xero buys melio for $3 billion in race for ‘the active gl’

cornerstone report: the new ai-powered war for the general ledger super-app

by 卡塔尔世界杯常规比赛时间 research
cornerstone report

xero is betting up to $3 billion that the future of accounting is more than recordkeeping.

the new zealand-based cloud accounting firm is making its largest-ever acquisition: new york and tel aviv-based payments platform melio. the all-cash deal, valued at $2.5 billion with a potential $500 million earn-out, aims to supercharge xero’s push into the u.s. market by embedding b2b bill pay directly into its general ledger software. xero is raising $1.23 billion in equity to help fund the acquisition.

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by acquiring melio, xero is accelerating a profound evolution in the general ledger’s role—from static bookkeeper to real-time financial operator. for accounting firms and their small business clients, the shift could mean fewer keystrokes, faster closes, and new frontiers for advisory services. routine work—from data entry to expense classification—is increasingly automated. this frees up time but also demands new skills.

the xero-melio tie-up also reflects a larger movement among accounting platforms to build what analysts call “active gls” — systems that don’t just record transactions but initiate them, verify them, and optimize them.

integrations like xero and melio, by pairing accounting and payment systems, are becoming a standard expectation, reshaping the financial management landscape for smbs and their accountants. s providers are positioning themselves as central hubs for financial management, offering end-to-end solutions that cater to the diverse needs of modern businesses.

the general ledger software market is being redrawn, and the battle lines are clear. traditional giants are modernizing fast, digital-native challengers are scaling rapidly, and a wave of ai-first upstarts is rewriting the rules altogether. the xero-melio deal doesn’t just sharpen the competitive edge — it heightens the urgency.

	platform	real-time processing	multi-entity support	ai integration	cash & accrual accounting	target segment(s)
	quickbooks online	partial	no	moderate	both	smbs, accountants
	xero	yes	yes (via apps)	moderate	both	smbs, accountants
	digits	yes	yes	high	both	startups, smbs
	light	yes	yes	high	accrual	multinationals, enterprises
	softledger	yes	yes	moderate	both	mid-market, crypto, enterprises
	puzzle.io	yes	yes	high	both	startups, saas companies
	rillet	yes	yes	high	both	mid-market, enterprises
	zoho books	yes	limited	moderate	both	smbs, global businesses
	sage intacct	yes	yes	moderate	both	mid-market, enterprises
	netsuite	yes	yes	moderate	both	mid-market, enterprises

 

key insights:
• real-time processing: platforms like xero, digits, light, softledger, puzzle.io, and rillet offer real-time data processing, providing immediate financial insights.
• multi-entity support: softledger, light, rillet, sage intacct, and netsuite provide robust native multi-entity capabilities, essential for businesses operating across multiple subsidiaries or regions. xero offers this functionality through third-party integrations such as fathom and spotlight..
• ai integration: digits, light, puzzle.io, and rillet stand out with advanced ai features, including automated bookkeeping, predictive analytics, and natural language processing, enhancing efficiency and decision-making.
• cash & accrual accounting: most platforms support both accounting methods, with light focusing primarily on accrual accounting, catering to enterprises with complex financial structures.(tryfondo.com)
• target segments: while quickbooks online and zoho books are tailored for small to medium-sized businesses, platforms like softledger, sage intacct, netsuite, light, and rillet are designed to meet the needs of mid-market to enterprise-level organizations.

one trend unites the tiers: the race to embed intelligence, connectivity, and real-time responsiveness into the general ledger. in this new landscape, passive books are out, and operational platforms are in.

the general ledger, once the quiet ledger of truth, is now the software battleground for control of the small-business back office. as the xero-melio merger reshapes competitive dynamics, industry watchers ask: who moves next?

all eyes are on intuit. the quickbooks parent is sunsetting its desktop products — with sales ending july 2024 and support for 2022 versions ending in may 2025 — in a decisive push toward the cloud. analysts expect intuit to organize its ai stack or pursue acquisitions to shore up automation and real-time capabilities.

private equity is also entering the picture. crete professionals alliance, launched in 2025 with backing from thrive capital, is building a roll-up of accounting firms armed with openai tools and more than $500 million in committed capital. crete’s bet is that ai-powered firms operating on a unified tech stack can scale advisory services more efficiently than traditional practices.

meanwhile, the startup class is consolidating. digits’ acquisition of basis in 2024 strengthened its forecasting and planning tools, positioning it as a credible challenger in the mid-market. puzzle.io, with its focus on founder-friendly reporting, is rumored to be in acquisition talks with fintech platforms seeking vertical integration.

light, the copenhagen-based ai ledger startup, is expanding aggressively after its €12.1 million atomico-led seed round. its real-time reporting and nlp interface are aimed squarely at global firms tired of clunky multi-entity software.

at the same time, new entrants keep emerging. dualentry, rillet, and numeral are all building gl infrastructure with ai at the core, and are positioning themselves as api-first, developer-friendly, and automation-heavy.

for accounting firms, the question is no longer whether to adopt ai-native tools, but which stack to bet on. will firms stay with incumbents like quickbooks and xero as they modernize? or will they pivot to challengers built natively for the era of real-time advisory?

quotes from real-world users and executives

softledger: “the key point when looking for a new system was our multi-currency situation. we found some systems that were not very good at that, and then we found softledger, and softledger matched exactly with our needs.” — ronaldo bezerra, financial director, aag management co.

digits: “digits saves us 6 hours per client monthly when preparing and analyzing reports. plus — we can pass far deeper insights to our clients on their financials, enabling them to make better decisions.” — mark reininga, co-founder, between names

xero + melio: “this two-way sync with xero will help small business customers better understand how much money is going in and out of their accounts at a time when it is critical to keep a close eye on cash flow.” — ilan atias, co-founder and cto, melio

freshbooks: “freshbooks is incredibly user-friendly — perfect for those without an accounting background.” — verified small business user, g2

the next 18 months will be decisive. the race isn’t just to close the books — it’s to control the interface through which small businesses see, understand, and act on their financial lives.

the xero move only escalates the competition among accounting software providers to dominate the back office — and front office — of small and midsize businesses. it places xero in more direct rivalry with intuit’s quickbooks and startup disruptors like digits and light, each racing to create what some call the “financial operating system” for the next generation of smbs.

xero plans to build up melio’s payments product and leverage xero’s go-to-market expertise to accelerate growth in melio and xero in the us, where xero growth has stalled. “we will embed melio’s features into xero’s core platform,” says xero ceo sukhinder singh cassidy, in her biggest deal since being named ceo in 2022, cassidy’s career highlights stretch to 1999 as one of the five partners who launched what is now yodlee.

“this acquisition solves a critical customer need in the u.s., uniting accounting and payments in one platform,” xero says. executives frame the deal as a step toward transforming the general ledger from a passive data archive into a real-time command center for small business finances.

melio, founded in 2018, has grown rapidly in the u.s. by enabling small businesses to pay and receive bills digitally, often embedded within platforms like shopify and quickbooks. by 2022, melio was already handling over $4 billion in annual payment volume with over 100,000 businesses on its platform. filings for the 12 months ended march 2025 show melio processed more than $30 billion in payment volume for about 80,000 customers

“this two-way sync with xero will help small business customers better understand how much money is going in and out of their accounts at a time when it is critical to keep a close eye on cash flow,” says melio co-founder and cto ilan atias.

xero’s u.s. expansion ambitions are longstanding. estimates put the company at over 3.95 million subscribers globally, but the u.s. accounts for just a fraction. executives project that integrating melio could help more than double xero’s u.s. revenue by 2028 compared to 2025.

industry analysts say the deal is a strategic milestone. they say it signals a clear shift in what accounting platforms are becoming. it’s not just about closing the books anymore. it’s about orchestrating real-time cash flow.

the strategic shift: why this deal matters

traditionally, general ledger systems have served as historical records, essential but inert. the xero-melio combination changes that by embedding b2b payments directly into the accounting stack. users can now issue payments, schedule bills, and reconcile transactions without leaving the gl environment. this move positions xero not just as a ledger, but as a hub for managing the financial heartbeat of a small business.

melio’s platform — designed with a user-friendly interface and tailored for the nuances of smb workflows — fits snugly into that strategy. its payment capabilities, including ach, card-to-check, and vendor management, are already integrated with platforms like quickbooks and shopify. now, they will sit natively inside xero.

for cpas and accounting firms, this promises tighter integration between bookkeeping and cash flow management, and new opportunities to advise clients on liquidity, vendor strategy, and payment timing.

timeline: key milestones in gl software evolution

2001: intuit launches quickbooks online.

2006: oracle acquires netsuite.

2007: xero is founded in new zealand.

2010–2015: wave, zoho books, and freshbooks emerge to serve microbusinesses.

2018: melio launches in the u.s., targeting smb b2b payments.

2020–2024: rise of ai-native gl startups like digits, puzzle.io, and light.

2021: intuit acquires mailchimp for $12 billion.

2024: digits acquires basis finance; light raises €12.1m from atomico.

2025: xero acquires melio for $2.5 billion; crete professionals alliance launches with $500m for ai-enabled cpa firm rollups.

“this two-way sync with xero will help small business customers better understand how much money is going in and out of their accounts at a time when it is critical to keep a close eye on cash flow,” says ilan atias, melio’s cto and co-founder.

melio’s automation reduces manual entry by syncing invoices and payments with the general ledger. that means fewer errors, faster closings, and greater confidence in real-time financial data. for accountants, this automation can free up monthly hours that can be reallocated to higher-margin advisory services.

small businesses don’t want to bounce between apps to send a payment or track an invoice..  embedding payments into accounting makes the platform stickier — and turns it into a system of engagement, not just a system of record.

that shift is not lost on competitors. intuit has integrated mailchimp to extend its marketing reach; zoho is enhancing its end-to-end business suite; and ai-native entrants like digits and basis are building automation-first gls from the ground up.

for xero, the melio acquisition is more than a product enhancement—it’s a declaration of intent to lead in the platform era of accounting. melio and xero started integrating their systems in 2023, allowing users to manage payments directly within the accounting software, streamlining workflows and reducing the need for multiple platforms.

melio’s platform automates the synchronization between accounts payable and receivable, reducing manual data entry and minimizing errors. this automation provides real-time visibility into financial transactions, allowing for better forecasting and financial planning.

“this two-way sync with xero will help small business customers better understand how much money is going in and out of their accounts when it is critical to keep a close eye on cash flow,” according to ilan atias, melio’s co-founder and chief technology officer.

industry landscape: who’s playing and competing

this strategic move by xero underscores the growing importance of integrated financial operations platforms in the accounting software market, which can be sorted into three tiers: legacy giants, modern contenders, and ai disruptors.

• intuit quickbooks online still commands the lion’s share of the u.s. smb market. independent software-tracker estimates place quickbooks’ share of the small-business accounting category at generally between 66 percent and 85 percent, depending on the dataset. however, 81 percent is the most commonly used benchmark. its cloud-first transition, bolstered by strategic acquisitions like mailchimp for $12 billion in 2021, has expanded quickbooks’ ecosystem into marketing and e-commerce. the firm is pushing deeper into ai features like smart categorization and predictive cash flow modeling.
• with just over 3.9 million global subscribers and around 11 percent u.s. market share, xero is leaning into platform unification. by embedding melio’s b2b payments and investing in automation and ai, xero is bidding to grow beyond its australasian roots.
• sage, headquartered in the u.k., has relied on acquisitions, including futrli and goproposal, to inject ai and cloud-native features into its lineup. while sage 50 still retains a 6.8 percent market share among u.s. smbs, sage intacct — targeting saas and mid-market companies — leads sage’s u.s. cloud push.
• oracle netsuite, serving larger smbs and mid-market firms, has held steady with around 1.3 percent market share in the accounting software segment. but its erp-grade financials, embedded analytics, and growing ai features have helped it attract finance teams seeking scalability.

modern contenders: lean, integrated, growing

• zoho books, part of the broader zoho suite, is gaining traction with cost-conscious small businesses and global startups. the value lies in its integration — users get crm, email, invoicing, and accounting in one platform. zoho doesn’t disclose user counts, but it’s building an accountants channel to aggressively expand in north america.
• freshbooks remains the go-to for freelancers and service-based firms. its clean ui, time tracking, and billing tools appeal to non-accountants, and user reviews consistently highlight ease of use as a key differentiator.
• wave accounting, owned by h&r block, offers free software with paid add-ons for payments and payroll. its model is especially attractive to microbusinesses. while wave lacks mid-market features, its reach among solopreneurs is growing thanks to shopify integrations.

ai-native and disruptors: automate everything

• digits positions itself as an autonomous general ledger, powered by ai trained on over $825 billion in transaction data. it automates reconciliation, trend analysis, and forecasting. in 2024, it acquired basis finance to boost its ai modeling.
• io, aimed at startups and vc-backed firms, offers real-time accrual accounting with deep automation. it supports month-end close workflows and investor reporting, without manual spreadsheets.
• based in copenhagen and backed by atomico, light raised about €12.1 million (or u.s. $13 million) in 2024 to scale its natural language-powered gl for multinational teams. its platform interprets user queries like “show all ap by vendor in brazil.” it also instantly returns dynamic reports.
• softledger, built api-first, targets multi-entity companies and crypto-heavy firms. its real-time consolidation and flexible integrations make it a niche favorite.
• eleven, designed for cpa firms, supports multi-entity accounting and built-in practice management tools. its direct appeal to accountants sets it apart in a market dominated by smb-first design.

go-to-market strategies

in the high-stakes contest for the smb back office, how accounting platforms reach the market can matter as much as what they offer. from direct sales to partner-led channels to embedded finance plays, gl software vendors are experimenting with multiple go-to-market strategies—and the mix is evolving fast.

direct-to-business models remain dominant among entry-level players like freshbooks and wave. freshbooks markets directly to freelancers and microbusinesses, emphasizing ease of use and automated invoicing. wave, owned by h&r block, draws in startups with free tools, then monetizes through payments and payroll.

but the power users—accounting firms—are increasingly critical to growth. that’s where quickbooks and xero shine. quickbooks boasts more than 600,000 proadvisors worldwide, who act as brand ambassadors and technical support for clients. according to company figures, xero’s partner ecosystem includes over 250,000 accountants and bookkeepers, with training, certification and marketing tools built into its strategy.

“partners are our growth engine in north america,” xero said during its last investor update. the melio acquisition is expected to deepen those relationships by giving accountants new payment capabilities to manage on behalf of clients.

meanwhile, embedded approaches are gaining traction. melio, before being acquired by xero, grew through integrations with platforms like shopify, quickbooks and wix, placing b2b bill pay inside the tools businesses already use. this model is spreading. software vendors from zoho to digits are now building apis to embed accounting or payments into third-party systems.

hybrid models are rising, too. softledger, for instance, combines api-first delivery with direct sales and white-label options for cpa firms. zoho takes a hybrid approach by offering its full suite as a direct sale while recruiting implementation partners.

some bypass traditional sales channels as ai-native platforms like digits and puzzle.io scale. digits sells through trusted accounting firms that beta-test its ai forecasting and reporting tools before rolling them out to clients.

no one go-to-market playbook fits all. but firms that win attention—and wallet share—from accountants are better positioned to scale. as gl tools evolve into operating platforms, the real winners may be those that let others build on top of them.

product differentiation

in today’s general ledger software market, it’s not just about who processes debits and credits — it’s about how they do it, what they automate, and who they empower. the leading platforms are carving out space by optimizing for speed, scale, intelligence, and user fit.

one dividing line is real-time versus batch processing. modern systems like xero, softledger and digits are pushing toward continuous synchronization, enabling instant updates across accounts and entities. softledger advertises sub-second consolidation across entities, and digits delivers on-the-fly reports as transactions occur. by contrast, legacy systems like quickbooks desktop still rely on periodic batch updates, which limit real-time insight.

support for accrual versus cash accounting also shapes a platform’s relevance. while most major platforms now support both, some — such as puzzle.io — differentiate with prebuilt workflows for deferred revenue, prepaid expenses and close-of-month processes. that makes them a better fit for saas clients or vc-backed startups, where accrual compliance is non-negotiable.

multi-entity and multi-currency support is another major vector. netsuite, sage intacct, and softledger are the lead here, offering global consolidations and advanced elimination logic. xero does not natively support these capabilities through third-party apps like fathom and spotlight. quickbooks online remains limited, prompting mid-market clients to outgrow the tool as they scale.

ai capabilities are now an expected—not optional—differentiator. digits uses machine learning to forecast cash flow, analyze anomalies, and generate narrative reports. rillet, an emerging player, applies ai to amortize prepaid and reconcile transactions automatically. light, the denmark-based upstart, uses natural language processing so finance teams can generate reports by asking plain-english questions.

open apis and integration ecosystems are becoming key battlegrounds. zoho books wins with tight integrations across its crm, marketing and inventory stack. softledger markets itself as “api-first,” letting developers embed accounting into vertical solutions. even traditional players are catching on — intuit recently expanded its developer toolkit to encourage app builders.

then there’s reporting. firms like light and sage intacct stand out for multidimensional reporting and custom dashboards that give cpas insight into department, project and regional performance. puzzle.io and digits aim to simplify those visuals for startup clients and advisory firms, offering prebuilt templates that match investor expectations.

in this fractured landscape, no single product owns all dimensions. but for accounting firms shopping for the future, the best general ledger isn’t just the most accurate — it’s the most adaptive.

funding and financial traction

the general ledger software category is no longer a sleepy corner of enterprise software. fueled by ai, embedded finance, and rising demand for real-time accounting, the space attracts serious venture capital, and strategic buyers are circling.

venture funding has surged since 2020, with 2024 showing renewed investor confidence. according to data from goingvc, seed-stage deal sizes rose 35 percent year over year, and early-stage investments climbed 14 percent, signaling a strong appetite for startups modernizing financial infrastructure.

digits, one of the most aggressive ai-native players, acquired basis finance in 2024 and now markets a full-stack financial automation suite. its funding exceeds $100 million, with backers including gv (formerly google ventures), benchmark, and softbank. the basis deal gave it access to ai models tailored for fp&a and budget forecasting — core services for startup clients and their finance teams.

based in copenhagen, light raised roughly $13 million in a june 2024 seed round led by atomico. its pitch: an ai-powered general ledger that allows multinational finance teams to ask real-language questions and get live financial answers. light, in short, wants to make the cfo’s stack conversational.

puzzle.io, another ai-native gl company, secured undisclosed but significant funding to target early-stage companies with real-time accrual support and close automation. its interface mimics investor dashboards, appealing to founders managing fundraising cycles.

on the m&a front, strategic buyers are making their bets. xero’s $2.5 billion acquisition of melio in 2025 is the most significant deal in the gl space to date, aimed at embedding payments and scaling in the u.s. for comparison, intuit’s $12 billion acquisition of mailchimp in 2021 signaled its pivot toward platform integration across finance and marketing.

other roll-up efforts are underway. thrive capital-backed crete professionals alliance launched in 2025 with plans to invest $500 million to acquire traditional cpa firms and layer in ai-driven automation, potentially creating vertically integrated gl-advisory hybrids. indeed, automation efficiencies are key to private equity’s interest in cpa firm takeovers.

investor sentiment is converging around platforms that embed financial services, automate workflows with ai, and scale across verticals. startups that combine these elements — or help others do so — are the most likely acquisition targets or ipo candidates.

with nearly every player now racing toward platform extensibility, gl software is no longer a back-office utility. it’s becoming the financial control layer, and private equity and venture capital firms are piling in accordingly.

the future of the accountant’s role

the accountant of tomorrow may not spend much time reconciling bank feeds, but they’ll spend more time explaining what the numbers mean, how they change in real time, and what to do about it. as ai-driven general ledgers gain traction, the role of the accounting professional is shifting from technician to technologist, and from historian to strategist.

melio and xero offer synced, embedded bill pay; digits eliminates spreadsheet reconciliation; and puzzle.io closes books automatically.

as ai handles more workflows, accountants will be expected to interpret outputs, assess reliability, and guide clients through decisions. expect to see accountants becoming more like financial engineers.

that shift aligns with broader trends in advisory services. in its newest “state of the profession” report, cpa.com found that 74 percent of firms plan to expand client advisory services (cas) in the next two years, citing demand for real-time insight and integrated tech stacks. at the same time, 61 percent say finding staff with the right tech skills is a major challenge.

tools like light and rillet now offer dashboards powered by natural language queries. accountants no longer interpret numbers—they shape the queries, design the reporting layers, and ensure outputs are audit-ready. in some firms, cpas are trained in prompt engineering and data governance.

ethics and risk oversight also take center stage. ai-driven financials demand new diligence — ensuring algorithmic outputs are free from bias, properly documented, and compliant with audit standards. misapplied ai tools could expose firms to liability if recommendations are flawed or opaque.

yet human connection remains irreplaceable. as machines handle mechanics, clients look to their advisors for judgment, context and strategic foresight. the ability to listen, explain and build trust — the “soft skills” — will become harder to outsource than ever.

the accountant’s job isn’t going away. but what it means to be an accountant is undergoing its most significant reinvention in decades. and the gl is now both the tool and the test.

 

posted on june 25, 2025