There are a lot of accounts softwares available, Zoho Books, FreshBooks, NetSuite ERP to only name a few. However there are two softwares that have become the industry standard in every regard. They are Xero and QuickBooks. Here we compare Xero accounting software vs. Quickbooks.
Modern businesses are digital businesses. Whether it be marketing, administration or accounts. Absolutely no aspect of business is free from the effects of digitalisation. To precisely talk about accounting, there aren’t many businesses that rely on the primitive paper ledger. The ledger book has been replaced with the modern accounting application. This has not only made accounts and billing more accessible for administrators but has also made the work of accountants easier. Read on to find out which software is right for your business.
While we’ll be focusing on specific factors such as costs, user experience, scalability, and more. We’ve found each software having perks and drawbacks in different criteria, so it’s safe to say neither is one-size-fits all. That being said, let’s check out general specifications of Xero and QuickBooks before we get to comparing them.
Basics of Accounts softwares
Accounts softwares are designed to provide various accounting services using different modules. According to Wikipedia the following services should be present in an accounts software for it to be fully functional.
1. Accounts receivable
2. Accounts payable
3. General ledger
4. Billing
5. Stock/inventory
6. Purchase order
7. Sales order
8. Bookkeeping
9. Financial close management
Xero Accounting software
Xero accounting software is the product of Xero, a software company based in New Zealand. The company started in 2006 and since has grown to serve more than one million customers in 2018. Xero accounting software supports over 800 third-party apps. The touch-based mobile (iOS) application was released in 2011, ushering in the era of mobile accounting. Source: Wikipedia.
QuickBooks
QuickBooks is the accounting software marketed by Intuit. While the core program was based on the “In-house Accountant” software that Inuit purchased, the software uses different code architecture for Windows and iOS platforms. In September 2019, Inuit released the latest version called QuickBooks 2020. Moreover, QuickBooks provides services as both platform application and cloud based storage called QuickBooks online. Source: Wikipedia
Xero accounting software VS QuickBooks
While each of these two provides comparable features there are some core differences as well. First we’ll feature the similarities and then get on with the comparisons. Here are the common features you will find both in Xero and QuickBooks, Accountants need to be trained with either Xero accounting Software or QuickBooks to work efficiently.
1. Online accounts
2. Payable / Receivable accounting
3. Banking synchronization
4. Invoicing
5. Payroll
6. Financial reporting
7. Quick view of cash flow
8. Bank reconciliation
9. Multi-currency compatibility
10. Document sharing
11. Billing management
12. Countless integrations and add-ons
13. Display outstanding balances
14. Mobile friendly applications
15. Free Trials (no credit card required)
Aside from these basic services there are other specific perks that each of the softwares provide. These perks make them compatible for differing businesses. Although not all of them are included in the starter packs. Both Xero and QuickBooks target small and mid-range businesses as their clientele.
1. Cost
Xero: three pricing tiers
Xero’s starter plan (Early) costs $9/month, with a limited set of features. This allows sending only 5 invoices and quotes, entering 5 bills, and reconciling just 2 bank transactions. For most businesses this isn’t even close to enough in terms of accounting demands. If you’re looking to learn more about Xero Accounting Software we’ve got a course on it. Go check it out.
Their mid-price plan (Growing) is actually well-equipped for small businesses. The costing for this package is $30/month. For the full feature set, you’ll have to pay $60/month under their Established service package. To access their affiliated Gusto full-service payroll pricing starts at $39/month base + $6/month for each person.
QuickBooks: Accessible price points
QuickBooks has priced their basic plan (Simple Start) at $20/month. This comes with all the basics of tracking income and expenses, capturing and organizing receipts, invoicing and accepting payments which are significantly more than Xero’s cheapest plan. The main limitation of the Simple Start plan is that it only allows access for one user at a time. Time tracking and billing is also not offered with this package.
Most mid-range businesses prefer the Essentials plan at $35/month, with all of the above features and access for up-to 3 users. The state-of-the-art features come with the top plan: Plus for $60/month. It includes services such as track inventory, managing up to 1099 contractors, and QuickBooks newest feature, real-time tracking of project profitability.
Comparison
If you need to track income, expenses, invoices and time, we’d recommend you’ll likely be paying $35/month for QuickBooks. However, the top plans ($60/month), you’ll get grossly similar functionality from both providers.
2. Overall features: Invoicing, Inventory, Payments, Expenses and Bills
With either tool you’ll get dedicated features for fast bank reconciling, processing invoices and quotes, sending purchase orders, managing inventory, bills and expenses.
Xero is a dream come true for small and medium-sized businesses that need a user-friendly method for bookkeeping. It’s by far the most easy-to-use accounting system available. On the downside, for complex features like full stock management or control, you’ll have to purchase third-party integrations.
With regards to Inventory management functionality, QuickBooks has a clear edge alongside the most comprehensive point-of-sale solution. QuickBooks makes it easy to connect your bank account – the fundamental aspect of bookkeeping. Xero, lags behind in secure bank feed connection and is slightly less seamless compared to QuickBooks.
Comparison
QuickBooks is the more comprehensive solution considering all the features.
3. Integrations
To truly reap the benefits of automation you need to integrate you accounting software with the following systems,
- CRM system
- Time tracking tool
- Reporting tools
- E-Commerce
- Email marketing tool
- Point-of-sale systems
- Inventory management, and
- Debtor tracking
For the most part, Xero and QuickBooks both are compatible with similar integrations in their respective marketplaces. You need to find compatible integrations for each according to your needs.
Comparison
It’s a tie between Xero and QuickBooks considering integration compatibility.
4. Reporting & dashboards
Considering pulling reports based on date range, such as monthly P&L and balance sheets, QuickBooks is a walk in the park. Xero is a little more clumsy in this regard. However, Xero has a good range of customizations for reports, compared to QuickBooks.
One of Xero’s strengths in this regard is its “Business Performance dashboard” which highlights all of your essential metrics. For instance, debt ratio and gross profit percentage are displayed in an easy to understand layout.
Comparison
Xero Accounts software wins this round for better designed reports.
5. User experience & user interface
Xero: it makes accounting much more enjoyable
Startups generally prefer Xero than QuickBooks for the simple reason that Xero looks better. Especially because the user interface feels more polished and more user-friendly. It’s no surprise that new users enjoy using Xero for this reason.
QuickBooks Online: less trendy, still easy to use
QuickBook was criticized for its antique user interface in the early 2010s. Since then competitors such as Xero have pushed QuickBooks to reevaluate user-experience in product design. Frankly though, they still have plenty of room to improve.
Comparison
Xero is our clear winner considering user experience.
6. Scaling
Xero
According to online reviews Xero’s functionality is dramatically affected by the size of your business. Xero claims that their accounting software works with the soft limits for transaction volume at around 2000 sales, 2000 purchases and 4000 bank lines per month. If your business is under these numbers Xero can be considered a good fit for your growing business.
QuickBooks
For larger businesses or one that’s growth rate is immense, it’s better to look into Intuit’s wider software suite, mainly QuickBooks Enterprise Solutions. QuickBooks Enterprise is specifically designed to handle the needs of larger businesses.
QuickBooks Enterprise claims to have 6-times the capacity of other QuickBooks solutions. The Enterprise edition is capable of managing up to 30 users and supports up to 1 million list items alongside the standard inventory and management options.
Comparison
QuickBooks for larger businesses or those scaling fast. Xero for small to mid-range enterprises.
Ending Notes
With these comparisons we hope you’ve got the answers you need to select a suitable accounting solution for your business. We intend to write a separate blog on the pros and cons of Xero account software in a later blog. However if you think it’s still not enough to make a decision then you could check our training courses to see which one suits your accountants better.
Although QuickBooks is the older player in this field, Xero has become a top contender. Beating QuickBooks at user interface and customizable reporting it’s our personal recommendation for your business. Of course a large factor is the scale of the business and it’s difficult to ignore the specific capabilities of QuickBooks in this regard.
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