Business Central VS Xero—Which suits your business best?

Business Central VS Xero

A growing business faces relentless challenges where tactical and strategic decisions are a constant necessity. To stay at the competitive forefront demands an agile cloud-based ERP system, one that radically transforms financial management, offering scalability, accessibility, and affordability. Microsoft Dynamics 365 Business Central and Xero are two standout options that can help businesses overcome these challenges. These platforms provide powerful tools to simplify financial management and help your business grow and thrive.

This blog compares Dynamics 365 Business Central and Xero to help you find the best fit.

Critical differences between Xero and Microsoft Dynamics 365 Business Central

Features and functionalities

Microsoft Dynamics 365 Business Central and Xero offer a range of accounting and financial management features, but they differ significantly in the depth and scope of their offerings.

Business Central stands out by providing comprehensive financial management capabilities. This includes managing the general ledger, accounts payable and receivable, budgeting, fixed assets, cash flow forecasting, and more. Additionally, it offers advanced inventory management, sales, and customer service functionalities, effectively serving as a holistic ERP solution.

In contrast, Xero primarily focuses on core accounting functions like invoicing, expense tracking, bank reconciliation, and financial reporting. It also extends its capabilities through integrations with various third-party applications.


As your business expands, it’s essential to have a system that can grow with you. As part of the expansive Dynamics 365 ecosystem, Business Central is renowned for its high scalability. Its modular approach allows you to add or remove modules as needed. While Business central primarily focuses on SMBs, it is equally favored by large enterprises.

On the other hand, Xero is also scalable, but it leans more towards small to medium-sized businesses. As businesses evolve in complexity and size, they might discover that Business Central’s comprehensive tools and customization options are better suited to their expanding needs.

Integration with other systems

Seamless integration with other business applications allows you to break down data silos and improve workflow. D365 Business central excels in this aspect as part of the Dynamics 365 suite. It seamlessly integrates with Microsoft products such as Office 365, Power BI, and Dynamics 365 Customer Engagement. This creates a unified ecosystem that streamlines data sharing and enhances the user experience.

Xero also offers integration with third-party applications, including popular CRM systems and e-commerce platforms. However, it’s worth noting that these integrations may not be as comprehensive as those within the Dynamics 365 ecosystem.

User Interface and ease of use

Dynamics 365 Business Central offers a modern and intuitive user interface that feels familiar to users already accustomed to the Microsoft ecosystem, which then significantly reduces the onboarding time and training needs for employees.

On the other hand, Xero prioritizes a user-friendly interface emphasizing simplicity and ease of navigation. It’s a good choice for businesses that need a simple and easy-to-use solution without the need for extensive ERP capabilities.

Reporting and analytics

Smart decision-making relies on accurate and insightful reporting. D365 Business Central offers flexible reporting and analytics capabilities. Users can create custom reports, analyze financial data, and gain valuable insights into their business performance. Integration with Power BI facilitates the creation of interactive dashboards for a comprehensive view of financial data.

While Xero offers standard financial reports, it may lack the depth of reporting and analytics Business Central provides. Nevertheless, Xero compensates with various third-party reporting integrations that can extend its reporting capabilities.


Business Central and Xero offer a range of pricing plans tailored to accommodate businesses of all sizes. Business Central’s pricing structure is based on the number of users and the specific modules you subscribe to.

D365 Business Central pricing consists of three main tiers.

  1. Essentials: This plan is aimed at small businesses and includes core accounting and financial management features. It costs $70 per user per month.
  2. Premium: Geared towards medium-sized businesses, this plan offers more advanced features like inventory management, sales, and customer service. It is priced at $100 per user per month.
  3. Team Members: This plan is for businesses that require additional users, although it doesn’t include any extra features. It’s a customizable option for adding more users to your existing subscriptions and comes at a rate of $8 per user per month.

Xero’s pricing model is based on the number of users and the specific plan you select, with three distinct options:

  1. Early: Tailored for businesses in their early stages, it provides essential accounting and financial management features for $5.50 per month.
  2. Growing: Suited for businesses in the growth phase, this plan offers more advanced features like inventory management and payroll for $16 per month.
  3. Established: Geared towards businesses requiring the most advanced features, including support for multiple currencies and project tracking, available for $31 per month.

Read also: Dynamics 365 Business Central vs Quick Books – All you need to know

Choose the ERP that’s right for your business

Choosing the right ERP system for your organization is a critical decision. It is important to carefully evaluate your business needs and goals to ensure you select a system that will help you grow. Your business deserves an experienced and knowledgeable ERP implementation partner who understands your needs, goals, and system environment. DemandDynamics is a trusted Microsoft partner that can help you leverage the robust features of Dynamics 365 Business Central for end-to-end business management. We offer top-notch services, including migrations, implementations, consulting, customization, and support.

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