records
• Real-time cash flow and bank visibility
• Invoicing and billing
• Bank reconciliation
• GST, BAS and financial reporting

Xero’s strength lies in its simplicity and accessibility. Finance teams can log in from anywhere, see up-to-date financials, and manage day-to-day accounting without relying on desktop software or manual uploads.

In short, Xero is where your financial data is recorded and reported.

Why Xero Is So Widely Used in ANZ

Xero has become a default accounting platform for ANZ businesses because it:

• Is cloud-based and easy to use
• Supports Australian GST and BAS requirements
• Integrates with a large ecosystem of third-party apps
• Scales well from small businesses into the mid-market

For many CFOs and Finance Managers, Xero provides a reliable accounting backbone. However, as organisations grow, new challenges emerge, particularly around accounts payable, expenses and spend control.

Where Xero Starts to Struggle as Organisations Scale

Xero is excellent at recording spend after it happens. It is not designed to control spend before it occurs.

As invoice volumes, headcount and entities increase, finance teams often encounter:

• Manual invoice entry and PDF handling
• Email-based approval chains with no audit trail
• Limited protection against duplicate invoices or fraud
• Separate tools for expenses, cards and purchase orders
• No real-time visibility of committed spend against budgets

These gaps aren’t flaws — they’re simply outside Xero’s scope as an accounting system.

This is exactly why many ANZ organisations extend Xero with ProSpend.

How ProSpend Works with Xero

ProSpend integrates directly with Xero and acts as a pre-ledger spend control layer.

For Xero users, ProSpend manages spend before it reaches the ledger — ensuring only approved, compliant transactions are posted to Xero.

Xero remains your system of record. ProSpend manages the operational spend workflow.

How the Xero + ProSpend Integration Works

Step 1: Sync Your Financial Structure from Xero

ProSpend securely syncs:

• Chart of accounts
• GST and tax codes
• Tracking categories (cost centres, departments, projects)

This ensures anything approved in ProSpend is coded correctly for Xero from day one.

Step 2: Capture All Business Spend in One Place

Spend enters ProSpend through:

• Supplier invoices (email, upload or eInvoicing)
• Employee expense claims (mobile or web)
• Corporate and virtual card transactions
• Purchase requests and purchase orders

OCR automatically extracts invoice and receipt data, removing manual data entry.

Step 3: Apply Approvals, Budgets and Controls

Before anything touches Xero, ProSpend enforces:

• Multi-level approval workflows
• Real-time budget validation
• Duplicate invoice detection
• PO matching (2-way and 3-way)
• Policy rules and GST logic

This is where risk, errors and overspend are stopped, before payment..

Step 4: Export Clean, Approved Data to Xero

Only once approved does ProSpend export transactions to Xero as draft bills, complete with:

• Correct GL coding
• GST treatment
• Attachments and audit trails
• Direct links back to ProSpend for audit review

Xero receives clean, validated data ready for payment and reporting.

What Xero Gains When Integrated with ProSpend

With ProSpend in place, Xero users gain:

• Accounts Payable Automation with OCR and approvals
• Purchase Orders (POs) with pre-spend budget control
• Expense Management with mobile receipt capture
• Corporate & Virtual Cards with real-time feeds
• Budget Visibility across committed and actual spend
• Audit Trails that satisfy internal and external auditors

This transforms Xero from a recording system into part of a controlled, end-to-end spend process.

Example — Breakthrough Accounting (Xero + ProSpend)

Breakthrough Accounting is a Central Coast–based accounting firm specialising in Not-for-Profit accounting, business accounting and virtual CFO services.

Before ProSpend, their internal AP processes relied on paper invoices, manual approvals and disconnected systems — creating delays, admin overhead and audit risk.

After integrating ProSpend with Xero:

• Paper processes were eliminated
• OCR automated invoice capture and coding
• Multi-level approvals enforced before posting to Xero
• Duplicate invoices detected automatically
• Multiple entities managed from one platform
• Auditors accessed documents remotely

“By automating our accounts payable, we gained back up to 85% of the time previously spent on manual, tedious processes.”

Read the full Breakthrough Accounting customer story

Benefits for Australian and New Zealand Finance Teams

Using ProSpend with Xero enables organisations to:

• Reduce manual AP effort by up to 80–85%
• Prevent duplicate or unauthorised payments
• Gain real-time visibility of committed vs actual spend
• Improve GST accuracy and audit readiness
• Remove approval bottlenecks and paper handling
• Scale spend control as the business grows

Integrations and Implementation

ProSpend integrates with Xero, MYOB AccountRight, MYOB Acumatica, NetSuite and Business Central.

Typical implementation timeframe: Implementation timelines vary by module. Most mid-market organisations can be up and running within 2 weeks, though this depends on factors like entity count, approval workflow complexity, PO adoption scope, and ERP integration requirements.

FAQs

How does ProSpend integrate with Xero?
ProSpend connects via secure APIs, syncing accounts, tax codes and tracking categories, and exporting approved transactions back to Xero as draft bills.

Does ProSpend replace Xero?
No. Xero remains your accounting system and general ledger. ProSpend controls spend before it reaches Xero.

Can ProSpend support multiple Xero organisations?
Yes. ProSpend is designed for multi-entity environments and can connect to multiple Xero files in one platform.

How is GST handled?
GST logic is applied in ProSpend before export, ensuring accurate BAS reporting in Xero.

What types of spend can ProSpend manage?
ProSpend syncs with Xero, and manages supplier invoices, purchase orders, employee expenses, corporate and virtual cards, and travel-related spend.

Is ProSpend suitable for mid-market organisations?
Yes. ProSpend is built specifically for ANZ mid-market complexity and scale.

Conclusion

Xero provides a strong accounting foundation for Australian and New Zealand organisations.

By integrating ProSpend, ANZ finance teams gain the controls Xero isn’t designed to provide, without changing their ledger. The result is faster processing, lower risk and real-time visibility of business spend.

Book a ProSpend demo to see how Xero spend control should work.