QuickBooks Xero

Why I Have Chosen to Work With Xero

Written by Patti Scharf

In November 2015 I attended SleeterCon in Las Vegas (Accountex in 2016). It’s one of the very few agnostic conferences that serves users of Xero, Intuit, and Sage — along with dozens of other technology vendors that help bring those accounting products to the next level. The conference is a magnet for lovers of accounting technology.

Although Hector Garcia is very well known in the accounting technology industry, SleeterCon 2015 was the first time I had met him. We immediately had an engaging conversation about why we each preferred the software we were using. It certainly wasn’t a debate since it was obvious from the start that neither one of us would be swayed in the slightest, and we weren’t interested in “converting” the other person anyway. Rather, it was more of a discussion about why we personally chose one piece of software over the other.

Accountex (formerly SleeterCon) is awesome because it brings together great minds in the industry, who then get to interact and share perspectives. In that spirit we present this lively exchange between Patti Scharf (for Xero) and Hector Garcia (for QuickBooks Online).

After Hector told me about his practice, it was immediately clear to me why he would be using QuickBooks Online instead of Xero, and I suspect the reverse was true as well. We thought it might be fun to bring everyone into our conversation (for Hector’s part of this exchange, click here), so here goes…

My History and Perspective

Like most US accountants who have been practicing for more than a few years (or, “cough,” a couple of decades), I’ve had plenty of experience with QuickBooks, and for years, QuickBooks Desktop was my preferred tool. I was an Advanced Certified QuickBooks ProAdvisor and the whole bit.

Coming from the tax world, I often met with business owners who would bring us their QuickBooks files in September to complete returns for the prior year, and their books were in utter shambles. I couldn’t understand how a small business could effectively run their business with stale and/or disheveled information that was only updated annually.

When my husband and I started our business (Catching Clouds) in 2011, our intention was to create a business that could be run entirely in the cloud using tools that were built for the cloud. We wanted to run our business from any beach in the world, and we wanted our clients to be able to do the same. We wanted our clients to have current, accurate, and actionable information so they could make important business decisions on the fly.

Now our team of 11 does all of the bookkeeping, controller, and IT integration work for our clients. Our clients review financial reports in Xero and some do their own invoicing. But apart from that, they largely keep their hands out of the books. We don’t do any training beyond teaching them how to look things up in Xero because they don’t need to be (and in my opinion, shouldn’t be) bookkeepers. They are business owners and should leave the accounting to the professionals and spend their time growing their businesses instead.

Because of the nature of our firm, we want something solid, dependable, and efficient. We only use fixed pricing, so it’s in our best interest to finish the work as quickly and accurately as possible. We’ve tried QuickBooks Desktop (hosted), QuickBooks Online, and Xero, and Xero is by far our favorite for stability, accessibility, and efficiency. We very rarely need to contact support, but when we do, we get very productive responses. They may not have phone support, but you can request a call if needed. Overall, we’ve been very happy with Xero.

As I discussed in my last Sleeter blog post, we picked only our favorite tools for our niche clients, and Xero is the core tool in our business.

Some of our team’s favorite Xero features are:

  • Automatic bank feeds
  • Bank rules
  • Suggested coding
  • Cash coding
  • Depreciation & ability to roll it back if needed
  • Find and Recode
  • Integration with other apps (Hubdoc, Stitchlabs, Dear Systems, Bill.com, etc.)
  • Search (new)

By far, the biggest appeal to our team in using Xero is our ability to quickly and easily get data into the system without having to key in data by hand. People who feel compelled to type in every transaction one by one will probably hate this software. But for us, it’s unlike anything I’ve ever had the pleasure of working with, and it rocks my world. As long as our team is good with technology (they are) and understand accounting (they do), this system is great to use.

The system has the added benefit of being able to publish reports and store them in the software. So when we close the books, we can point our clients to the reports folder to review the updated financials. It’s easy for them and easy for us.

Apart from the solid accounting and cool bells and whistles that the software provides, there are some intangibles about Xero that make it the company we have chosen and continue to choose to work with:

Xero Just “Gets It”

Xero seems to understand that having a good accountant is critical to the success of small business owners. And this is probably the most important trait to us, since our entire focus is on helping our clients’ businesses succeed.

Xero is not about using accountants as sales reps for selling their product. You can see this in the (free) online training they provide to accountants and business owners. You can see it in their open API and network of hundreds of third-party applications used to customize accounting systems. You can see it in how they encourage small business owners to team up with accountants. You can see it in their total absence of per user fees. They genuinely understand that the key to success is through a complete ecosystem of data support and collaboration.

So Xero does what they do best — build great accounting software, and help others collaborate doing what they do best — build great add-ons, provide great accounting advice, and build great companies.

In my opinion, this is one of the biggest reasons why they have a growing base of raving fans.

Company Culture

Hand-in-hand with the “they just get it” piece is Xero’s company culture, particularly with respect to their relationship with accounting partners. Even as a fledgling little no-name company, we were always able to build a relationship with the Xero team regardless of how high up the individual was in the food chain. They are a down-to-earth, accessible group of humans who actively listen to feedback and constantly work to improve their product.

Ecosystem

Xero works with hundreds of add-ons, making it possible for us to customize the right solution for each client instead of having to depend on the features inherent in one piece of software.

Even though we specialize our tools for a niche industry, we still probably use close to two dozen add-on tools. It’s extremely important to the success of our company and the health of our clients’ businesses that the tools we use integrate well with the accounting system we’ve chosen. It’s also critically important that if there are integration issues, we can reach out to the product teams to quickly solve the problem.

Industry Driver

It became clear to us from the onset that even if Xero wasn’t (yet) the market leader in the US, they would be the ones driving the industry. Xero was built in the cloud and for the cloud beginning in 2006, five years after QuickBooks Online was launched. Xero crossed 500,000 worldwide users by June 2015, and they are arguably growing at a faster pace than QuickBooks Online.

I constantly hear fans of both QuickBooks Online and Xero mention what a great race this has turned into, but without Xero, the race would not exist. Xero, in my opinion, is absolutely forcing Intuit to step up their game, and they are driving the entire industry every day to be better than it was yesterday.

Bottom Line

I personally don’t care who the market leader is today. I want to use a product that I trust, built by a company that is driving innovation. Business owners know more and are demanding more. They are actively seeking out alternatives, and the Internet makes those alternatives easy to find. A long legacy, an inspirational talk by Oprah, or nifty swag can only go so far. It’s the company’s vision and day-to-day hands-on experience with the product that are going to create raving fans who will help create the next big thing.

As Seth Godin, a popular blogger and thought leader, mentioned in his recent blog post:

“When one surveyed people in 1996, most thought AOL = The Internet. They were the same thing, game over. Then, of course, just four years later, Yahoo cornered the market.”

“… it’s hard to imagine the next thing. Until it’s here.”

I don’t claim to know whether that next thing for the accounting industry will be Xero, but… it’ll be fun to watch and see.

About the author

Patti Scharf

Patti is a blogger, speaker, and thought leader in the accounting technology industry and is the co-founder and Chief Controller for Catching Clouds LLC. She is a CPA and holds several current software certifications: Xero, Bill.com (Guru), QuickBooks Online, and FreshBooks and was previously an Advanced Certified QuickBooks ProAdvisor. She absolutely loves designing effective accounting systems for ecommerce businesses and is committed to advancing the artistry of accounting through the use of technology.

25 Comments

  • Hi Patti and Hector,

    Enjoyed reading both of your articles and positions on the products chosen.

    Who chose whose article went first? Any chance of debate at AccountEx 2016?

    Charlie.e.e… remember our Click and Clack note. Don’t drive like my brother.

    Or was it by lottery or drawing straws? We hope so… Anyway.

    Having met both of you first via Social Blogs and then in person, I can say you both are very different people, in style, business practice, clients, and approach to the accounting software marketplace. It is a huge factor in the decision making process when selecting products for a company or practice.

    These articles were both enjoyable reads. Sharing is good for this Industry.

    We really enjoyed the banter on “Cash Coding”. It truly is unique to Xero.

    Other topics could be Multi-Currency, open API’s and who’s Ecosystem or Platform is it anyway? Even, Sage and SAP have been energized by Xero.

    Xero’s arrival in the global marketplace has really poked many sleeping Giants.

    Thanks Patti for poignantly pointing this out here and in comments on Hector’s article. Thanks Hector for your response and getting to post first…

    Respectfully,

    Tamra

    Tamra Groff, Senior Consultant, GASC/GHFG

    • Hi Tamra – thanks for commenting.

      The editors chose whose article would be posted first (mine), but I’m not sure how they decided. My guess is that since Intuit has a larger following (in the US, at least), posting mine first might’ve sparked anticipation for the one to follow. But again, that’s just a guess.

      There hasn’t been talk of a debate, but I’m not sure a “debate” is the right term anyway… both are reputable products and companies. We (Hector and I) just each chose the product that fit our needs best.

    • Tamra, one of the articles had to come out first, since we can’t publish two simultaneously…

      In this case, Patti’s article went out first because Patti got the completed article to us first. That is the only reason why one was sooner than the other…

  • Hi Patti,

    Agreed, Debate is not the right term, but a comparison or analysis; maybe an Analyst Roundtable. Because as you and I both know, a comparison or roundtable is good for all, clients, consultants, and vendors, alike. We all learn and benefit.

    Anyway…Agreed you and Héctor both chose what is best and benefits each.

    We like an industry full of App.s, then all have choices and changes are enabled.

    Respectfully,

    Tamra

    Tamra Groff
    Senior Consultant, GASC / GHFG

  • Hi Patti,

    Thank you for the review. I’m a small business owner and frankly hate Intuit as a company and would love to get away from QuickBooks. I read glowing reviews of Xero and signed up for a trial. I’d like to give them my business because they also have more usable forums with much better interactions with their customers.

    But trialing it, one of the things that struck me was how painfully dumbed down it was. That may be good for a lot of small businesses, but it’s not what I want. Maybe getting information into it is faster, but God was it painful to see what was “behind” a transaction. Things that are 1-click in QB took me 3 or 4 clicks sometimes having to look at multiple screens to see the data behind a transaction, I couldn’t believe how inadequate it was.

    Anyhow, those are my thoughts. I still wish I could switch to it, which is why I’m posting here, I’d be interested to hear your response to my comments above.

    Thanks,

    David

    • Hi David,

      I guess it really depends what you are doing in Xero.

      In my opinion, the beauty of Xero is in getting the information *into* Xero in a super-efficient and clean way.

      I think Accounts Payable (bills) is cleaner and easier to use for small businesses as is Accounts Receivable (invoices). I love the ability to customize bank rules in a finely targeted way. I love Cash Coding (which is available for accountants, so you may not have access). And from the accountant’s side, it’s also super-easy to share reports and provide insights by publishing reports within the system.

      The one thing that I feel Intuit does a better job at (so far) is ease of reporting. In QBO, I can look at an income statement, click one button, and it drills down into detailed reports nicely. You can get there with Xero, but like you said, it sometimes takes several clicks and several screens to get there, and that can be annoying.

      The way you’re describing your issue, it sounds like you’re trying to review a P&L to see what transactions are making up the number in a particular account or something like that.

      One trick I use for reviewing the income statement… I’ll pull up a report and right-click on the amount I want to drill down into and open that in a new tab. I can look at detailed reports in no time at all without having to go through multiple screens to get to that detailed info. I do it all the time… so it’s 2 clicks instead of one, but for all the other benefits Xero provides me, I’ll happily pay that toll.

      Hopefully that helps.

      Patti

      • Thanks for the prompt response Patti. I wish I could give the exact example, though I did give a very specific one in my post below about purchasing. What I recall is I was testing the online banking features (which I agree are nicer by a hair than QB). Once I had reconciled some transaction and assigned them to certain accounts, I wanted to click on them and make sure I had assigned all correctly. Amazingly, I found it impossible to do without jumping through hoops. That concerned be greatly, as IMO it encouraged not catching accounting errors.

        • Yep. My advice above should fix that problem.

          Believe me, I am a pro at catching accounting errors. Xero doesn’t get in the way of that at all for me. ;o)

  • BTW, here’s a more specific example of something I just remembered. You can’t even do something in Xero as ridiculously basic as receive items against purchase orders, all you can do is mark a purchase order as “billed”. Nor can you partially receive items against an order.

    I mean come on, these are BASIC business requirements. It seems to me like reviews that seek to be even handed should acknowledge these types of huge issues.

    • Sorry, I was responding above and didn’t see this additional comment with enough time to respond at that moment.

      To be clear, this is not a review of the product. It’s an op-ed piece documenting my own personal experience and why I chose Xero to use in our practice. My goal was not necessarily to be “even handed” and list all the pros and cons of the product. In fact, in this particular case, it’s almost the opposite. I wrote about the things that pushed me towards Xero, and Hector wrote about the things that pushed him towards QBO.

      In our firm, the vast majority of our clients use a separate cloud inventory system (Dear, Stitch Labs, Shiphero, and so on) that integrates with Xero. As such, the PO functionality within Xero is irrelevant for us.

      I always recommend that people test out different systems to see what works best for them. This isn’t a one-size-fits-all world. Find what works for you and leave the rest.

      • Thanks Patti, I apologize for that last comment, I didn’t mean for it to come off like that. I was speaking more in general terms, I’ve read a lot of glowing reviews so I was surprised when I tested it to find it so lacking in what to me are fairly basic areas. To be clear, I do see the good in it too.

        Thanks again for being so resposive here.

        • You’re welcome, David.

          And no worries. I just wanted to make sure you realized this wasn’t an actual product review… just my personal experience and opinion.

          I do think that there is a big laundry list for both QBO and Xero of things they’d like to tweak and improve. I would be extremely surprised if your complaint wasn’t already on their list.

          Cloud accounting is still relatively young, and they’re knocking out the improvements as fast as they can (and as the public demands them). It’s my opinion that Xero is speeding up the improvements all around by challenging Goliath. Gotta love them for that.

    • Not paid. Just my opinion and experience.

      Please check out Hector’s blog post for his opinion and experience with QuickBooks Online which is the product he prefers.

      What software do you use and what do you like about it?

  • Hi Patti,

    Hilariously, it’s exactly 1 year from my last comment in this article and here I am reading your article again and evaluating Xero again. And remembering what I couldn’t remember last time. An example of the type of thing I take for granted is just being able to open the bank account register and see each (reconciled) transaction and as part of it the account it’s been assigned to (meals, travel etc.). I’ve probably just spent 30 minutes trying to figure out how to accomplish this dead simple thing in Xero (without having to click into *every* single transaction).

    I’ve looked at Bank Account transactions and Bank Statements. I’ve run numerous reports. None that I can find include the account column. The closest I can find is find and recode, but I haven’t been able to figure out how to limit it to a particular bank account. Surely there has to be a way to be able to look at a list view of a bank or credit card account, and see how the transactions have been assigned?! I hope I’m missing something.

    Thanks,

    David

  • And poking around a bit more I see this bizarre issue exists throughout the application. If the user looks at a list view of bank transactions, they can’t see what expense accounts the transactions were assigned to (without clicking into each one). On the other hand, if the user looks at a list of transactions for an expense account, they can’t see where the money came from (without clicking into each one). I can’t grasp how this is even possible in an accounting application….please tell me I am missing something :-)!

  • Patti, since you have been gracious enough to respond to folks questions here I thought I’d throw in one final (hopefully) question. Earlier you said “believe me, I am a pro at catching accounting errors. Xero doesn’t get in the way of that at all for me.”

    I’m curious how you would do that in Xero if I asked you to look at the bank transactions for the last year and see if you think they’ve been classified to the proper chart of accounts, when Xero doesn’t provide any mechanism to do this (other than clicking one by one).

    One of the most common things our accountant does and visa versa is send me a list of transactions for a specific account and ask me to review how some of them have been assigned. We had just signed up for Xero but without this functionality I’m having a hard time figuring out how we can use it. It seems like it makes it 100x more likely errors will be missed.

    Many thanks if you find the time to reply.

    • Hi David,

      Sorry – I was really busy yesterday or I would’ve responded already. ;o)

      Following are some options for you…

      1) Start with the Balance Sheet or P&L.

      This is what I use most of the time when I’m reviewing books for accuracy. I don’t start at the bank account register because I typically want to know where transactions ended up, not where they were originally entered.

      So for example, I’ll run an income statement, find what I want to investigate (i.e., Advertising for March), hold down the Ctrl button & click on the number. This opens a new tab with all the transactions coded to Advertising so I can see if they’re where they belong. From that screen I can change the date range, change between cash & accrual, drill-down on a specific transaction for more details, or even export an Excel report (or Google Sheet, my preference) for a deeper review. If there are a gazillion transactions, I’ll export to the Google Sheet, filter the headings & then sort or filter to my heart’s content.

      2) Use the Account Transactions report.

      Go to Reports / All Reports / (Accounting) Account Transactions

      I think this will give you exactly what you were looking for… you can choose which accounts to include in the report, and then it will give you all the transactions for a specific period of time.

      I hope this helps!

  • Thanks Patti! It’s very interesting hearing how someone else approaches it. Those tips were useful.

    I am spoiled by wanting to see both sides of the transaction in each row. Account Transactions (as with every other Xero report) only shows one side of the transaction, but never both. Journal is the only report that shows both, but it’s not very functional. Cash coding shows *everything* I want to see – except that once a transaction is coded both sides disappears never to be seen together again :-)! (without clicking into each transaction)

    Overall I like Xero much better than QB so I’m going to try to make it work.

  • Patti, since I’m sure this is below your pay grade, I wondered if you had anyone you could recommend for a Xero consultant that would be willing to consult in small blocks of hours – the challenge is I need someone that can give me solutions, not just tell me what Xero can and can’t do, which is usually self evident. I’m getting frustrated at the lack of documentation and answers on dead simple issues that we’re encountering as we test Xero, and would rather pay someone that can give us the answers rather than spend hours trying to dig them up.

    As an example we require PO’s for most purchases, regardless of whether they’ll be paid with check or credit card. And I keep finding dead simple task such as paying a purchase order>bill with a credit card appears impossible in Xero. Then my frustration becomes compounded because I spend an hour searching for what should/would be a 60-second Google search with Intuit or Intaact and….nothing.

    Every time I think we’ve turned the corner, I find a new “can it really be possible it doesn’t do this” and there never seems to be any documentation. Would love to have a person who can respond to these issues with knowledge and suggested workarounds.

    Thanks

    • Hi David,

      I think your best bet is to reach out to one of the sales reps at Xero to help you connect with the right partner. They will know (much better than me) the people who specialize in the type of consulting services you’re looking for.

      I hope that helps.

  • p.s. My question re: consultant still stands – even though I just figured out (DUH!) that I can pay a bill with a CC, but have to do so by clicking into it. I kept trying to use the “make payment” button from the list view screen, not unreasonably I think expecting to be able to select a source account, but a credit card cannot be selected there.

    BTW, I want you to know your articles have been immensely valuable as we’ve been tackling this, and thank you again. So far I think we are going to integrate Xero with bill.com, probably Hubspot, and now I’m evaluating expense tracking. The last seems to be the toughest to decide on so we may use the built in Xero functionality for a little while until we complete the larger integration with our main business software.