Accounting is pivotal to the operation and success of companies and businesses across the globe. Professionals in this field help organize and collect information pertaining to an organization’s revenue and spending and use that information to create a detailed picture of its financial health.
To help them paint that financial portrait, accountants can use various professional and technological tools to collect and organize data. Two popular and helpful digital tools accountants use are Xero and QuickBooks: accounting software that can help them navigate financial tasks, create invoices, and process customer and vendor information more efficiently.
As new companies emerge and established businesses grow and become more complex, they’ll require the services of accountants who know not only how to use these different types of accounting software, but also their similarities and differences.
Comparing Features: Xero vs. QuickBooks
Created in New Zealand, Xero (pronounced zee-row) is also well known in Australia and the UK. Xero is cloud based and offers a simplified, intuitive user interface. First-time users with limited or no accounting knowledge can use Xero’s straightforward approach to managing inventory, invoicing, paying bills, converting currency, and running the payroll, among many other features.
QuickBooks is an accounting software that provides accountants, small business owners, self-employed people, and freelancers with tools to manage clients, vendors, customers, finances, and inventory. The majority of its users are American business owners, accountants, and employees. QuickBooks Online is the cloud-based version of the accounting software, while traditional QuickBooks is designed for desktop computers.
Xero and QuickBooks both enable financial and accounting professionals to maintain and monitor their financial activity and history. Accounting professionals can input a range of financial transactions, such as a $12,000 payment for an office renovation, a $500 check to an outside contractor or freelancer the company works with, and even a $10 purchase of office supplies.
By using these software programs, financial and accounting professionals are able to paint a clearer picture of the finances. The software can show them how much their company is owed, how much cash they currently have on hand, and in what areas they’re spending the most. The software can also help them prepare reports and documents, such as invoices or account receivable (AR) and account payable (AP) reports, necessary to conducting financial activity.
Since Xero and QuickBooks are both used for accounting, they do have many common features, including the following:
- Online accounting
- Banking synchronization
- Invoicing for vendors and customers
- Financial reporting
- At-a-glance view of cash flow
- Bank reconciliation
- Multiple currencies
- Document sharing
- Billing management
- Countless integrations and add-ons to improve functionality
- Outstanding balance display
- Mobile friendly
- Free trials
Desktop vs. Online Interface
Since Xero was specifically designed to operate in the cloud, it’s set up for smartphones and tablets. Xero has a mobile app called Xero Touch that lets accountants monitor real-time cash flow and keep track of transactions while traveling.
In the QuickBooks mobile interface, most desktop functions are retained, but it may look a bit cramped on a smaller screen compared with Xero’s interface. The QuickBooks tablet app has many features and is much easier to look at since tablets provide a larger display.
Bank reconciliation enables professional accountants to verify the accuracy of all the money coming and going from their businesses’ or organizations’ financial accounts. Accounting professionals can use real-time cash flow insights to keep track of uncleared checks, which may represent outstanding invoices and also monitor AR via deposits. In turn, accountants can understand their organizations’ finances that much more clearly and help them make and suggest more informed business decisions.
Xero and QuickBooks both have bank reconciliation features, but the user experience is different for each program.
Accountants can use Xero to match invoices and receipts with transactions and to spot errors and potentially fraudulent charges. In Xero, users are presented with two columns: a left column showing bank statement line items and a right column showing recorded transactions.
Accountants using QuickBooks can take advantage of the software’s search engine approach: they can choose the account they want to reconcile and systematically check off matching transactions individually within the program. Ultimately, accountants can use both Xero and QuickBooks to accomplish these same tasks but in different ways.
Ideal Company Size and Industries
Many financial professionals believe that QuickBooks is ideal for small, large, and even enterprise businesses. It has maintained an established reputation as the go-to accounting software since Intuit launched the first version almost 20 years ago.
Financial professionals often cite Xero as ideal for small businesses and freelancers. It’s useful for professionals in various types of industries, including retail, e-commerce, farming, and real estate.
However, it’s important to remember that while Xero and QuickBooks each have benefits, financial and accounting professionals need to evaluate the strengths of each program before deciding which is a better fit for them. There may be freelancers who can reap more benefits from using QuickBooks or large businesses that may find Xero is the best fit for their unique needs.
Xero and QuickBooks both offer third-party app integration to help enhance functionality. Xero integrates with more than 300 business apps, whereas QuickBooks integrates with about 60 as well as with its own products for services like payments and payroll. Both programs work with file sharing apps like ShareFile.
When comparing Xero vs. QuickBooks, it’s important that accountants know that both systems offer a 30-day free trial, so they can test all the various features and functionalities before deciding which software is best suited for them.
QuickBooks may be the more affordable option of the two, depending on what services a user needs. Its lowest-priced plan, Freelancer, is $5 per month and enables professionals to track employee miles, income, and expenses over time; estimate quarterly taxes; run reports; produce invoices; and accept payments.
The other plans fall under Small Business and offer slightly more advanced features as the prices rise:
- Simple Start ($10 per month)
- Essentials ($20 per month)
- Plus ($35 per month)
- Advanced ($75 per month)
Xero has three plans: Early, Growing, and Established. These plans are offered at $9, $30, and $60 per month, respectively. More expensive tiers offer additional functionalities and services.
Xero vs. QuickBooks: Support
Both Xero and QuickBooks offer accounting and financial professionals support in multiple ways, including the following:
- Live support
- Support tickets
Xero has more than 400 partners that help make its software run seamlessly and improve the customer experience. Current integrations include Evernote, PayPal, Gusto (formerly ZenPayroll), and Squarespace.
QuickBooks integrates with Intuit’s industry-specific solutions, including accounting software for construction and manufacturing companies, nonprofit organizations, professional services, and retail operations. It also integrates with other QuickBooks applications, including QuickBooks Payroll and QuickBooks Payments.
Enhance Skills with an Online Master of Accountancy
Xero and Quickbooks are fundamental software tools that can be used to understand a company’s financial operations and health. Businesses rely on skilled and dedicated accounting professionals who not only fully understand how to use both programs, but also can determine which is best suited to help their organizations grow and succeed.
Ohio University’s online Master of Accountancy (MAcc) is designed for professionals who aim to further their accounting career. The curriculum is entirely online and includes courses in management, auditing, forensic accounting and fraud examination, accounting theory and research, data analytics, and organizational behavior.
Learn from real-world scenarios while developing in-demand skills like data analysis, a key factor in important business decisions. Choose one of three pathways to your MAcc: Advanced Accounting Track, Business Background Accounting Bridge Program, or Non-Business Background Accounting Bridge Program. Discover more about Ohio University’s online MAcc today.