If you are searching for cloud-based accounting software to strengthen your business, the two most popular ones you will come across are Xero and QuickBooks. Not only are they popular, they are also the best products in the cloud accounting software domain.
Let us look at both in detail.
What is Xero?
Developed in 2006, it is a very popular online accounting tool used by small and medium-sized businesses for sharing their financial information with members of the firm. It is a fully cloud-based software – meaning you can enjoy unrestrained access regardless of your location. Your data will be securely stored in the cloud and can easily be shared among the accountants, managers and other professionals of your organization.
Xero is compatible with major platforms such as iOS, Windows, Android, and Mac. The software’s artificial intelligence prowess allows you to generate multiple invoices and undertake large transactions very easily.
It is a great tool to use if you are not proficient in accounting. If you are a business owner or an employee, the software will help you take better financial decisions based on the data.
Features of Xero
The various features of Xero are:
- It offers you over 500 add ons, that you can integrate to enhance its functionality
- The dashboard is labelled neatly and is easy to understand
- It can observe all the transactions in real time
- You can prepare reports like profit and loss statements, company balance sheets, and periodic budgets
- Features like inventory management, online invoicing, purchase orders etc. will let you save time
- You can group customers and suppliers to handle financial data in an easy manner
- Fixed assets can be easily managed
- You can take advantage of its cash coding feature to handle multiple transactions without the risk of errors
What is QuickBooks Online?
QuickBooks was introduced in 2004. Its primary job is to help users to handle business accounting operations in an efficient manner. It can also track your financial and sales data online.
This software is used through a web browser. You can run it across web browsers like Internet Explorer, Google Chrome and Firefox.
It can assist you in performing the following functions –
- Manage daily transactions
- Make bill payments
- File taxes
- Create invoices
- Analyse and monitor your sales
Features of QuickBooks Online
Let’s look at the various features of QuickBooks –
- It allows you to schedule transactions
- You can attach and send files, pictures, documents and signatures with your transactions
- It allows you to relabel customer names. This can come handy when there two customers share the same name or there is a need to name a customer differently
- You can access to unlimited reports and time tracking
- It can create multiple budgets in a financial year
- QuickBooks allows you to integrate third-party applications very easily
- You can connect up to 3 monitors via the multi monitored mode
- Track changes via the audit logs and review your financial operations
QuickBooks vs Xero
Now that you have a clear understanding of both, let us compare them and figure out which is a better option for you.
The Xero basic plan starts from $9 a month that includes 20 bank transactions, 5 bills and 5 invoices and quotes. Although it allows an unlimited number of users, its basic plan puts a cap on the features. Xero’s $30 plan does not include new features but removes all restrictions of the basic plan. Finally, we come to its $60 plan, where it allows you to track expenses and includes multiple currencies.
QuickBooks’ basic plan called Simple Start, costs $20 per month and is ideal for small businesses. It offers features like expense tracking, invoicing, estimates, handling sale taxes and reporting. However, unlike Xero’s basic plan, here only one user can access it. Its $30 plan allows three users to access it and includes two additional features – time tracking and bill payment.
QuickBooks offers payroll processing, which cost either $19 or $49 per month, depending on your needs and then $2 for every employee. Xero doesn’t have this feature but it integrates with other applications that offer this feature.
Overall, the basic plans are more or less similar. In the high-end plans, QuickBooks beats Xero with its payroll-processing feature.
Ease of Use
Xero is very user-friendly – it has a simple workflow and easy to navigate user interface. Its dashboard is easy to use, which makes paying bills and sending invoices a hassle-free and convenient process.
QuickBooks Online version is not user-friendly and has many features that might confuse users in the beginning. It will be a while before you perfect its use.
Xero boasts of a 99.97 % uptime rate, data encryption, redundancy, two-step authentication to provide high data security to users. Xero’s security apparatus is well known in the cloud-computing arena.
In QuickBooks, there are similar features like data encryption, firewall protection, data backup and redundancy, but its users have reported outage and downtime.
Xero is the clear winner here.
Xero’s mobile applications let you handle bank transactions, store customer information, record expenses and send invoices quickly. However, the application is not very popular among users, as they have complained about bugs and frequent crashes.
QuickBooks Online lets you send invoices faster, easy expense tracking, uploading photos of your receipts and profit/ loss analysis. Its easy to use interface has impressed users and is one of the main reasons for its high ratings in both iTunes and Play Store.
Both the accounting tools have enough integrations to get your job done.
QuickBooks comes with around 590 integrations. But Xero beats it in this case, having more than 700 integrations.
There are no user limits in Xero right from its basic plan. QuickBooks allows only a single user to access its features in its basic plan. Its higher end plans allow you to add more users.
XThe features of Xero and QuickBooks are very similar. In areas such as tax support, lending, project management, invoices, QuickBooks races ahead. Especially lending, as Xero does not have this feature.
In terms of invoicing, QuickBooks is better because Xero’s usability is limited in the basic plan. On top that it has only one template. QuickBooks offers multiple templates from built-in packing slips, The feature makes it very useful if you own a small business.
Xero has stronger user permissions so that you can control who has access to the features. For example, the Manage Users permission allows you to restrict the access of other users. Other permissions include Payroll admin, Bank account, Projects and Submit BAS.
In QuickBooks, the Master Admin permission can allow you to add users, alter billing information, and send money. The Company Admin permission can supervise everything, but cannot remove the Master Admin’s access.
Over the years, users of Xero have provided a high number of positive reviews for the product as it is easy to use and has an amazing interface. But they have faced issues with their mobile application and recent pricing plans have created some discontentment among the users. Overall, it has received high ratings on all major platforms such as Play Store, G2Crowd and GetApp.
QuickBooks has received more negative than positive comments as compared to Xero. Some users have complained about poor customer service, no email support and the steep learning curve.
The Final Verdict: Xero or QuickBooks Online?
QuickBooks has many features for assisting the users but the plans are costlier than Xero. On the other hand, the Xero software offers a very interactive and simple interface for the users. So, if you are a newbie to the world of accounting software, Xero is the best choice. As an employee or a business owner, Xero will assist you to obtain real-time data about your company.
Apart from this, the community of Add on solutions is growing slowly for Xero and this is expected to improve its overall functionality massively in the upcoming years.
But if you want the better deal and want to take your business to another level, QuickBooks is the better option. Although the interface is a little tricky, it offers you a large number of pre-built reports to make life easier for you. It has a scorecard feature that lets you analyze the business performance. If you want merchant processing and payroll processing, QuickBooks can take care of that too.
Therefore, the choice depends upon whether you are looking to scale up your business or just start a small venture when it comes to choosing the right accounting software. As both Xero and QuickBooks can be used for tracking the finances at a small scale to large-scale business, figure out your requirements first and then pick one accordingly.