Odoo vs Xero - accounting software comparison guide for the UK

To compare accounting software effectively, you need a common benchmark

Vendors bundle features differently. 

Some include core functions like SEPA or deferred revenue. Others split them into add-ons or leave them out entirely.

This comparison looks at the features UK businesses typically rely on once accounting becomes operationally critical. Here’s what that typically includes:

• Multi-currency support: Needed for working with international suppliers or clients.
• SEPA payment formats: Required for smooth cross-border EU payments.
• Deferred revenue handling: Critical for subscription or prepaid business models
  
• Automation: Reduces manual effort and error-prone data entry
• Field and screen-level access: Important for managing financial roles and security
  
• Multi-company consolidation: Needed to close books across multiple entities
  
• Custom reports and KPIs: Useful for investor reporting, board packs, and forecasts
  
• Smart reconciliation: Saves time with matching logic and AI rules
  
• UK/EU localisation: Ensures compliance with VAT, MTD, and audit standards

We compared:

• Odoo Enterprise: full accounting with automation, SEPA, and reporting tools
• Xero Standard: core accounting with invoicing and bank feeds

These reflect the plans most teams use once they’ve outgrown lightweight tools.

UK tax compliance starts with HMRC recognition and MTD

HMRC (His Majesty’s Revenue and Customs) is the UK government department responsible for collecting taxes and enforcing compliance.

Odoo is officially recognised by HMRC as compliant with the UK’s Making Tax Digital (MTD) requirements, the government’s initiative to digitalise VAT returns and accounting records. 

That means UK businesses can use Odoo to:

• Submit digital VAT returns
• Maintain digital VAT records
• Stay MTD-compliant without third-party plugins

Xero has supported MTD since its introduction and also meets all HMRC-recognised requirements. Both tools meet the digital VAT compliance requirements for the UK. Odoo’s official recognition confirms it's a valid MTD alternative to more established players like Xero.

Odoo vs Xero - key accounting features

Before diving into specifics, here’s a high-level look at the accounting features UK businesses typically rely on, from consolidation and access rights to automation, reporting, and localisation.

*Optical character recognition

**Monthly recurring revenue

In a nutshell:

Xero handles the basics well with clean invoicing, solid UK compliance, and easy bank feeds. 

While Xero may be ideal for SMEs,  it cannot handle complex reporting and consolidation breakdown that are often needed in midsize to big corporations.

Odoo includes features growing teams often need, like SEPA support, multi-company structure, access controls, or automation logic. It also has built-in AI, deeper reporting, and full localisation for UK and EU entities out of the box.

Customer invoicing & accounts receivable

We looked at how both tools handle recurring invoices, subscription billing, SEPA, and customer communication.

In a nutshell:

Odoo is better for businesses with complex billing cycles or subscription models. Xero works well for standard recurring invoicing, but lacks deep automation or EU features.

Vendor bills, AP automation & SEPA support

This section compares how Odoo and Xero manage vendor payments, OCR, and approval workflows.

In a nutshell:

Odoo helps you automate vendor processing with OCR, approvals, and payment flows. Xero handles basic expenses and bank transfers but not SEPA or advanced AP logic.

Bank feeds & reconciliation

From bank formats to matching logic, here’s how both systems handle reconciliation at scale.

In a nutshell:

Xero makes reconciliation fast for standard feeds. Odoo supports more formats and adds matching logic, AI, and automation triggers.

Reporting & dashboards

We compared what reporting options are available out of the box and how customisable they are for growing finance teams.

In a nutshell:

 Xero covers the basics with clean visuals. Odoo offers multi-dimensional analysis, pivots, and deeper compliance tools for UK/EU audits.

Automation & AI

These features show what each tool can automate and how far built-in AI actually goes.

*Cost of goods sold

In a nutshell:

Odoo leads on automation with native AI logic and document scanning. Xero is rule-based only, with no built-in AI features.

Platform scope, pricing & deployment options

Here’s what you get with each platform in terms of pricing, user limits, and deployment flexibility.

In a nutshell:

Odoo gives you a complete ERP-grade suite with AI and custom flows. Xero is leaner and ideal for single-entity, SaaS-only use cases.

When to choose Odoo and when to choose Xero

The bottom line is that the right tool depends on how far your accounting needs to go and how closely it should connect with the rest of your business.