6 Ways Accounting and Bookkeeping Firms Recharge Software Costs to Clients (And What Actually Works)

Most firms have landed on a way to handle software billing. Not always deliberately. They started with what they had and it stuck. A spreadsheet here, a repeating invoice there, maybe a line item buried in a quarterly BAS bill.

The problem is that what works at 10 clients breaks at 50. And every time a vendor raises prices, the cracks get wider.

Below is a method-by-method comparison of every common approach. Find your current setup, see where it falls short, and what else is out there.

1. Manual Spreadsheet Billing

The "no system" baseline. You export charges from Xero, MYOB, or whatever vendor portal you're using. You match them to clients with VLOOKUPs. You manually create invoices. Maybe you copy and paste line items one at a time.

It works. Until it doesn't.

Pros:

• No cost. You already have Excel or Google Sheets.
• Full control over every number.

Cons:

• Takes 1 to 2 days per month. That's 12 to 24 days a year spent on admin that generates zero margin.
• Error-prone. One wrong VLOOKUP and a client gets billed for someone else's subscription.
• Pro-rata calculations get skipped because they're too fiddly to track manually.
• Plan changes get missed. A client upgrades mid-month and you don't catch it until the next quarter.
• Doesn't scale. At 30 clients you're drowning. At 50 you've stopped trying to be accurate.

Who it suits: Very small firms with under 10 clients and no plans to grow the subscription book.

2. WIP Billing (Through Practice Management Software)

Billing software costs as disbursements through your practice management system. The charges sit in WIP alongside time entries and get invoiced quarterly, usually lined up with BAS lodgements.

This is common because it fits the way firms already work. Clients are used to getting a quarterly bill. The software costs just tag along.

Pros:

• Fits your existing workflow. No new tools, no new processes.
• Clients are used to the billing cycle.

Cons:

• You're carrying 3 to 6 months of software costs before you recover them. Some firms sit on $60,000 to $90,000 in unbilled software costs at any given time. Your cash flow is funding vendor subscriptions.
• Disputes are harder to resolve months after the fact. A client questions a June charge in September and nobody can remember the details.
• Write-offs are common. It's easier to waive a disputed $200 charge than spend an hour proving it's correct.
• The delay between paying vendors and recovering from clients creates a permanent cash flow drag.

Who it suits: Firms that want everything through one system and are comfortable with delayed recovery. Works if your cash flow can absorb the gap.

3. Xero Repeating Invoices

Setting up fixed recurring invoices in Xero for each client. $50 per month for Xero, $30 for Dext, whatever the standard package looks like. The invoice goes out on the same day each month for the same amount.

How clients pay is a separate decision. Most firms pair repeating invoices with a payment gateway. GoCardless is the most common for direct debit. Clients authorise a mandate once and payments get collected automatically. Stripe and Pinch Payments are alternatives if your clients prefer paying by card or if you want more flexibility. The gateway handles collection. The repeating invoice handles the amount.

Pros:

• Built into Xero. No extra tools needed.
• Clients see a consistent, predictable amount each month.
• Simple to set up for a small number of clients.
• Pairing with GoCardless or another gateway means you're not chasing payments manually.

Cons:

• Repeating invoices are fixed. Software costs are variable. Every plan change, upgrade, downgrade, or price increase requires you to manually update the repeating invoice.
• Xero raised prices in 2024 and again in 2025. Each time, firms using repeating invoices had to update every single client invoice individually.
• Pro-rata and partial months get skipped entirely. If a client starts mid-month, they either get a free half-month or you do the maths manually.
• The payment gateway solves collection but not calculation. GoCardless, Stripe, or Pinch will collect whatever amount you tell them to. They don't know what plan each client is on, who upgraded last Tuesday, or who cancelled Dext. You still need to get the number right yourself.
• Doesn't scale past 20 to 30 clients. Beyond that, keeping repeating invoices in sync with actual costs becomes its own part-time job.

Who it suits: Small firms with stable client bases and infrequent plan changes. If your clients rarely switch plans and vendors rarely move pricing, this can work for a while.