Finding the right accounting software is frustrating when the options seem endless.
This comparison of Xero and QuickBooks lays out key differences on pricing, usability, features, and more to help you determine which solution may be the best fit for your or your clients' needs.
You'll see how the two softwares diverge when it comes to mobility, scalability, integrations, and overall user experience - shedding light on strengths and weaknesses so you can make an informed decision.
Xero vs QuickBooks
As accounting professionals, we're constantly evaluating tools and software to best serve our clients. With the rise of cloud accounting platforms like Xero and QuickBooks Online (QBO), the options have expanded exponentially from the old days of desktop QuickBooks.
While QuickBooks still dominates the SMB accounting market in the US, Xero has made tremendous strides internationally. Understanding the key differences can position us to recommend the best solutions for each client's unique needs.
In this post, we'll analyze some of the most important contrasts between Xero and QBO that accounting professionals should know:
Deployment Models
The first major difference is in deployment. QBO moved fully to the cloud in 2015, while Xero has been cloud-native from inception. For clients who still rely on desktop software, QBO offers QuickBooks Desktop Pro as a locally installed option. Xero is strictly cloud-based.
The benefit is that Xero boasts robust anytime, anywhere access without tying companies to on-premise servers. However, some businesses in regulated industries may prefer local hosting and control.
Integration Capabilities
While both platforms offer hundreds of integrations through apps and add-ons, Xero has placed heavy strategic investment here. They pioneered open APIs in accounting software and have robust third-party support.
QuickBooks now matches many top app capabilities but has some catching up to do on proprietary integrations. For companies needing custom solutions, Xero may have an edge.
International Reach
Here is where the platforms truly diverge. QuickBooks dominates the US and Canada but has little overseas traction. Xero began in New Zealand and leads the UK/Australia with growing adoption in Southeast Asia and elsewhere.
For international companies or US firms with foreign subsidiaries, Xero is worth strong consideration. Its multi-currency handling is smoother and reporting clearer across borders.
Ease of Use
In early years, QuickBooks earned a reputation advantage for usability and intuitive workflows. With major UI updates, Xero now matches and even surpasses in some areas like reconciliation.
As advisors, we need hands-on experience with both UIs to guide clients appropriately. Clean design can help overcome initial user learning curves.
While close competitors, Xero and QuickBooks solve similar problems quite differently. As trusted advisors to growing businesses, exploring these nuanced software distinctions benefits our clients enormously. Evaluating individual needs first, instead of our own familiarities, serves them best in the long run.
How is QuickBooks different from Xero?
QuickBooks and Xero are two popular accounting software platforms, but they do have some key differences that businesses should consider when deciding between them.
Ease of use
One of the biggest differences is that QuickBooks was designed specifically for small businesses without an accounting background to use, whereas Xero was designed with accountants and bookkeepers in mind. This means QuickBooks tends to have a more intuitive interface that is easier for non-accountants to navigate. Xero provides more advanced accounting functionality but may have a steeper learning curve.
Pricing
QuickBooks tends to be more affordable for very small or new businesses, with plans starting under $20 per month. Xero has more expensive plans that offer more features which growing businesses may need. QuickBooks pricing also tends to be simpler and more transparent upfront.
Support
Xero provides phone and chat support with their paid plans, whereas QuickBooks offers more limited email-based support unless you pay for premium support add-ons. So Xero can be better for those wanting more personalized support.
So in summary, QuickBooks simplifies accounting for beginners while Xero provides deeper functionality for accounting professionals. Consider the team's needs and growth plans when deciding which one suits best. Reach out if you need help choosing!
Why do accountants not like QuickBooks?
There are a few reasons why many accountants do not prefer QuickBooks:
- Limited automation: Although QuickBooks does have some automation features, they are often limited and may not work the way accountants expect. For example, the bank reconciliation function is basic and requires manual review.
- Poor reporting: Producing detailed financial reports in QuickBooks can be challenging. The reporting functionality is not very intuitive or customizable for accountants' needs.
- Data integrity issues: QuickBooks does not have strong controls around data input and integrity. There is greater risk of errors in categorization and coding which creates reporting inaccuracies.
- Lack of collaboration: QuickBooks does not allow easy, real-time collaboration between an organization's accounting team. This makes it difficult for distributed teams or external accountants to work efficiently.
- Weak audit trail: The audit trail capabilities in QuickBooks are fairly basic. There is limited ability to track changes or have multiple approval controls, which accountants value for accuracy.
- Steep learning curve: QuickBooks has a reputation for having an unintuitive UI and significant learning curve, especially for the desktop version. Accountants would prefer software that is faster to onboard and tailored to accounting workflows.
So in summary, while QuickBooks is a popular small business accounting software, professional accountants often prefer alternative solutions that are more customizable, collaborative, secure, transparent, and designed specifically for accounting needs. Many accountants view QuickBooks as rigid and simplistic compared to advanced platforms.
Why do accountants prefer Xero?
Xero has gained popularity among accountants due to its intuitive and user-friendly interface. Here are some of the key reasons why accountants prefer Xero over other accounting software:
Simplicity and Ease of Use
Xero is designed to be simple and easy to use for non-accountants. This allows accountants' clients to easily categorize transactions and reconcile bank accounts themselves, saving accountants hours of tedious data entry work. The dashboard provides an overview of key numbers, and features like automatic bank feeds further reduce manual work.
Seamless Multi-Currency Support
Xero seamlessly handles transactions in multiple currencies without extra effort from the accountant. Exchange rates are automatically updated, which is useful for accountants working with international clients. This saves accountants from manual currency conversions and calculations.
Accessibility and Collaboration
Since Xero is cloud-based, accountants can securely access client financial data from anywhere, anytime. The software also allows collaboration with clients and other stakeholders in real-time via features like contacts, task management tools and file storage capabilities. This leads to efficient and streamlined accounting operations.
Integration with Other Software
Xero offers 800+ third-party integrations with tools like payroll, CRM, inventory management, ecommerce platforms etc. Automatic data sync eliminates duplicate data entry. Plus, add-ons like Hubdoc handle invoices and receipts with ease. This level of connectivity suits most modern accounting workflows.
In summary, Xero's user-friendly interface, robust accounting capabilities and extensive integrations explain why it has gained immense popularity among accountants as the preferred cloud accounting solution. These features save accountants time, effort and enable efficient and collaborative work.
What do accountants do on Xero?
When working with Xero, your accountant will take care of key accounting tasks to keep your finances organized and optimize business operations. Here are some of the main services an accountant provides within the Xero platform:
Bookkeeping and Reporting
Your accountant can connect your bank feeds directly into Xero to automatically import sales, expenses, and other transactions. This automates much of the daily bookkeeping, saving you time while ensuring accuracy.
Customized financial reports provide real-time insights into cash flow, profit and loss statements, balance sheets, and KPIs. Your accountant will analyze trends to highlight areas for growth or cost savings.
Invoicing and Billing
Xero offers customizable invoices to bill clients, send payment reminders, and track payments. Your accountant sets up recurring invoices for regular customers and configures online payment options.
The platform shows outstanding invoices and can even chase late payments automatically. Your accountant monitors your accounts receivable aging report in Xero to ensure a healthy cash flow.
Tax Preparation
At tax time, Xero automatically imports data into IRS-approved tax forms. Your accountant will ensure tax liabilities are calculated correctly and leverage features like Xero HQ to advise on tax deductions and strategies to minimize your obligations.
This automation and oversight by a financial expert keeps your taxes easy and compliant year-round.
Overall, Xero empowers your accountant to save you time on daily accounting while unlocking data and insights to help your business thrive. The platform's user-friendly interface also enables collaboration so you understand exactly where your finances stand.
QuickBooks Pricing Showdown: Assessing Affordability Against Xero
Small businesses and contractors often face difficult decisions when selecting an accounting software solution. With tight budgets and limited resources, financial implications weigh heavily in determining the best fit. In this pricing showdown, we'll analyze how QuickBooks stacks up against Xero to assess affordability.
Xero's Starter Plan vs QuickBooks Simple Start
For small businesses just getting started, Xero offers an attractive entry-level plan. At $9 per month, Xero's Early plan includes features like invoicing, expense claims, fixed assets, and standard business reporting. QuickBooks Simple Start runs $15 per month. While it also covers invoicing, bill payments, and reporting, the plan lacks support for tracking expenses, managing assets, or handling multi-currency transactions.
Businesses migrating from spreadsheets can make the transition smoothly with Xero's connections to solutions like Google Sheets. And users can access Xero's mobile app to manage finances from anywhere. With a more robust core feature set and greater flexibility at a lower price point, Xero offers SMBs and solopreneers compelling value as a QuickBooks alternative. The cost savings from Xero's Starter tier create opportunities for early-stage businesses to reallocate funds towards growth.
QuickBooks vs Xero: Scalability for Growing Businesses
As business needs expand over time, the costs of accounting systems scale up dramatically. QuickBooks Online's Plus plan runs $25 per month with support for up to 3 users. The Advanced tier costs $40 monthly for access up to 25 users. However, integrating with other apps requires upgrades to more expensive subscriptions.
By contrast, Xero offers scalable pricing without the pressure to constantly upgrade. While the Standard plan runs $30 per month, it handles up to 100 invoice transactions for a single user. And Premium supports unlimited invoicing, bills, reconciliation, and multi-currency transactions for only $60 monthly. With an ecosystem of 700+ connected apps, Xero makes growth seamless without inflating fees.
For enterprises aiming to scale operations efficiently, Xero gives owners better control over cash flow. QuickBooks' pricing model pressures decision makers to purchase new licenses and add-ons just to maintain existing capabilities. So particularly for contractors juggling multiple clients, Xero's value proposition strengthens as the business grows.
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User Experience Face-off: Xero's Intuitiveness vs QuickBooks Online Complexity
Evaluating Xero's intuitive interface and QuickBooks Online's more complex user experience reveals key differences that cater to users with varying accounting proficiencies.
Navigating Dashboards: Xero's Simplicity vs QuickBooks Online's Learning Curve
Xero prides itself on ease of use, with a clean, simple dashboard interface. Key financial numbers and reports are visible at a glance without clutter. This enables new and non-accounting users to quickly find information and understand cash flow.
In contrast, QuickBooks Online has more customization options but a steeper learning curve. The interface can feel overwhelming to entry-level users. While power users may value the advanced functionality, small business owners are more likely to prefer Xero's straightforward navigation.
Ultimately, Xero reduces the time spent learning the software, while QuickBooks Online rewards those willing to climb its learning curve. Businesses should weigh the accounting expertise of their users when choosing between simplicity and customizability.
On-the-Go Accounting: Xero's Mobile Mastery Over QuickBooks
Mobile connectivity has become a must-have for accountants and small businesses. Xero clearly dominates QuickBooks Online when it comes to sleek, user-friendly mobile access.
Xero provides full accounting functionality via its phone and tablet apps. Key tasks like invoicing, reporting, reconciling bank feeds, and approving bills can be handled seamlessly on-the-go. For contractors in the field or managers away from their desks, this enables true anytime, anywhere access.
While QuickBooks Online offers mobile apps, they provide limited capabilities compared to the desktop experience. The reduced feature set makes balancing the books from a mobile device frustrating. Instead, the QuickBooks apps seem more geared for checking high-level financial snapshots rather than daily accounting needs.
For accounting mobility, Xero is the undisputed winner. Its mobile tools empower remote work and management by accountants, bookkeepers, and business owners alike. QuickBooks Online's spotty mobile performance remains a clear weak point by comparison. Businesses requiring extensive mobile functionality should look to Xero.
Inventory Management: Xero vs QuickBooks for Contractors and Retailers
Both Xero and QuickBooks Online offer robust tools to manage inventory for contractors, retailers, and other inventory-dependent businesses. However, there are some key differences in their approaches.
Intrinsic Inventory Solutions: QuickBooks Online vs Add-Ons for Xero
QuickBooks Online has built-in inventory management features like inventory tracking, reorder reminders, and the ability to connect to ecommerce platforms. This allows seamless synchronization between orders, inventory levels, and reporting.
Xero relies more on third-party add-ons and integrations for managing inventory. For example, users need to connect Xero to platforms like Dear Inventory or Unleashed to access comprehensive inventory features. While powerful integrations exist, inventory capabilities are not natively included in Xero.
This means QuickBooks Online provides more out-of-the-box inventory tools, while Xero offers flexibility to customize inventory solutions through apps tailored to your business.
Tracking Across Locations: QuickBooks' Edge Over Xero
A key advantage QuickBooks Online has over Xero is robust multi-location inventory tracking. QuickBooks enables users to set up and monitor inventory quantities, sales, transfers and orders across multiple warehouses, retail outlets, job sites and other locations.
Xero's inventory reporting is limited to a single centralized inventory list. While sales orders can be assigned to different locations, robust per-location inventory tracking and management is lacking without third-party enhancements.
Therefore, QuickBooks Online is better equipped to help manufacturers, wholesalers, contractors and multi-location retailers handle complex inventory needs across several sites. Xero can achieve similar goals but requires additional customization through inventory apps.
In summary, QuickBooks Online has more intrinsic inventory features like multi-location tracking. Xero offers flexibility to build customized inventory solutions but requires third-party add-ons to match QuickBooks' depth in inventory management. Evaluating specific inventory requirements is advised when choosing between the two platforms.
The Reporting Rivalry: QuickBooks vs Xero's Analytical Capabilities
Contrast the reporting tools of both platforms, emphasizing on their respective strengths in data analysis and decision-making support.
Pre-Made vs Custom Reports: QuickBooks' Template Treasure
QuickBooks offers over 100 customizable report templates across all essential accounting tasks - from profit and loss statements, balance sheets, aged payables and receivables, to detailed sales and expense reports. The pre-formatted templates allow users to efficiently pull critical business insights without spending time building reports from scratch.
However, Xero provides more flexibility for businesses to build custom reports tailored to their unique needs. Users can mix and match various data sets and choose specific fields to include. Although it takes more effort upfront, custom reports give companies the ability to track metrics not found in off-the-shelf reporting.
So while QuickBooks simplifies reporting with pre-made templates, Xero offers greater customization for those seeking to analyze specific business data. Companies should weigh convenience vs flexibility based on their use case.
Data Visualization: Xero's Aesthetic Advantage
Xero clearly beats QuickBooks when it comes to modern data visualization capabilities. While QuickBooks generates standard tabular reports, Xero allows users to showcase insights using sleek graphs, charts and infographics.
For example, Xero's profit and loss reports can be viewed as line or bar charts over custom date ranges. Its dashboard gives visual snapshots of cashflow, account reconciliation, expenses, and more. For many users, digesting data through visuals is faster and more impactful.
QuickBooks does have options to export report tables into Excel for further formatting. But it doesn't match Xero's extensive visualization options directly integrated with its reporting engine.
So companies that want real-time visual intelligence for better and faster decision making may lean towards Xero over QuickBooks. But QuickBooks still holds its own for users happy with standardAccounting statements and formats.
Payroll Integration: The QuickBooks vs Xero Debate
QuickBooks and Xero take different approaches when it comes to payroll integration. QuickBooks offers a built-in payroll solution, while Xero partners with third-party providers. Both options have their merits depending on a business' specific needs.
Seamless Payroll with QuickBooks vs Xero's Third-Party Partnerships
QuickBooks' integrated payroll feature allows users to handle payrolls seamlessly within the software. This consolidated solution means there is no need for additional platforms or staff training. Users can process paychecks, file taxes, generate reports, and more with just a few clicks.
However, while convenient, QuickBooks' payroll does come with limitations. There are extra fees beyond the base subscription, and customization options are restricted compared to dedicated payroll solutions. For rapidly scaling companies with complex needs, an external provider may ultimately provide more flexibility.
Navigating Support: QuickBooks vs Xero's Assistance Arena
Compare the customer support and training resources provided by QuickBooks and Xero, spotlighting their efforts to empower users.
Self-Help Solutions: QuickBooks' Knowledge Base vs Xero's Guides
QuickBooks offers an extensive searchable knowledge base with helpful articles and video tutorials covering a wide range of accounting topics. From getting started guides to troubleshooting specific errors, QuickBooks aims to provide self-service support enabling users to easily find answers to their questions.
In contrast, Xero offers a smaller set of manuals and user guides focused on key workflows like reconciling bank transactions, tracking sales tax, and configuring user permissions. While less comprehensive than QuickBooks, Xero's guides dive deeper into topics critical for small businesses to maximize value from the software.
Both solutions showcase a commitment to enabling customer independence through robust self-help content. QuickBooks offers unparalleled breadth across its knowledge base to serve users at any stage. Xero strategically targets high-value topics to accelerate new user onboarding and core feature adoption.
Community Insights: Tapping Into Xero's User Forum
A standout advantage only Xero offers among the two platforms is an active user community forum. With over 100,000 forum posts, small businesses can tap into the wisdom of Xero's passionate user base to find answers to niche questions.
Users can browse forum topics to uncover insights from those with similar accounting workflows. The community builds camaraderie through shared challenges and success stories. Forum members generously devote time helping others, embodying the spirit of Xero's brand.
For requests better handled directly by Xero's support team, users can submit private tickets to report software bugs or ask complex configuration questions. But for many daily queries, Xero's user forum offers a quicker path to solutions thanks to engaged peers.
The user community represents a strategic asset for Xero, strengthening brand loyalty and lowering the customer support burden. By catalyzing user-to-user assistance, Xero multiplies its reach and influence.
App Integration Ecosystem: QuickBooks vs Xero vs Zoho's Add-On Arsenal
Explore the variety and versatility of third-party integrations offered by Xero, QuickBooks, and Zoho, with a focus on productivity, flexibility, and specialized solutions for accounting professionals.
Open API vs Partner Integrations: The Pros and Cons
Xero, QuickBooks, and Zoho each take different approaches to enabling third-party integrations.
Xero relies primarily on its ecosystem of over 1,000 app partners that provide tailored solutions for industries like ecommerce, nonprofit, manufacturing, and more. This curated approach ensures quality and compatibility for accountants. However, there may be limitations in creating highly customized integrations.
QuickBooks, on the other hand, offers an open API that developers can use to build custom integrations from scratch. This provides more flexibility for accountants to connect QuickBooks to their existing software stack. However, quality control over these integrations lies with the developers themselves.
Similarly, Zoho Books allows developers to access API documentation to build Zapier and custom integrations. Over 750 apps are currently available. Like QuickBooks, this enables flexibility through customization but may have variability in integration quality.
Overall, each platform's approach has trade-offs. Xero's partner ecosystem provides specialized yet standardized integrations. QuickBooks' open API enables more customization and versatility. And Zoho connects with popular tools like Zapier for lightweight automations.
Specialized Software Synergy: Industry-Specific Integrations
Xero shines when it comes to industry-specific integrations that sync seamlessly with niche software.
For example, Xero's integration with Vend point-of-sale provides accountants real-time reporting and automation for retail clients. Transactions flow directly into the accounting software without manual entry. This saves significant time while reducing human error.
Another great example is Xero's partnership with ReceiptBank, which helps accountants simplify bookkeeping for clients. By automatically extracting and categorizing expenses from receipts, accountants can focus on high-value advisory work rather than manual data entry.
While QuickBooks and Zoho integrate with some popular niche tools, Xero's partnerships with specialized software tailored for industry verticals like retail, ecommerce, nonprofit, and manufacturing provide helpful synergies out-of-the-box for accountants with clients in those sectors. With pre-validated compatibility and branded partnerships, Xero's third-party integration ecosystem empowers productivity through automation.
Conclusion: QuickBooks vs FreshBooks vs Xero - The Ideal Accounting Fit
As we have seen in this article, both Xero and QuickBooks have strengths and weaknesses that make them suitable for different types of accountants and accounting needs.
QuickBooks may be the better choice for accountants working with small businesses that need robust inventory management and job costing features. The learning curve is gentler with QuickBooks compared to Xero, but it lacks some of the automation and flexibility of Xero.
Xero shines when it comes to streamlining accounting workflows, providing accountants with excellent automation, collaboration, and flexibility. The mobile apps and integrations available make Xero a great fit for accountants working remotely or with clients across different locations and time zones. However, Xero may not provide the depth of functionality some accountants need for niche industries.
Ultimately, assessing your client's unique needs and accounting priorities will determine whether QuickBooks or Xero is the better solution. Both platforms aim to simplify accounting processes, but their specific strengths dictate what types of accountants can benefit most from adopting either software. With an understanding of these key differences outlined in this article, accountants can make an informed decision on the best accounting platform to propel their business growth.
