Two of the most popular online accounting software used by small business owners, professionals, freelancers, and accountants are QuickBooks Online (QBO) and Xero. Both pretty much offer the same features that companies need to run accounting tasks like billing and invoicing, completing purchase or sales orders, making bank payments, and even managing payroll. When you take the time to consider Xero vs. QuickBooks, what would be the difference?
QuickBooks has been around longer with its desktop versions so it is the more familiar name for business owners looking to get an accounting system. So, it was easier for Intuit, the makers of QuickBooks, to gain users when the online version came out in 2004.
Xero, from New Zealand, came out two years after QuickBooks Online launched. While QBO gained over two million users in recent years, Xero has slowly been growing its consumer base to nearly a million.
As much as both software offer similar functionalities, they also boast unique features. Below are the 5 differences that make Xero vs. QuickBooks Online standout.
1. Pricing Schemes
QuickBooks Online and Xero offer a three-tiered monthly pricing scheme depending on the version the user purchases. QuickBooks, however, offers a slightly more affordable pricing plan than Xero.
Xero’s Starter Plan has too many limitations compared to QuickBooks Simple Start. It offers just five invoices for 20 transactions in a month, which will not even suffice for small businesses and freelancers.
Yet Xero’s next tier, the Standard Plan, provides the same full features that you would get with QuickBooks’ Essentials Plan. With Xero, you get most of the features you’ll need for a seamless accounting system, including some features that may not necessarily be applicable in your business operations.
With QuickBooks, you get what you pay for. If you want additional features, such as managing bill payments and reconciling bank transactions, then you would subscribe to Plus, its highest tier. On the other hand, Xero’s highest tier also has full features, including the option for multi-language use.
Xero, however, does not require additional fees for technical support. QuickBooks Online subscribers, on the other hand, have to pay for this service on top of the monthly costs and the upgrade fees.
Some users like that QuickBooks’ tiers are more tailored to accommodate the size of their business compared to Xero’s extreme offers. Xero’s Starter Plan is quite useless but its Standard Plan has all that you need to begin using an online accounting software.
2. Software Features
Since both software programs offer a wide number of features that promise to streamline business operations and accounting system, it’s not easy to distinguish if one is better than the other.
For instance, QuickBooks and Xero are both capable of generating a secure bank feed that pulls the accounting data showing the profits and expenses of your business. QuickBooks and Xero also have invoicing and payment features that make it easier to transact with customers online. Both have convenient payment integrations with PayPal, Vend, and Shopify.
QuickBooks and Xero can also run the payroll system and documentation. However, some features like income tax calculations, managing client profiles (CRM), lending, and projects management, are not available in the low tiers of QuickBooks. Again, you would have to pay more for these features but this could be a deal-breaker for some business owners and self-employed workers.
Meanwhile, Xero doesn’t have a lending and project management feature for any of its tier plans. It also doesn’t have a highly functional reporting feature, whereas QuickBooks offer 80 different reports that users may customize for the sales, products and stocks list. However, Xero has over 500 integrations with other companies, while QuickBooks has about 200 integrations.
3. User Experience and Dashboard Functionality
Both programs have a well-designed, user-friendly and organized interface. But Quickbooks Online might have a slight edge since there’s a learning curve to use Xero. You need time to understand how the software works before you are comfortable with it. Xero’s setup can also be more complicated and time-consuming than QuickBooks despite the presence of support tools to guide users.
As cloud-based programs, QuickBooks and Xero can work seamlessly on any device that has access to the Internet and on browsers like Chrome, Firefox, Safari, Microsoft Edge or Internet Explorer. Xero may also be installed in a Linux system, while this is not possible with QuickBooks, for now.
Both accounting software programs also have mobile apps for iPhone and Android smartphones. Most users prefer the QOB app. It ranks higher on iTunes and Google Play Store than Xero’s app, which, according to reviews, can often crash and lacks the key features as the online version.
Data encryption is crucial to a cloud-based program and both companies make sure that their data centers are up and secure 24/7. QuickBooks has a 28-bit SSL encryption and different levels of authentication. Its data center regularly undergoes routine tests. Despite this, however, QuickBooks Online users complain of frequent outage and downtimes. One of the reasons for this could be because there are more users on this system than Xero.
On the other hand, Xero has a solid cloud security reputation and its data is backed up across multiple locations. The company proudly proclaims that it has a 99.97% uptime.
5. Customer Service Support
Users mostly rave about the support that Xero extends to its customers. Customer support is open 24/7 online and has a better response time than QuickBooks. Xero’s community forum is also more active with both users and in-house staffers offering advice and tips.
Aside from paying extra for online support for QuickBooks, you can only count on its technical staff for particular work hours. However, it has a dedicated phone line for its Help Center, something that Xero doesn’t provide unless you pay a fee.
Every software has its advantages and disadvantages, and it will vastly depend on the needs of your business. If you’re running and growing your small company, the last thing you should be dealing with is a software that won’t give you the right solutions.
The good thing about Xero vs. QuickBooks, however, is that they both come with a 30-day free trial. You can experience the benefits and drawbacks yourself before fully committing to a subscription plan.