# Xero for Charities — What It Does Well and Where It Falls Short

Xero is one of the most popular accounting software packages used by small UK charities. It is cloud-based, well-designed, and genuinely good at bookkeeping for small businesses. The problem is that charities are not small businesses.

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## What Xero Does Well for Charities

Cloud-based accessibility, bank feeds, invoice and purchase management, multi-user access, and clean reporting. For charities with simple fund structures, Xero works adequately.

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## The Two Tracking Category Limit

This is Xero's most significant limitation for charity finance. Xero allows only two tracking categories with a maximum of 100 options each.

Most small charities have more than two restricted funds — each grant from a different funder creates a separate restricted fund. The result: restricted fund tracking happens in a parallel Excel spreadsheet outside Xero entirely.

When the spreadsheet and Xero get out of sync — which happens — the charity's reported fund positions are wrong. This can lead to restricted funds being overspent, underspent, or incorrectly reported to funders.

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## No SORP-Compliant Output

Xero produces standard profit and loss reports — not a Statement of Financial Activities. Every month, charity finance officers using Xero must export the trial balance and manually reformat it into a SORP-compliant SOFA. This takes hours and is repeated twelve times a year.

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## How Fyntel Works Alongside Xero

Fyntel does not replace Xero. Finance officers continue using Xero for bookkeeping. At month end, they export the trial balance and upload it to Fyntel. Fyntel produces the SORP-compliant management accounts automatically — without the manual reformatting that currently bridges the gap.

Fyntel is currently accepting waitlist registrations at [fyntel.co.uk](http://fyntel.co.uk).

*Fyntel is a SORP-compliant management accounts and reporting tool for small UK charities. Join the waitlist at* [*fyntel.co.uk*](http://fyntel.co.uk)*.*