Limitations of Xero’s Inventory System

June, 2020

What are the limitations of Xeros Inventory?

When you are growing your business, it would involve a lot of processes like managing your inventory. Managing your inventory can be made easier with software that gives you more control and can make your business more efficient and effective by making the processes simpler like your cash flow, invoice, payments, and payroll. What better way to migrate your system to a cloud-based inventory management software like Xero.

Xero gives you real-time information about your business wherever you may be. Xero will help your business grow and become profitable as it makes processes more efficient because of the better cost insights and stock control. It gives detailed reports of the quantity and on-hand stock availability accurately.

Xero is an amazing tool and can work wonders on your inventory management, however, like all great superheroes, Xero has limitations in its inventory system/module. Xero only works with a simple inventory to deliver service or project.

As you expand your business and it becomes bigger, there would be instances that you might need to add other locations of your business to address the growing needs of your clients and even suppliers.

If the nature of your business is import, export, retail, or wholesale, it will mean that you will be having more complex inventory to track which might give you issues if you are managing your inventory in Xero only without any add-ons.

Here are some of the limitations you might encounter due to some constraints in Xero:

  1. If you have several users attending to the business and they simultaneously enter an invoice, they will all get the same invoice number wherein Xero overwrites invoices made at the same time. Xero only reserves an invoice number once it is saved or saved as a draft.
  2. Another limitation in managing your inventory in Xero is it encounters performance issues due to its soft limits for a transaction volume of 1000 Sales Invoices (based on 10 line items per Invoice), 2000 Account Transactions, 1000 Purchase Bills (based on 10 line items per Bill) and 2,000 bank lines per month.
  3. You can buy and sell finished goods only. Xero cannot track raw materials or work-in-progress.
  4. You cannot operate with a negative inventory balance or record the sale of an item if you haven’t recorded its purchase.
  5. Xero recommends a ceiling of 4000 inventory items that are tracked, this is not referring to batch or serial tracking. But rather that you track Stock on Hand. More SKU’s than this and the system may start experiencing performance issues.

When you start to encounter all of these, this is the time where you might want to consider an inventory specific app that connects and easily sync with Xero to efficiently manage your inventory.

If you want to check out Xero’s official developer limits, you can check it out here.

Choosing an app is not an easy task since there are a lot of add-ons that can give you more flexibility and will give you a better experience in managing your inventory in Xero. It is up to you and your business needs to choose which among these add-ons will help your business to become more successful and profitable.

What are the Category leaders amongst the cloud-based Inventory Management Solutions?

Locate Inventory, Dear Inventory, Cin7, Tradegecko and Unleashed are some in the handful selection of software that will allow you to better manage your inventory in Xero. Each of this app has almost the same functionality with all the same objective of simply managing your inventory in Xero and it’s the little differences in software that makes a huge difference to businesses.

Dear Inventory – is a cloud-based, inventory, and order management for small and mid-sized businesses that offer a complete back end management solution with purchasing, sales, warehouse management, and light manufacturing features as well as shipping, e-commerce, and payment gateway integrations.

Tradegecko logo

Tradegecko – an inventory and order management software for multichannel brands,
high growth eCommerce, and wholesale. It enables automation for omnichannel operations,
improving efficiency, and increasing profitability. Includes integration with Shopify, Xero,
Quickbooks, and more.


Cin7- makes complex retail and wholesale simple, with all-in-one inventory management POS,
Direct EDI Integration, and 3PL integration.

Unleashed logo

Unleashed – a web-based system designed for businesses to manage their stock
levels and inventory.

Comparisons Table

FeaturesDear SystemsCin7TradegeckoUnleashed
iPhone App
Android App
Support for Xero Tracking CategoriesHave some supportHave some
Two-Way Xero Payment Sync
Purchase Order Sync
Supplier Invoice Sync
Deposit Paid to Supplier
Customer Credit Hold
Consolidation Options for
High Transaction Volumes
Document Links
Mapping to Xero Tracking Categories

These details are a brief overview of the add-ons you can use to help manage your inventory in Xero. To know more on which add-on is more suitable for you. You can contact us, and we will be glad to assist you on your concerns.

Are you ready to bring that perfect system in your head to life?

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