In Pursuit of Profit
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At their lowest plan levels, Xero is more affordable but QBO is a better value because it offers users many more features at a higher price point. Xero’s base plan severely limits how many invoices, bills, and bank transactions can be created. It also does not include any reporting or expense tracking functionality, making it far too simplistic for most businesses. However, the ability to add unlimited users is a strong benefit for companies that do not have centralized operations.
Their mid-level and highest-level plans are similarly priced and aimed at similar business segments, making them a more even comparison of QBO and Xero.
QuickBooks and Xero both utilize recurring invoices, but the similarity effectively ends there when it comes to accounts receivable. Xero has a strong offering for consultants and retail shops with respect to receivables, while QBO leads across many of the remaining industries.
QBO allows for invoice customization from within the software, offering users the choice to select different layouts and colors as well as upload a company logo. The result is a well-designed output that makes even smallest businesses appear extremely professional.
Xero requires that a custom template be uploaded after being created in Excel or elsewhere.
With QuickBooks payment reminders can be individually set, allowing more customization for key accounts. This is an essential feature for businesses that offer flexible payment options to select customers. It is also helpful for companies with customers that pay by check, require purchase order approval, or have negotiated longer payment terms.
On Xero all accounts are automatically notified seven days after the invoice due date if payment has not been received.
Xero integrates invoicing and inventory tracking at every plan level, making it a cost-effective solution for online retailers of all sizes.
QBO does not include inventory features as a standard offering, but they can be added for a fee. Typically, however, retailers that want to use the QuickBooks platform and have inventory needs will benefit most from purchasing QuickBooks Desktop instead of adding these features onto QuickBooks Online.
Xero integrates with time tracking apps and invoices customers based on hourly rates.
While hourly billing is technically available through QBO as well, it is much more difficult to achieve. Integrated project management tools allow for time tracking but the subsequent billing is much trickier.
Terms and Conditions
QBO contains a field on invoices that businesses can use to include notes or provide terms and conditions for customers.
Xero does not offer this same capability, necessitating that companies offer terms and conditions separately. While this may seem like a minor difference, service providers that require acceptance of terms from customers before providing services may have trouble obtaining it (or enforcing the terms later) because they have to send terms and conditions separately.
QuickBooks easily integrates payment processing into invoices, giving customers the option to click and pay directly from within invoices. The result is expedited payment and greater customer satisfaction.
Xero requires customers to pay invoices through a third-party payment processor like PayPal, adding an extra step between customers receiving their invoices and the business getting paid.
Unlike QBO that provides robust reporting and tracking capabilities across all plans, expense tracking is only available on Xero’s highest plan level. However, even without that functionality, Xero still offers some advantages when it comes to accounts payable.
Xero’s biggest competitive advantage is in new bill creation and payment. It is incredibly simple to create recurring bills in Xero for predictable expenses like utilities. The result is a user-friendly solution that takes the sting out of bill paying. Additionally, Xero separates upcoming and outstanding bills to make it easy to keep them organized and pay them on time, which is why it is viewed as a more forward-looking accounting solution.
QBO has far more steps to create new bills and recurring bills can only be created from an existing bill that has already been paid. This creates inefficiencies because users have to wait until a bill comes due and is paid off before generating subsequent bills, duplicating work.
QuickBooks is one of the few accounting solutions that is large enough to offer their own short-term lending for businesses.
Xero and other competing platforms may promote third-party financing options to receive a commission for referrals, but none provide their own offerings.
Neither solution offers payroll functionality as a standard feature. However, QBO provides the option to add payroll services onto their plans for an additional fee.
Xero does not have any payroll features, but it integrates with various payroll apps.
While QuickBooks remains the most popular online accounting platform among business owners nationwide, Xero is the top alternative.
The Accounting Solutions Partners team has expertise with many accounting software systems. If you need help, take a moment to reach out to us here >