Here’s a comparison of Xero to Quickbooks our team member Virginia Jackson, CPA put together after we both underwent Xero training, and are now proud to say we’re “Xero Certified Advisors”. So check it out, and let us know if you’d like to learn more about how Xero might help you!
“Both Xero and QB provide access to accounts receivable, accounts payable, invoicing, general ledger, bank reconciliation and reports functions. However, while QB requires some amount of knowledge about basic accounting terms and concepts in order to be use most efficiently and effectively, Xero requires little to no accounting knowledge. Xero marketing focuses on the idea that it is easy to use, and the integration of simple terms like ‘Spend Money’ or ‘Receive Money’ make Xero intuitive and user friendly. However, it also includes tabs for Accounts Receivable and Accounts Payable, which will make an accountant feel like Xero is also speaking their language.
The pricing for these products is about the same but Xero seems to have the advantage when it comes to accessibility. First, Xero allows for unlimited users at no additional cost. And because Xero is cloud-based, there is no need to e-mail accountant or portable files back and forth between client and accountant. Both client and accountant can access Xero files from any computer with an internet access at anytime.
One of the best features of Xero is its automated daily bank uploads. Xero is a global product which integrates with almost all banks and will automatically download your transactions on a daily basis. The reconciliation process is easy and setting up bank rules so that your bank transactions are matched to the correct account is a breeze. I did find the process of finding and correcting transactions after they were reconciled a little confusing. I also think that using the term reconcile for the process of matching bank transactions to Xero transactions might be confusing for accountant and bookkeepers who are expecting to have to complete a traditional bank reconciliation. Xero’s automated download and matching process are much more user-friendly than the QB bank download which must be manually initiated. Although this post is focusing on the features of QB desktop version, I will note here that the QB online version will automatically download your bank transactions. However, the review and matching process in Xero is still much more user-friendly than the process required by QB online.
There are several areas where QB still has the advantage over Xero. One area is payroll processing. While QB is a leader in providing small business payroll services, Xero does not provide a full service payroll options. Companies wanting a service that will calculate payroll tax withholdings and deductions will need to use an add-on service for Xero. [Update 3/2013: Xero is planning to release payroll functionality in 2013.] Another area that QB excels in is the area of payment process. QB supports merchant account payments and has several other options for receiving electronic payments from customers. Xero will import information from your bank or PayPal account after the payment is received and deposited, but they do not provide other methods of receiving payments. (For this you could use an add-on like Freshbooks.)
Quickbooks’ reports are also more robust and provide more options than Xero. Because the QB has been around for so long, their reporting features are more mature and will meet the needs of accountants who need to customize reports for their clients.
A few other areas to highlight:
- Xero–Compatible with Windows, Mac, iPhone, Android, Blackberry; QB–Compatible with Windows and Mac (limited functions)
- Xero–Limited to two tracking categories; QB–Unlimited classes for tracking
- Xero–Multi-currency functionality is more user-friendly and automated; QB–
Multi-currency functionality exists but requires manual process for updating exchange rates
- Xero–Fixed asset tracking is more user friendly and Xero will calculate depreciation for assets and post to general ledger; QB–Fixed assets can be tracked using Fixed Asset Manager but depreciation entries must be manually entered
- Xero–Printing of 1099′s is not available (but is being worked on), information must be exported and entered into another system [Update 3/2013: 1099's can now be prepared from Xero]; QB–1099 forms can be printed from within the software
- Xero–Inventory tracking is not available, must use an add-on; QB–Inventory tracking and job costing options are available within the software
Overall, both are great products. For the client whose business is more mature and requires a full suite of accounting options and flexibility, QB is still the way to go. However, for the smaller start up company who needs basic bookkeeping functions and a solution that is easy to use and doesn’t require a lot of time for upkeep and data entry, Xero is a better alternative.” VFJ