Xero vs QBO

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#1
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Recently I've been doing a quick analysis of bookkeeping software.

In a nutshell, I'm looking for a platform that's cost effective and gives us the data we need for small rental real estate partnerships.

I believe the only way to efficiently segment rentals in QBO is to use the class feature, which is only available in the Plus plan and up. This subscription level is $85/month which is not cheap in most clients' eyes. I also very much don't like that QBO is not able to generate a trial balance by class. It's a pet peeve of mine.

Xero offers tracking categories at all subscription levels, which does the same thing as classes in QBO. Further, it looks like most clients could get by with the Early plan ($13/month) or the Growing plan ($37/month).

I like Stessa for Schedule E rentals, but feel it's not equipped for a 1065.

Any thoughts on the current state of Xero or the above?
 

#2
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This is on my summer evaluation list as well.
My memory says that Xero's reconciliation feature left a lot to be desired. It also required a bank account connection, I think, which I don't like.
~Captcook
 

#3
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I'll let you know what I find out. I plan to do a trial of Xero in May or June. My concern is automation level and availability of accounting and management reports, particularly at the lower subscription levels.

One thing I do like about Xero vs QBO is that the interface appears more intuitive for the non-accountant based on what I've seen. Non-accountants using QBO often describe being "overloaded" by the features and menu options.
 

#4
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Xero gets the job done for most of my bookkeeping needs. Sure the reconciliations are not great but most of my bookkeeping is pretty simple and Xero has more than enough features for me to feel comfortable with it. I have about 30 clients on Xero and it is great having most of my clients in the cloud without the high cost of QBO. I am a Xero partner and they provide great discounts and support. I think I pay around $8 per month per client.
 

#5
MWEA  
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If a client doesn’t need invoicing features, we typically go to Xero. We also have about 30 clients on the cash book plan for $8 per month plan. Given the choice, I like QBO better. Given the price, I can live with Xero for simple accounts.

There are certain items in Xero we actually prefer. Some of the cash coding options are actually faster for our staff to complete versus QBO each month.
 

#6
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MWEA wrote:If a client doesn’t need invoicing features, we typically go to Xero.


After watching a few Xero feature videos I was under the impression that Xero had native invoicing and payment collection. Is that not accurate, or does it just leave something to be desired? Please expand if it's the latter if you don't mind.
 

#7
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Xero is the best. The bank reconciliation feature is probably the easiest to use and quick. Bank rules are the best and very customizable. I find QBO very clunky, hard to use and fraught with issues.

Also the reports features are quite good for xero and you can customize them as well.

The only thing I prefer about QBO is the iphone app. The xero iphone app is quite limited in its functionality from a reports perspective.
 

#8
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Not the original commenter, but I can talk about invoicing. Xero uses Stripe for CC payments and GoCardless for direct debit. The direct debit feature is what is lacking, as GoCardless automatically withdraws from the bank account after the client initially signs up. For myself and my clients, I want clients to initiate the payment every invoice. I still prefer it over QBO, but advice clients to use a separate invoicing system if they need that feature.
 

#9
MWEA  
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ManVsTax wrote:
MWEA wrote:If a client doesn’t need invoicing features, we typically go to Xero.


After watching a few Xero feature videos I was under the impression that Xero had native invoicing and payment collection. Is that not accurate, or does it just leave something to be desired? Please expand if it's the latter if you don't mind.


My comment was more geared toward the pricing difference becomes less when a client needs invoicing in Xero and at that point, I prefer QBO in most circumstances.
 

#10
MWEA  
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cpambt22 wrote:Xero is the best. The bank reconciliation feature is probably the easiest to use and quick. Bank rules are the best and very customizable. I find QBO very clunky, hard to use and fraught with issues.

Also the reports features are quite good for xero and you can customize them as well.

The only thing I prefer about QBO is the iphone app. The xero iphone app is quite limited in its functionality from a reports perspective.


I’m trying hard to like Xero better than QBO, but can’t quite get there. There are some things I like better like the “Find & Recode” feature and the ability to classify bank transactions faster.

However, the bank reconciliation is still a problem for us. Maybe we are doing something wrong. I’ll have to revisit it after tax season.
 

#11
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Same here. I got certified in Xero about 10 years ago, drank their Kool-aid and went all in. Tried for a year and hated it. It has gotten better, especially their reporting. Still don't like it. I really like QBO.
MWEA wrote:
I’m trying hard to like Xero better than QBO, but can’t quite get there. There are some things I like better like the “Find & Recode” feature and the ability to classify bank transactions faster.

However, the bank reconciliation is still a problem for us. Maybe we are doing something wrong. I’ll have to revisit it after tax season.
 

#12
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MWEA wrote:My comment was more geared toward the pricing difference becomes less when a client needs invoicing in Xero and at that point, I prefer QBO in most circumstances.


Sorry for all the back and forth. Does the growing plan not have full invoicing functionality?

https://www.xero.com/us/pricing-plans/
 

#13
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Even for my simplest of bookkeeping clients, I have found Xero to be pathetically simple and insufficient. I guess I should reevaluate it; it would certainly be simpler to talk clients into paying for Xero than QBO.
 

#14
MWEA  
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ManVsTax wrote:
MWEA wrote:My comment was more geared toward the pricing difference becomes less when a client needs invoicing in Xero and at that point, I prefer QBO in most circumstances.


Sorry for all the back and forth. Does the growing plan not have full invoicing functionality?

https://www.xero.com/us/pricing-plans/


I believe it does, but I don't have anyone on that plan. After we get a 40% wholesale discount on QBO Essentials, the pricing is virtually the same as the Xero Growing plan. I prefer QBO, so that's what we've done in the past.
 

#15
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I use both extensively on a daily basis: Xero for my own practice and QBO for my wife's business, as well as most of my clients businesses. The fact is that both work well, and both have certain strengths.

I'll give Xero the edge for the cleaner interface, and will argue that it feels faster. QBO's interface can feel a bit overloaded and gimmicky, but this can be fixed by getting your clients off "business view" on to the more conventional "accountant view" right off. I prefer Xero's integration with Stripe, Gusto, and Hubdocs, all of which I feel are superior to Intuit's offerings. Xero's Import and export of just about everything is more robust, although there are excellent QBO Excel Import / Export apps that level this advantage out.

QBO has a bigger network of banks that connect directly. Xero has a mix of direct and Yodlee feeds. Double check that the bank you need is supported. QBO is better at automatically suggesting and one click creating bank rules, although maybe a bit too eager at times. Xero's creation of bank rules is more of a manual process, which takes longer but is is safer. QBO also has a bigger network of connected apps which may mean you have no choice for a particular client.

One item that clearly stands out for QBO is the "Classes" feature. It's one of those easily overlooked features that can be incredibly useful. Xero has nothing like this.

Quickbooks also has better printing supplies. For example, Xero does not support preprinted laser bank deposit tickets of any kind. Something to know if your client takes a lot of checks.

Hope that helps.
 

#16
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Air Kevin wrote:One item that clearly stands out for QBO is the "Classes" feature. It's one of those easily overlooked features that can be incredibly useful. Xero has nothing like this.


This was my primary disappointment with Xero. I was hoping to use that platform for the many rental LLCs for which I do bookkeeping, but 'classes' are how we separate the properties. Without this feature, we'd have to arrange the GL in a way I didn't want. So, we're sticking with QB. Although, for the moment, all these are still QB desktop and not online.
~Captcook
 

#17
KoiCPA  
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As a solution for rental real estate specifically, I like Stessa.com. I do agree with ManVsTax, it is a little limited for partnerships, but I'd still encourage it over QBO, especially given the price tier that supports locations or classes.

On the topic of Xero, I've never seen the attraction. Their two main tiers of service are basically the same cost as QBO. I haven't tried to see whether the 13/month plan is sufficient in quite a while, but nothing there makes it a compelling alternative in my mind.

I loathe QBO, but I would suggest that those looking to save money look at the Tags feature. Tags are built in to every tier and if they're used consistently they can achieve most of the functions that classes did. They are different, though. For example, one transaction can have multiple tags, but it can't assign tags to a single line of a multi-line transaction.

QB desktop is still the way to go in my mind. Versions with permanent licenses are worth more than gold as far as I'm concerned.
 

#18
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I know I bang on about this software a lot but, for rental businesses with several properties, I challenge anyone to beat Moneyworks Gold by Cognito Software. It's a New Zealand company so some of its advanced features are intended for, or can only be used in, Australasia. It doesn't do US tax depreciation, for instance. It will do Book depreciation though. It is basically a manual system that harnesses the power of a computer.

For classes you need Gold or one of their online offerings. Gold is $549 (US) for a single license. You can also get a subscription and licenses after the first one are about a third of the full price.

I get why this software is a minority taste for many accountants. As software for a trading company, it can sometimes be a bit much. However, for rental businesses, I really do think it is a no-brainer. I am not the most expert when it comes to making computers work but even I was able to make templates for financial statements.
 

#19
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MWEA wrote:After we get a 40% wholesale discount on QBO Essentials...


How are you getting a 40% discount if you don't mind me asking? I get a 30% discount with ProAdvisor.
 

#20
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I've completed a relatively thorough review of Xero and am going to recommend it with "select" clients who need a bookkeeping solution moving forward.

Here are the things I liked:

--It's more condensed and less overwhelming than QBO. I think it will be less intimidating for clients who are not accountants.

--Classes, called "tracking categories" by Xero, are available at all subscription levels and have the exact same functionality as classes in QBO as far as classifying transactions and reporting goes. They can be added to a P&L report, Balance Sheet report, and G/L report. Unfortunately they can't be added to a T/B in Xero, however classes can't be added to a T/B in QBO either.

--Classifying and reconciling transactions is largely the same in Xero as QBO, however it's not as aesthetically pleasing I'll admit.

--Recurring invoices can be setup just like QBO. Late invoice reminders can be setup just like QBO.

--Price. I imagine most of my clients would be fine with the growing plan (currently $37 per month assuming no partner program discount).

Here are the things I didn't like:


--When reconciling transactions, switching to a separate account (e.g. checking, savings, credit card) requires you to scroll to the top and click a drop down box. They're not in separate bubbles up top like in QBO. "Out of sight, out of mind." I think this is mitigated by the dashboard, which generates a hyperlink to reconcile transactions when there are unreconciled transactions in any account.

--Invoices aren't as aesthetically pleasing as QBO.

--Sales tax rates and data seem to be integrated prominently into reports and invoices. This isn't necessary for US rental operations. It may be able to be removed, but I haven't investigated that thoroughly yet.

--Accepting online payments isn't as streamlined and integrated as QBO. You need to sign up with a third party processor for an account. But...it appears the Xero recommend third parties will auto categorize and reconcile these payments like QBO.

--Partner program discounts are less generous than QBO.

--The invoice interface and some settings interfaces look like they're straight out of the 90s. Very antiquated.

Overall, I'm going to give clients with a respectible or growing rental portfolio the choice. QBO has more bells and whistle, but for the cost conscious landlord, Xero is a valid choice IMO.
 


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