gocardless.com Open in urlscan Pro
2606:4700:10::ac43:1b5  Public Scan

Form analysis
0 forms found in the DOM

Text Content

Skip to content

Go to GoCardless Blog Homepage
Why GoCardless?
Product
Partners
Pricing
Resources
Log inSign up
Close
menuOpen site navigation sidebar

Why GoCardless?
 * For use case
   * Subscription paymentsRecurring payments built for subscriptions
   * Invoice paymentsCollect invoice payments automatically
 * Our customers
   * Case studiesOur customers successes
   * Customers love usHear from our customers
   * Customer successOur customer first approach
   * Customer HubTraining resources, documentation, and more
 * For enterprise
   * Overview
   * Reduce churn
   * Reduce international barriers
   * Reduce operational costs
   * Reduce time to get paid
   * Reduce conversion risk
 * For small business
   * Overview
   * Improve your cashflow
   * Keep track of payments
   * Reduce costs
   * Reduce failed payments
   * Increase conversions

Product
 * Features
   * Recurring paymentsIdeal for subscriptions and invoices
   * International paymentsCollect from 30+ countries
   * GoCardless Success+Reduce payment failures
   * GoCardless Protect+Advanced fraud protection for recurring payments
   * Verified MandatesPayer authentication you can rely on
 * Integrations
   * API integrationsBuild a custom integration
   * Partner integrationsConnect to 350+ partner apps
   * Payment provider integrationsEmbed bank payments into your platform

Partners
All partnersGoCardless for Salesforce BillingGoCardless for ZuoraGoCardless for
Xero

Pricing
Resources
 * Help and support
   * Customer HubTraining resources, documentation, and more
   * API documentationGuides for integrators
   * FAQCommon questions answered
 * News and resources
   * Blog
   * Guides and eBooks
   * Complete guide to ACH payments
   * Subscription payments guide
   * Webinars, podcasts, events
   * Industry research
   * News
   

Log inSign up

Go to GoCardless Blog Homepage
Why GoCardless?
Product
Partners
Pricing
Resources
Log inSign up
Close
menuOpen site navigation sidebar

Why GoCardless?
 * For use case
   * Subscription paymentsRecurring payments built for subscriptions
   * Invoice paymentsCollect invoice payments automatically
 * Our customers
   * Case studiesOur customers successes
   * Customers love usHear from our customers
   * Customer successOur customer first approach
   * Customer HubTraining resources, documentation, and more
 * For enterprise
   * Overview
   * Reduce churn
   * Reduce international barriers
   * Reduce operational costs
   * Reduce time to get paid
   * Reduce conversion risk
 * For small business
   * Overview
   * Improve your cashflow
   * Keep track of payments
   * Reduce costs
   * Reduce failed payments
   * Increase conversions

Product
 * Features
   * Recurring paymentsIdeal for subscriptions and invoices
   * International paymentsCollect from 30+ countries
   * GoCardless Success+Reduce payment failures
   * GoCardless Protect+Advanced fraud protection for recurring payments
   * Verified MandatesPayer authentication you can rely on
 * Integrations
   * API integrationsBuild a custom integration
   * Partner integrationsConnect to 350+ partner apps
   * Payment provider integrationsEmbed bank payments into your platform

Partners
All partnersGoCardless for Salesforce BillingGoCardless for ZuoraGoCardless for
Xero

Pricing
Resources
 * Help and support
   * Customer HubTraining resources, documentation, and more
   * API documentationGuides for integrators
   * FAQCommon questions answered
 * News and resources
   * Blog
   * Guides and eBooks
   * Complete guide to ACH payments
   * Subscription payments guide
   * Webinars, podcasts, events
   * Industry research
   * News
   

Log inSign up
Breadcrumb
Resources
Accountants


XIRR VS. IRR: WHAT’S THE DIFFERENCE?


Written by
GoCardless
The GoCardless content team comprises a group of subject-matter experts in
multiple fields from across GoCardless. The authors and reviewers work in the
sales, marketing, legal, and finance departments. All have in-depth knowledge
and experience in various aspects of payment scheme technology and the operating
rules applicable to each. The team holds expertise in the well-established
payment schemes such as UK Direct Debit, the European SEPA scheme, and the US
ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New
Zealand. See full bio

Last editedJun 2021 — 2 min read



Table of contents

 1. What is the IRR formula?
 2. What is the XIRR formula?
 3. XIRR vs. IRR: example
 4. What’s the difference between IRR and XIRR?
 5. We can help

View all 250+ G2 reviews
Read our reviews

IRR and XIRR are Excel functions that you can use to determine the rate of
return of any particular investment or project. Both functions use the same cash
flow, but in many cases, they’ll produce different results. Why is this? In our
guide to the difference between IRR and XIRR, we’ll take you through the ins and
outs of the IRR and XIRR formulas, providing you with a comprehensive overview
of XIRR vs. IRR for business accounting.


WHAT IS THE IRR FORMULA?

IRR stands for Internal Rate of Return. Essentially, the IRR formula enables you
to calculate the rate of return on an investment or project, while excluding
external factors. The IRR formula is as follows:

> 0 = NPV = t∑t=1 Ct/ (1+IRR)t − C0

This may be a little more complex than the accounting formulas you’ve used
before, but once you know what’s going on, it’s relatively simple to navigate.
Basically:

 * Ct = Net Cash Inflow During Period t

 * C0 = Initial Investment Cost

 * IRR = Internal Rate of Return

 * t = Number of Time Periods

Essentially, the IRR formula equates the net present value (NPV) of future cash
flows to zero (0). This means that if you calculate the project/investment’s NPV
– using IRR as the discount rate – and subtract the value of the original
investment, the NPV will be equal to zero. Confused? Don’t worry too much! While
you can work out the IRR of a project manually, if you so choose, most people
will simply use Excel, as it’s far more efficient.


WHAT IS THE XIRR FORMULA?

XIRR stands for Extended Internal Rate of Return. In contrast to IRR, the XIRR
formula provides you with an extended rate of return that takes into account
cash flows and discount rates, as well as the corresponding dates, providing you
with a more accurate ROI percentage. In practical terms, if you’re working in
Excel, you’ll simply need to enter two series in the XIRR formula – the series
of cash flows and the corresponding dates of these cash flows.


XIRR VS. IRR: EXAMPLE

Let’s look at a quick example of the IRR formula and the XIRR formula in action
to understand the differences between the two Excel functions.

Imagine that Company A has made an investment in a project:

 

A

B

C

1

Particulars

Date

Cash flow

2

Initial Investment

10-April-2020

-250,000

3

Return – 1st Installment

10-April-2021

100,000

4

Return – 2nd Installment

5-November-2021

150,000

5

Return – 3rd Installment

2-April-2022

125,000

6

Return – 4th Installment

17-December-2022

210,000

Using this data, we can calculate the ROI percentage in Excel.

 * For the IRR formula, simply type “=IRR(C2:C6)”.

 * For the XIRR formula, simply type “=XIRR(C2:C6, B2:B6)”.

This produces the following values:

 * IRR = 40%

 * XIRR = 58%

As you can see, despite the two formulas using the same cash flows, they have
produced different results.


WHAT’S THE DIFFERENCE BETWEEN IRR AND XIRR?

As we’ve explained, the key difference between IRR and XIRR is the way each
formula handles cash flows. IRR doesn’t take into account when the actual cash
flow takes place, so it rolls them up into annual periods. By contrast, the XIRR
formula considers the dates when the cash flow actually happens. Because of
this, XIRR is a more accurate way to evaluate an investment. So, when it comes
to XIRR vs. IRR, you should always use XIRR unless you explicitly want to
calculate the IRR over a yearly period.


WE CAN HELP

GoCardless helps you automate payment collection, cutting down on the amount of
admin your team needs to deal with when chasing invoices. Find out how
GoCardless can help you with ad hoc payments or recurring payments.


WHAT OUR CUSTOMERS SAY

250+ G2 reviews
What do you like best?
We have always received exceptional customer service from every member of
GoCardless that we have met.

What do you like best?
I started using GC in 2016, when looking for a good value DD solution. I found
the Banks did not do it well. I tried this for regular accountancy fees and have
not looked back.

What problems is the product solving and how is that benefiting you?
Getting paid on time can be a problem in any business but with GoCardless you
can forget about all of that. Therefore less stress is one of the main benefits
I would say.

Recommendations to others considering the product:
If you're a business owner needing an easy method of collecting client payment,
GoCardless is a no-brainer.

What problems is the product solving and how is that benefiting you?
I have been using GoCardless for years in this business and my previous one, for
me it's all about simplicity. it is really simple and easy to operate; not only
for me but for my customers too.

What do you like best?
Pulls the invoice details from Xero into GoCardless and matches to client.
Allows easy registration for new clients. Split payments for invoices easy to
set up.

What do you dislike?
I've not experienced any issues with GoCardless. On the few times I have had to
contact them its been easy, staff have been pleasant and they've responded in a
timely manner.Review collected by and hosted on G2.com.

Recommendations to others considering the product:
If you want to guarantee your payments use GoCardless, also has great
integration with cloud software such as Xero and FreeAgent




OVER 70,000 BUSINESSES USE GOCARDLESS TO GET PAID ON TIME. LEARN MORE ABOUT HOW
YOU CAN IMPROVE PAYMENT PROCESSING AT YOUR BUSINESS TODAY.

Get StartedLearn More

Related topics

Accountants

Recommended for you

[Webinar] Get to know ACH Pull

Faster, safer and cheaper. ACH Pull could save you time and money when
collecting payments. But what is it and how does it work? Join our short webinar
with live demo to find out more.

Webinar
[Webinar] Get to know ACH Pull
Webinar
GoCardless and Xero renew partnership to help small businesses navigate tough
economic times
2 min read

Press Releases
GoCardless partners with Kolleno, an AI-enabled financial operations platform
1 min read

Press Releases
UNIPaaS partners with GoCardless to add bank payments to its offering
1 min read

Press Releases
4 key insights from our new Forrester Consulting thought leadership paper
2 min read

GoCardless
Best low-cost affordable payment systems in the U.S.
3 min read

Small Business


INTERESTED IN AUTOMATING THE WAY YOU GET PAID? GOCARDLESS CAN HELP

Contact sales

How it works

 * Recurring payments
 * Invoice payments
 * API

Help and resources

 * Customer Hub
 * Guides
 * FAQ
 * API documentation
 * RSS
 * Complaints

About GoCardless

 * About us
 * Careers
 * Press
 * Privacy
 * Blog
 * Our affiliate program
 * Modern slavery statement
 * Our editorial guidelines
 * Licenses
 * Cookie Preferences

Contact us

Sales

Contact Sales

+1(415) 523-2279

Support

help@gocardless.com

+1 (628) 241-0044

Seen 'GoCardless Ltd' on your bank statement? Learn more

GoCardless Ltd, Sutton Yard, 65 Goswell Road, London, EC1V 7EN, United Kingdom

The GoCardless program in the United States is sponsored by Community Federal
Savings Bank, to which GoCardless Ltd (UK company registration number 07495895;
Financial Conduct Authority registration number 597190) is a service provider.
GoCardless Inc. (NMLS ID 2123932), with address at 135 Madison Ave., New York,
NY 10016, is a FinCEN-registered MSB with registration number 31000232044721 and
a licensed money transmitter in certain US states.

USA
 * * 
     Australia
   * 
     Canada
   * 
     Denmark
   * 
     Ireland
   * 
     New Zealand
   * 
     United Kingdom
   * 
     Spain
   * 
     Netherlands
   * 
     Sweden
   * 
     France
   * 
     Germany
   * 
     USA
     

Try a better way to collect payments, with GoCardless. It's free to get started.

Try a better way to collect payments

Learn moreSign up