Xero expands AI, payroll and payments tools for businesses

Xero has introduced new payroll, payments and AI features for small businesses and accountants, bringing more financial tasks into its platform.

The updates cover bookkeeping, expense management, cash flow and month-end work, alongside broader integrations with Microsoft 365, Claude and ChatGPT. Xero is positioning the changes as part of a wider effort to reduce the number of separate tools used by small businesses and accounting practices.

At the centre of the launch is JAX, Xero's AI platform, designed to simplify financial operations from document collection through to reconciliation and reporting. The system works within Xero's ledger and updates records in real time as tasks are completed.

JAX can identify unreconciled items, duplicate entries, missing documents and anomalies, then help users resolve them. Once records pass a health check, Xero Partner Hub can highlight issues such as cash flow patterns or unusual profit and loss movements across a practice's clients.

Another addition is Smart Document Capture, which reads source documents and extracts data directly into Xero, removing the need to export or sync information with a separate application.

Auto Bank Reconciliation is also being expanded. The tool automates matching between transactions and bank feeds, explains each match and flags exceptions that need human review.

According to Xero, accountants and bookkeepers using the feature save about 50% of their monthly bank reconciliation time. More than 100 million transactions have been auto-reconciled since the tool was launched.

Xero is also adding document request functions in Partner Hub. The system can ask clients for documents, send reminders, respond to clarifications and match files with transactions, while still requiring customer approval at each stage.

Cash flow management is another focus. Xero said JAX will identify possible cash flow shortfalls before they emerge and help businesses create a plan, while also supporting payment follow-ups and bill protection tools intended to improve oversight of money coming in and going out.

Diya Jolly, Chief Product and Technology Officer at Xero, set out the company's reasoning for the move.

"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," Jolly said.

"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."

Practise tools

Xero Partner Hub is being developed to show live book health, work status and month-end readiness in one view across a practice's client base. That would give firms a consolidated picture of progress and outstanding work instead of requiring staff to switch between separate workflows.

Xero also outlined XeroForce, a natural-language AI agent builder based on Xero OS. It now includes a month-end agent that can handle tasks ranging from reviewing reconciliation status to preparing manual journal entries for prepayments and amortisation before presenting its actions for approval, according to the company.

Integration push

Outside its own software, Xero is widening access to live financial data through third-party tools. Its Microsoft 365 Copilot integration is being extended into Excel, Word, PowerPoint and Copilot Cowork, allowing financial data from Xero to appear in charts, tables and documents.

Xero is also preparing a Xero OpenAI connector for ChatGPT across Chat, Work and Codex. Users will soon be able to switch between client organisations while using these integrations, a change aimed at making it easier for advisers to work across multiple accounts.

Xero's app ecosystem now includes more than 1,000 certified applications. The company also reported a fourfold increase in new app registrations since 2025, with custom apps accounting for about 20% of connections into the ecosystem.

Usage of Xero's MCP Server has risen tenfold between December 2025 and May 2026, according to the company, supporting more than 1 million API calls as of June 2026. The figures point to rising demand from software developers and firms seeking to build more tailored workflows around Xero's accounting data.

Xero said the wider AI push is built on what it calls Accountable Intelligence within Xero OS, drawing on two decades of proprietary data and infrastructure used by 5 million customers globally.