Xero expands AI tools for accountants & small firms

Xero has announced new artificial intelligence features for small businesses and accountants, centred on JAX, its agentic platform.

The update includes new tools in Xero Partner Hub, integrations with Microsoft 365, Claude and ChatGPT, and payments and payroll additions for US customers.

The accounting software group is expanding its use of AI across bookkeeping, document handling, reconciliation and cash flow management, as software providers compete to embed generative tools into finance workflows. The latest additions are designed to reduce manual work while keeping users in control of approvals and decisions.

At the centre of the update is an expanded version of Xero Partner Hub, which gives accounting and bookkeeping practices a single view of client book health, work status and month-end readiness. JAX identifies unreconciled items, duplicate entries, missing documents and anomalies, then helps users resolve them, with ledger data updating in real time.

Once records pass a health check, the platform highlights issues worth discussing with clients, including cash flow patterns and unusual profit and loss movements. That puts the product more directly into the workflow of accountants, who increasingly want software to surface exceptions rather than require manual review of every transaction.

Workflow tools

Xero is also adding Smart Document Capture, which reads source documents and extracts data directly into the platform. Built natively inside Xero, the tool removes the need to move documents through third-party apps before they appear in the books.

Another change affects bank reconciliation, one of the most labour-intensive parts of bookkeeping. Xero's Auto Bank Reconciliation feature matches high-confidence transactions to bank feeds automatically in real time, explains why each match was made, and flags exceptions for human review.

Accountants and bookkeepers using the feature save about 50% of their monthly bank reconciliation time, according to Xero. More than 100 million transactions have been auto-reconciled since launch, suggesting the tool is already being used at significant scale.

For accounting practices, document collection is also being pulled into the same workflow. Document Requests in Partner Hub asks clients for missing paperwork, sends reminders, answers clarifications and matches documents with transactions, with customers approving each step.

Cash flow is another focus. JAX identifies potential shortfalls before they emerge and helps businesses create plans to manage them. The platform also supports payment follow-ups and bill protection features aimed at improving oversight of incoming and outgoing money.

Xero framed the update around time pressure on small firms and their advisers.

"Every hour a small business owner or accountant spends chasing paperwork or guessing what's next is an hour they're not spending on their customers and growth," said Diya Jolly, Chief Product and Technology Officer at Xero. "JAX changes that, giving customers a trusted system of action with real-time visibility and forward-looking insight, without asking them to give up control or compromise on accuracy. That's Accountable Intelligence and the standard we believe AI should deliver: less time spent on the busywork of running a business, and more time spent building one."

External reach

Beyond Xero's own software, the company is extending access to live financial data through third-party products. Its Microsoft 365 Copilot integration, announced earlier, is expanding into Excel, Word, PowerPoint and Copilot Cowork, allowing users to pull Xero data into charts, tables and documents.

Xero also said a connector for OpenAI's ChatGPT will be made available across Chat, Work and Codex, allowing customers to use Xero data inside those products. Users will also be able to switch between client organisations while working across the integrations, a feature likely to matter most for accountancy practices handling multiple businesses.

Thousands of customers are already using Xero's Claude integration each day, according to the company. The move underlines how accounting software vendors are trying to make their data accessible inside the broader workplace tools many users already rely on.

Developer push

Xero is also trying to build a larger software ecosystem around its platform. It said there are now more than 1,000 certified apps in the Xero App Store and that new app registrations have risen fourfold since 2025, as coding tools make it easier to create software from natural language prompts.

According to Xero, about 20% of connections into its ecosystem are now custom apps. It also said usage of its MCP Server grew tenfold from December 2025 to May 2026 and was handling more than 1 million API calls as of June 2026.

Another product, XeroForce, is being positioned as a custom AI agent builder for practices and businesses. It now includes a month-end agent designed to automate recurring accounting work across clients, from reviewing reconciliation status to preparing manual journal entries for prepayments and amortisation, before presenting a full record of its actions for review and acceptance.

The broader message from Xero is that AI in accounting is moving beyond chat interfaces and into task execution inside ledgers, documents and reconciliations. The company said its current AI approach sits on 20 years of proprietary data and infrastructure used by 5 million customers worldwide.