Xero vs. Quickbooks, from a Quickbooks User

, posted: 15-Mar-2010 13:13

I decided I'd better see what the hoopla about Xero is.  Is it as good as is claimed?  Will it save me huge amounts of time?  Will it make me huge amounts of money?

In short.  Not really, not yet, I really hope they get there.  But for now, I have to continue plugging away with QB.

What I liked about Xero:

  1. API - this is where Xero REALLY stands out, it's API is open, easy, and anybody can get in there and dig about with it.  Quickbooks in NZ, is the diametric opposite, clunky, hard, and you need to pay hundreds of dollars to get access, even then it apparently fails, lots.  I could see myself doing all sorts of coolness with the API to automate my business processes.  Big big plus.

  2. The "Always On" nature, down of course to being Software as a Service.  This pays dividends when it comes to things like recurring invoices.  With Quickbooks, if you don't have it running, nothing is happening. Combine with API for super goodness.

  3. Not bad support.  I had instance to ask a support question, I did it via email, and after only re-explainng the problem one time I got a more or less comprehensive response, it wasn't what I wanted to hear, but at least I got a response.  Reckon (the NZ producers of Quickbooks), well, I wouldn't exactly give them marks for support!

What I didn't like about Xero:

  1. Account numbers, no hierarchy.  Seriously.  Xero still wants you to assign an arbitrary "code" to your ledger accounts.  What on earth is that about?  Why should I, a business operator who has many more important things to think about have to remember that the "Internet Service" account is "721" or whatever.  And why can't I have sub accounts, Communications:Internet, Communications:Mobile, Communications:Landline, so I can see at a glance how much total I am spending on Communications and it's sub-types. 

    This is stuff that Quickbooks handles with total ease, I don't see account numbers in QB (unless I REALLY wanted to), I can shuffle, reorganise, recategorise, make sub accounts, sub sub sub accounts if I want, it's all so much more organised.  I read a blog post at Xero where, I think it was Rod, mentioned he's seen sets of books(I assume he's taking about Xero managed books) with HUNDREDS of accounts.  I couldn't imagine dealing  20 accounts in Xero with no hierarchy.  It'd drive me BARMY.

  2. No customer “jobs”, in quickbooks, customers have “Jobs” which are sort of like “sub customers” really. This is really important to me. It allows you to deal with different people within the same company for different jobs, it allows you to properly organise the jobs you do for the same company.

  3. Reporting.  Very lack lustre.  I guess it's early days, and that partly this is down to the "dead flat" accounts structure, but I found the reporting ability of Xero to be very inflexible.  If Quickbooks I can filter and modify and generally create reports to show exactly the information I want.  If I want to know how some "vertical" slice of my business is doing, "a profit center" if you like, I can easily do this.  In Xero, not so much.  It's just not there yet.

  4. Ease of use for "common tasks".  Perhaps it's just that I don't think in the way Xero thinks, but for me, Quickbooks is easy, and Xero is not. Let's take for example a typical work process, you want to

    1. Create some new invoices

    2. Receive some cheque and cash payments against already created invoices

    3. Record the deposit


    In Quickbooks, you hit the Invoices button, and enter the details, hit ALT-N and do the next one, ALT-N, next one etc.

    Then you hit the “Receive Payments” button, you enter the details of the cheque/cash payment (customer, date, amount, cheque number), hit ALT-N, do the next one etc, when you enter the cheque, the appropriate invoices are automatically selected for payment. No “matching” required unless you need to specifically change which of the invoices get the money, 95% of the time, Quickbooks is right.

    Then you hit the “Deposits” button, you highlight all those cheques you just recorded, hit the deposit button, print the summary so your bank has the list of cheques, and then call into your bank on the way to the supermarket.


    Later, you reconcile your bank account, and tick the single deposit amount to verify that it's present and correct. Easy as pie.

    In Xero, first up, I had to FIND the create invoice button, ok it's under Accounts Receivable, I know what that is, but this is unnecessary “technical” terminology for normal people, believe me, people get CONFUSED with terms, K.I.S.S! This should be a big, obvious, colourful button “SEND INVOICE”, it should be right there, on the home page, I see there is a button there, but it blends into the swimming screen of “babble”.

    Once I get there, entering the Invoice isn't too different of course, except there is more clicking and no keyboard shortcut (obviously at least?) for “save and next”. One organisation I do this stuff for, I have to enter about 50 invoices at a time, keyboard shortcuts are mandatory.

    What about entering these cheques and depositing then. Uh oh, this is where things really start to fall down, there is no defined way. It just doesn't exist. There is no button “RECEIVE CHEQUE”, simply no option. After discussing with support, I find that what you do is gather your cheques and cash all into a big bag, toddle off to the bank with no record of them in Xero at all, deposit, then at some point in the future, you will see the deposit in your bank account.

    Not only do we not have ANY record of the cheque/cash payment individually in Xero, we also have to rely on the bank getting it right, on me not accidentally number-switching on the deposit slip etc etc. Ok, Xero is designed mostly with “online single invoice” payments in mind, but that doesn't mean you can simply ignore the fact that many people like to pay with cheque or cash, not in my business operations at least.

    Let's overlook it for the time though, and pretend we have deposited that bag o'cheques into the bank, so we hit “Reconcile” on the bank account, in the demo account we have one handy so I'll use it and pretend this bag of cash was to cover invoices from three different customers.

    Now what? Ok, hit “Match”, that sounds reasonable, and Xero shows me I think all the invoices outstanding, so far so good, now which invoices should this payment apply to? Which customers? Hopefully we wrote them down on a piece of paper before we deposited that bag o'cheques. We'll assume that bag had $500 from “Ridgeway”, $100 from Marine, and $400 from “Basket Case”.

    Ridgeway is easy, they only have 1 invoice, so I click it, I see there is a “split” link, so press this and it allows me to do the part payment – I know this, but Joe Bloggs, running his business, no, he doesn't know this “split” thing! Anyway, I still have to refer to my “bit of paper from the bag o'cheques” to see how much they actually paid (lucky it was me who deposited the money and kept the bit o'paper and not somebody else or they'd be up the spout now).

    Marine, I wrote down they paid $100, but they have several invoices, so... how should this be applied, which invoices? So now I need to filter that list of invoices, I type in “Marine” into the search field, I expect it to on-the-fly filter, but no I must press GO, anyway, up come the Marine invoices. Which ones should I select, in this case the customer didn't specify to pay any specific invoices just “pay on the account” as is usual, so I tick the first ones... ok, so that's them, I can judge easily in this case that we are still less than $100, but in different circumstances that would be more difficult, there NEEDS to be a sub total here.

    Anyway, now I have to work out “how much more” I can apply, so I have to break out the calculator now (isn't this supposed to be easy, why am I doing maths on a calculator now), $100 - $32.06 - $32.06 - $32.06 = $3.82, so now I must split that last invoice... I sure hope I didn't mess these numbers up.

    Finally, reading my bit of paper I see Basket Case paid $400, I tick it. Even though this puts the total over the deposit amount, Xero doesn't automatically split the amount, offer to, or even give a suggestion that we should. Lucky I'm a smart cookie, I split the amount, how much was it again, back to the bit of paper, $400. Damn this basket case, still not paid up.

    PS: Three weeks later, Basket Case rings me up and says “hey, I sent you two cheques totalling $600, not $400, here are the cheque numbers, you banked both of them on the same day, you must have applied it to somebody else by mistake, can you fix that please”. In Quickbooks, I hit CTRL-F and search the cheque number, double click and correct the payment, job done. In Xero, uh oh, you don't KNOW the cheque numbers, I now have no way, except for possibly my bit o'paper outside of Xero, to know where that cheque went. Who got the credit from the cheque that shouldn't have, and even if I do find out, how do I go back and fix it now! I feel a sinking feeling!


This report was just from a brief look through Xero, seeing how it would work for the ways in which my processes happen, but what I think are fairly typical processes for businesses using Quickbooks. Businesses using other, less refined systems (cough MYOB cough) probably wouldn't see what I see as flaws in Xero.

I really would love to see Xero up it's game just that little bit more so that it can compete with the ease of use, powerful reporting, and “audit trailability/error fixability” (see the cheque searching above), because the points I like about Xero, I really do like a lot.

The availability of the API for me is so far up the list it's not funny, if it wasn't for the fact that I think Xero would take me so much more time and mental gymnastics to do the mundane task of processing cheque and cash payments (which I have to do a lot of), I'd look very hard at Xero and see if I could overlook it's other flaws, just so I could use the API.

So Xero, you are on the right track, keep plugging away at it, but for the time being, Quickbooks/Reckon still has my business :-(

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Comment by cyberhub, on 15-Mar-2010 22:18

Hi James,
Really good to get a comparison between Quickbooks and Xero from an experienced MYOB user.  I currently use Xero for my business and I think it is the best thing ever.

In one of my previous work places we were running MYOB and the accounts lady had to go to night classes to be taught how to use MYOB so I have always had the impression that it can be tricky but I have never found out first hand.

For me Xero is and was very intuitive, my fav features are repeating invoicing as I provide ongoing services and I really like how quick it is input and email out invoices.

Sounds like you do all your accounts yourself, I have come across several clients that once they get several people accessing MYOB on a PC acting as a server on a lan, their whole system tends to come to a grinding halt.  For these kind of clients with straight forward Accounting requirements, I think Xero would be the perfect solution.

At which point I am talking to them about moving to a hosted server solution.

In regards to your tricky Xero situations like split billing I just call my Accountants, Xpress Accounting and they are Xero specialists and they talk me through what to do.  So I think getting an Accountant that can help you out is really key when considering Xero, they don't charge me for this service as it make their life easier when it comes to gst and end of year.

So right now my Xero and Xpress combo is the perfect for all my Accounting and Invoicing requirements. 

Please note: other than using their services I am in no way affiliated to Xero or Xpress Accounting.  I just think it is great to give the thumbs up when a good service is being provided.

Dan Ballard

Author's note by sleemanj, on 15-Mar-2010 22:23

Quickbooks and MYOB are worlds apart :-)  Like chalk and cheese. 

MYOB, last time I looked, was not exactly noob-friendly so I'm not surprised you had people to do stuff for you in it.

Comment by Catherine-Xero, on 16-Mar-2010 07:21

Hi James,

Thanks for this thorough review of Xero and comparison to Quickbooks. You make lots of valid points and the Xero design and product teams are reviewing your comments and will likely pick up some of the specific details as necessary.

Just a couple of quick things from me that may help you and others with Xero; I know getting used to a new process can be frustrating and hopefully that's what some of your comments are addressing rather than serious flaws in the Xero UI.

Chart of Accounts - noted re the mandatory account number however you can change that to lettering or words that you'd prefer or just ignore it completely. When you're entering a transaction you don't need to remember '489' in the account field, you can just start typing 'Internet' and the list will filter. This is how I do it, I'm not an accountant and I can never remember the codes either! (http://help.xero.com/#Settings_ChartofAccounts$BK_ChartofAccounts_AddEditPopup)

On many of the reports (biggies like P&L, Balance Sheet) you can also choose from the 'More options' link in the blue panel at the top to sort the report by account name, rather than code, and this will also omit the codes from your report. (http://help.xero.com/#Report_ProfitAndLoss$BK_RunReport)

Regarding the flat account structure - yes it is. However, if you want to create 'sub' accounts for vertical reporting our suggestion for best results if you have a specific set of business-wide options is to use Tracking (like cost centers) - you can choose from standard Tracking options you've set up when you enter each transaction and use the specific Tracking report or filter some reports by Tracking categories (e.g. P&L). You could create many accounts as you suggest and if you did want to use the account codes you could set up some kind of hierarchical lettering/numbering. (http://help.xero.com/#Settings_Tracking)

Reports - depending on the report you're running the options can be pretty powerful e.g. using the Tracking reporting as described above or to get really granular you can customize the report layouts on some reports to make your own sub-headings for groups of accounts. (http://help.xero.com/#Report_CustomiseLayout)

Invoicing - as you say, much of entering an invoice is a different process to get to grips with - finding buttons and dropdowns for 'Save and add another'. You're right there are no keyboard shortcuts - this may be something we look to implement as we have done for some of the bank reconciliation screens due to high demand.

Paying invoices - understand how you're processing your payments. In Xero when you have physically received a payment, for best results you should enter the details of that payment directly onto the invoice, including whatever reference you like (you can do this all at the time of raising the invoice (from the View screen after you approve the invoice) or later if you're sending out invoices first). Then when the deposited cash or cheques come through on your statement lines you can match them to the reference you entered onto the invoices. Agree it's frustrating that you can't search by invoice payment reference but on the bank-related screens you can display and sort by it. (http://help.xero.com/#Payments_PayInvoice)

Thanks again for the time you've given for such a thorough analysis - good or bad we like to hear it so we know what to improve.

Catherine Walker
Community Manager, Xero

Comment by Kevin, on 16-Mar-2010 08:08

Great review.

I have been using Xero for about 6 months and find it a great tool however the reporting needs improvment.

Author's note by sleemanj, on 16-Mar-2010 10:22

@Catherine, thanks for the detailed response.

I think that the Tracking in Xero is probably similar to Quickbooks "Classes", although that's not something I have need for in QB.

I think as Xero would benefit from having some videos showing the Xero way of doing common tasks, aimed at potential Quickbooks users, QB has such an enormous market share in the US particularly that providing some specific guidance could only be a good thing.

Comment by CatherineXero, on 16-Mar-2010 11:54

@James, thanks for the suggestion re the videos - we do have loads of them (on xero.com) but as you say, maybe the basics to introduce people to the Xero process could be made more obvious, or videos re-done with this in mind.

Comment by CatherineXero, on 16-Mar-2010 11:59

@James, thanks for the suggestion re the videos - we do have loads of them (on xero.com) but as you say, maybe the basics to introduce people to the Xero process could be made more obvious, or videos re-done with this in mind.

Comment by meesham, on 16-Mar-2010 12:35

For me Xero wins hands down in 2 areas, multi currency support and bank reconciliation. I only tried out Quickbooks briefly when looking for an accounting package and used MYOB for 6 months (a family member is a MYOB "consultant"), but the way Xero handles these 2 areas saves me lots of time each week. For the invoice payment I just do it straight from the bank reconciliation screen (I have automatic bank feeds from both my Aus and NZ accounts), I've got my customers trained to put the invoice number into the payment details which makes it quick and easy to find the invoices when matching it.

Everyone has their own way of doing things and things would be boring if we were all the same, but for me personally Xero saves me a couple of hours each week which more than makes up for the monthly fee.

Author's note by sleemanj, on 16-Mar-2010 12:47

Worth noting that Quickbooks has Multicurrency in it's Pro version, which I use, but I wish it could automatically grab the current conversion rates rather than me having to manually dig them out and update.  I think the Canadian version can, but this is one of those areas where Reckon Software do things "differently".

Setting separate prices for items in different currencies, that too I wish QB could do, I don't want my standard Widget price to be $20 NZD and some fluctuating number between $12 and $16 USD or whatever the current rate of the day is, but QB doesn't let me set a specific USD price for my widget.

I didn't check out the Xero Multicurrency support, so I don't know how it compares there, meesham, can you expand on that?

Comment by meesham, on 16-Mar-2010 14:41

It automatically grabs the exchange rate for each day, so it records the rate for when you issue the invoice and when you recieve payment, automatically recording currency gains & losses for you (you can override the exchange rate if you want to). If you backdate an invoice it'll also grab the rate for that date (not the current rate). Reports are also generated in your default currency, so all my bank accounts (including Australian ones) show up in reports all in $NZ (at the report date's exchange rate), MYOB kept showing mixed currencies on reports.

The version of MYOB I used previously had multicurrency support as well but it was a bit of a mess to use, it was probably a user entry error but at the EOFY my accountant had to redo it all to fix the currency gains & losses. I'm not quite sure what I did but with Xero I don't have to worry about any of it - it's kind of set and forget. My Australian clients automatically get invoiced in $AU with the rate at the date of the invoice with Zero Rated GST.

Author's note by sleemanj, on 16-Mar-2010 14:47

@meesham, thanks for the run down, that certainly sounds like the MC support in Xero is quite a bit nicer than in QB.

Comment by kiwitrc, on 17-Mar-2010 06:05

Thanks for the review James, and meeshams comments. We use multiple currencies and that feature alone sounds very useful.

Comment by tantexas, on 19-Mar-2010 11:15

Thanks very much for posting up this comprehensive review. I'm a QB user and when you look at something like Xero you realise you are stuck between a rock and a hard place. Like you the integration was what drove me to look in the first place.

Unless I've overlooked it the big drawback with Xero though was the multiple entry - it seemed nothing was remembered. So I'm creating and emailing 10 invoices all on the same day. Each time I have to reselect the date, reselect the due date, reselect if I want tax exclusive/inclusive, retype the message when I email the customer...QB defaults to the last selection. Likewise if I receive a payment I had to select the bank account every time. I can be entering 100 or more payments in one batch.

Now I'm no QB fan - in fact despite being a customer of their for 7 years, I'd be really happy to move away, and I too really hopes Xero gets there. But for me it isn't quite there yet.

Comment by Earl Rudolfo, on 23-Mar-2010 01:36

James, great topic and review of QB vs Xero. I too am a QB user (and ProAdvisor) as well as a Xero user (and Xero Financial Advisor). Personally, I have come to realize that certain customers are a good fit for Xero and others a good fit for QB. I find it helpful to looks at the clients needs/requirements and business processes to determine which software to use. As you outlined both applications have their merit, so you need to carefully weigh the pros and cons before making a decision on which one is more practical and beneficial to the client.

Comment by dmw, on 26-May-2010 22:45

Comprehensive. Well done, James. I'd be keen to try Xero, but for the cost, and my accountant's ignorance of it.

Another factor, pushing me towards Xero, is that the NZ version of QB doesn't seem to have a simple process to modify the GST rate (I'm using the 2008/9 Accounting version). I expected to find a SQL Server database table with a record currently set to 12.5%. How are you doing for the impending change?

Author's note by sleemanj, on 27-May-2010 09:45


I'll have to check later, but shouldn't it just be a matter of editing the tax code in the tax code list?  My QB is older than yours so maybe it has changed, but in mine you can setup various tax codes, generally "S" is the GST one, I imagine that come 1st of October I would just change the rate for the S code, should take all of 3 seconds.

Comment by byestuff, on 17-Jun-2010 22:54

Re: QB 2008/9 support for the pending GST change. Have spent some time checking this out. For some reason you can't just change the rate (though it seems on the canadian version you can). The message that comes up seem suspiciously like reckon has disabled that feature in NZ.

The only way I have found to change it is to add a new 15% tax code, 'M' for example, and use this on all invoices and purchases from Oct 1. I've checked the GST 101 reports and these seem to work properly with this method. Other than the code not being the letter 'S' I guess this is fine. If anyone has a better idea let me know. I see reckon is bugging everyone about upgrading to 2010/11 to 'fix' this problem.

Author's note by sleemanj, on 18-Jun-2010 02:12


In my 2005/2006 I can edit the tax rate fine for the "S" code, I changed it to 15% in a test copy.

  New invoices get 15%
  Old invoices are still 12.5%
Sounds like Reckon disabled it in the newer versions, which doesn't surprise me, they probably did it as soon as the words "we might be increasing GST" were uttered.  Anything to "encourage" upgrades.

That said, most of us will still want to have a 12.5% rate defined anyway as we will be working on payments GST basis, paying 12.5% accounts payable after the 1st of October, you don't want those at 15% so will have to be careful (whatever accounting system you use) that you set the correct GST rate (or adjust the tax amount I guess) when you are recording payments made by your business on those older invoices.

Author's note by sleemanj, on 18-Jun-2010 02:23

Ooo, hold on, I did just find a hiccup, memorised transactions - the GST gets screwed when you change the tax code rate.  

  Normal invoice lines keep the old rate in the MX, not good.
  Discount invoice lines get the new rate though, so it's not consistent.

On the MX I just checked with 1 normal line and one discount it "lost" a buck fifty on the old rate because of it, the (not yet created) invoice for $202.50 at 12.5% GST became $201 at 12.5% on the invoice line and 15% on the discount.

To each, looks like I need to open it up, switch the tax code on each line to something else, then switch it back, and re-memorise it.

Not actually an issue for me because I'm 1/2 way through moving all these over to FreshBooks anyway, but definitely something to be very aware of.

Comment by Alan Pinstein, on 27-Mar-2011 18:35

Nice summary. I agree; Xero is awesome, but also really painful for a QB person. I switched one of my businesses cold-turkey to XERO and it's been pretty painful for a handful of reasons:
1) Can't print checks. MAJOR FAIL.
2) UX makes it *really* hard to navigate around. Links don't do what you'd expect; sometimes they'll go to a customer for instance, other times to a payment. Sometimes things that look like links aren't even clickable. No mouseover hints to tell you what you get.
3) Copy/paste doesn't work in lots of places, which is obnoxious.
4) No search. Really, you can't have XERO show you all the places in the system where there's a $256.14 charge for instance; makes it really hard to find things, especially given the bad UX overall.
5) Not all links can be opened in new windows.

I am still glad I switched to start learning. I think ideally I should wire up my company to their API and just build a simple admin interface using the API for the 4-5 things I do daily, but really that shouldn't be necessary.

They would do themselves a lot of good to have some kind of "quickbooks" compatibility mode that allowed people familiar with QB to essentially use xero in the same way. The fact that you can receive money in multiple ways in XERO but some ways make reconciling impossible is really painful and a waste of time.


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James Sleeman
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