Xero's Biggest Benefits: When to Use Xero Instead of the Market Leader

You can't go wrong with QuickBooks for your business accounting. But could you do even better with Xero?

If you're shopping for accounting software for the first time, you could take the path of least resistance and sign up for QuickBooks, sync your accounts, and be done with it. QuickBooks is the most popular accounting software in the world, and it works great for keeping your business' books in order.

But the savvy business leader will wonder what else is out there on the market—particularly which QuickBooks alternatives might be a better fit for your business—before just blindly picking what most other people pick.

Such software searchers will quickly find that Xero is one of the biggest QuickBooks alternatives around, which will naturally lead to questions like:

• “What makes Xero so popular?

• "How can I tell if it's a better fit for me than QuickBooks?"

If you're asking those questions, good news: You're in the right place.

6 Xero benefits to help you decide if it's the right fit

Let's take a look at the biggest Xero benefits, reasons to use it as an alternative to QuickBooks, and which users it's best-suited for.

1. Xero costs less for very small businesses

Starting at $25/month (with a free 30-day trial or 50% off for three months), QuickBooks won't blow your budget unless you're operating with very slim profit margins, but it's not an insignificant expense for small businesses. On the other hand, Xero starts off at $9/month, which is about the lowest you'll pay for paid accounting software.

A few caveats to keep in mind: While Xero's starting plan is significantly cheaper than QuickBooks', it does limit you to only five outgoing invoices, five incoming bills, and 20 reconciled bank transactions per month. If you exceed those numbers, you'll want to upgrade to their Growing plan ($30/month) which gets rid of those caps. Also, neither Xero's nor QuickBooks' basic plan includes payroll.

But, if you only need to send out a few bills per month, and want to spend less than $10/month to keep everything ship-shape, Xero might make sense for you.

2. Xero includes inventory management in all of its plans

If you run a shop, e-tailer, warehouse, or some other inventory-heavy business, Xero might work better for you than QuickBooks. Why? QuickBooks doesn't include an inventory management module until you've upgraded to their Plus plan, which starts at $70/month.

<

Tracking inventory in QuickBooks (Source)

Xero, on the other hand, includes inventory management in every one of its plans, including the $9/month Early plan. Of course, it's unlikely that you'll need inventory management and have less than five invoices/bills and 20 transactions per month, but the point remains: You can still get inventory management functionality for much less with Xero.

3. Xero makes paying bills a little easier

If your business does a lot of purchasing and has (virtual) stacks of bills coming in every month, it's worth knowing that paying bills in Xero requires a few less clicks than it does in QuickBooks, according to Cloudwards.

You can see for yourself in the following videos:

Paying bills in Xero (Source)

Paying bills in QuickBooks Online (Source)

That's not to say that paying bills is difficult in QuickBooks, it's just a little easier in Xero. And a little easier each time adds up to a lot of time saved when you're dealing with lots of bills.

4. Xero includes fixed assets management as a standard feature

Fixed assets management comes standard in Xero—complete with depreciation, disposals, and reporting tools—but you'll need to purchase the separate fixed assets manager tool from Intuit for more than $300 to perform those duties in QuickBooks, or use one of these third-party integrations. Also, the fixed assets manager tool only works with QuickBooks Desktop, and not QuickBooks Online. There are some workarounds within QuickBooks that some accountants have figured out, but they're less than ideal.

Either way, fixed assets management is cheaper and more streamlined with Xero:

Intro to Fixed Assets in Xero (Source)

So, if your business has a lot of property, vehicles, and other equipment, and you want to use your accounting software to keep track of its value and condition, Xero could be a better fit.

5. Xero is a little more user-friendly than the competition

To be clear: Both of these products are designed to be easy to use compared to, say, launching a space shuttle, and both have gone through many iterations to make their interfaces more streamlined and approachable for first-time users.

On the other hand, they are different programs and—in general—users find Xero a little more accessible.

Case in point: Based on the thousands of Xero reviews on Capterra, 96% had positive things to say about Xero's user interface, and 95% shared positive thoughts about Xero's ease of use. On the other hand, based on thousands of QuickBooks Online reviews, 85% were happy with the user interface and 90% had something nice to say about ease of use.

In other words: Both products are easy to use, but users like you and your peers find Xero to be a little more user-friendly than QuickBooks.

6. Xero allows unlimited users

Xero allows unlimited users, while QuickBooks puts a cap on that number (between one and 25) based on which edition you have. If you have only one or two people that will need to access your accounting software, this might not be a problem.

But if you anticipate an open-ended number of people who might need to get in to access finance information, Xero is a bit more accommodating.

Disadvantages of Xero accounting software

Xero has a lot of positives, but it's not perfect:

• Apple users much prefer the QuickBooks iOS app (4.7/5 stars based on 120K+ reviews) to the Xero iOS app (2.8/5 on only 60+ reviews).

• QuickBooks is also better for invoicing and reporting, according to this Cloudwards review.

• Xero also lacks a built-in payroll option, which QuickBooks has (though for an additional fee).