Margaret Carey for Box Free IT writes: Back in February, I compared Xero with QuickBooks Online (SEE BELOW) but change occurs rapidly in the cloud. In the past eight months both have brought out new functions, Xero has consolidated as the vendor with the fastest growing number of customers in Australia and Intuit, the global incumbent, has signalled how seriously it views the challenge by releasing a new user interface.
Last week I reviewed the new QBO user interface(code named Harmony) (SEE BELOW) which dramatically improved the look and feel and catapulted it from the dreary and difficult to the interesting and useable.
I still prefer the Xero user interface – Ok it doesn’t have the plethora of colours we see with QBO and I can access functions in QBO more quickly and easily. But I like the way Xero effectively uses the real estate on the screen to present maximum information without being cluttered.
The user interface is important but is generally not the make or break factor when deciding what accounting software to use. Following is an update on key differences between the two products followed by an outline of non-essential features that could add weight to the decision-making process.
Major Features: What’s in and what’s not?
Right now QBO does not have an internal payroll solution and there is no indication that this gap will be plugged in the immediate future. There are third-party products that integrate into QBO which is helpful, but if payroll is a requirement, generally the choice would be for the fully integrated option.
Xero also has fixed asset module which can manage basic registers, depreciation and sale/disposal of assets. There has been a lot of simplification of depreciation rules from the Australian Taxation Office in recent years so for the many small businesses that just need some basic asset tracking/management this is a viable alternative.
However Xero has an extensive list of missing major items: purchase orders, sales orders and inventory. Xero has frequently acknowledged that these are holes in its core accounting platform and has promised to fill them in. But only fairly recently has Xero made a firm commitment and given evidence that the modules are on the drawing board rather than the wish list.
There are some minor differences too.
My Xero Likes:
- GST/BAS. I not only have the full calculations worksheet and the BAS form but also a GST Reconciliation report – great for identifying prior period adjustments etc.
- The customisable Account Watchlist on the dashboard. I use this to show PAYG Withheld, Superannuation Liability and Accounts Payable to enable clients to get a complete picture of their expected cash position.
- Overview of Bank Accounts on the dashboard. Clients can clearly see the status of reconciliations as well as balances.
- And I still love those Bank Rules which are so flexible and comprehensive.
- I can open additional functions or reports in a new tab (this is only available in the accountant version of QBO) which is incredibly useful for multi-tasking.
- Processing superannuation payments using Auto Super. How much time do small businesses spend on administering superannuation? And they still don’t get it right.
- The employee portal for lodging leave requests, printing payslips. Self service streamlines the administration processes.
- Direct lodgement of TFNs with ATO. Again this streamlines administrative tasks.
- So many third-party products that integrate to Xero via Open APIs.
My QuickBooks Online Likes:
- Report customisation. The user can easily customise reports specific to their business needs.
- Billable expenses. Very helpful where you need to on-bill expenses.
- Sub accounts in the Chart of Accounts. Makes longer P&L reports so much easier to read.
- Custom fields for customers and suppliers. Great for recording business data relating to customers and/or suppliers.
- Recurring or repeating general journals. Loved by accountants.
My Xero Dislikes:
- Super clunky and error prone posting of payroll into the financial accounts.
My QBO Dislikes:
- Can’t put default tax codes on chart of accounts. This functionality can save so many data entry errors.
- Sub category required on all accounts in the Chart of Accounts. It is confusing to users, not used anywhere but is so deeply embedded in legacy code that it can’t be removed.
Having said all that, the minor points are unlikely to substantially affect the decision making process but depending on requirements the absence or otherwise of some of the major functions could impact the decision. Other factors that could impact the decision are:
- Price. Xero has demonstrated through its more expensive pricing plans that customers are not necessarily particularly price conscious.
- Referrals/Recommendations. Here Xero currently has the edge having marketed extensively to accountants over the last couple of years and these accountants are busy on-selling to their clients.
- Marketing. Having consolidated its base, Xero has launched a national marketing campaign, advertising on billboards in your local shopping centres and at bus stops to increase brand awareness.
So while there are some differentiating features, Xero is adding more customers, more quickly in Australia right now, predominantly because of the relationships it has nurtured with accountants and possibly from its new advertising campaign.
Intuit is going to have to do something innovative to level the playing field if it is to win the hearts and wallets of Australian small businesses. During my recent visit to the Intuit Accountants Summit in the US, I asked what tactics the company was going to use to expand its position in Australia and take on Xero but didn’t receive any clear indications.
What is certain is that Intuit is in Australia for the long haul and will use its corporate muscle to carve out a slice of the pie.
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Margaret Cary writes:
I posted a couple of blogs last year about a new entrant in the Australian cloud accounting space – QuickBooks Online (QBO) from Intuit, the original US developers of QuickBooks. What makes the advent of this product so interesting is the determination of Intuit to penetrate the Australian marketplace and seems to have an almost bottomless pot of money to do so. Large amounts have been poured into both marketing and product development. Last week, senior management was back in Australia for the third time in about six months conducting a series of workshops in most major cities, showcasing the product and specifically their recent developments, to industry professionals.
I haven’t really worked out why Intuit is focusing so heavily on the Australian marketplace. I wouldn’t have thought it was large enough to warrant an investment of the size they are allocating. Their figures are that there are more than 2 million small businesses in Australia, which represents 50% of the workforce and 1/3rd of GDP and that this represents a business opportunity for them.
I remain unconvinced because I believe QBO is most suited to the micro end of the small business market and their target market is much smaller. Additionally many small businesses select their software based on their accountant’s recommendations who in turn prefer their clients use software that they are both familiar with and that will integrate with their practice management software. Other small businesses base their decision on recommendations from friends, colleagues or family, or software they have previously used. Right now on those criteria, QBO would not rate highly on many radar screens. However Intuit is using all weapons in its arsenal to increase brand and product awareness, most Google searches bring QBO up way ahead of Reckon’s QuickBooks, Intuit is out there on social media and its free certification programme all assist in this.
Based on the current functionality of QBO, I would see that it would be positioned mainly as a competitor to Xero customers and prospects. So what does it have going for it?
When Intuit first came to Australia, they received feedback that both Payroll and Inventory solutions in the product were necessary. In a relatively short space of time they have leapfrogged over Xero and have basic Inventory functionality embedded. Payroll has been added but it is at the stage Xero was this time last year – a separate web-based product that does pass journal entries directly into QBO – nice but not as good as Xero as there are separate products and additional licensing costs (unless you only have 1 employee when it is free).
Other pluses for QBO:
- You can do Quotes/Estimates and Sales Orders. You can raise multiple invoices from one quote. A fairly common requirement that is not yet in Xero.
- The report customisation feature that is a strong feature of QuickBooks is available in QBO. I have always found Xero to be very light on in reporting capabilities.
- QBO has both Locations and Classes for additional analysis. Locations are similar to Xero’s Tracking Categories and Classes are used for Job Costing – there is no similar functionality in Xero. However Xero does allow you to assign up to 5 Tracking Categories per transaction – so this could be an equal.
- QBO does have more comprehensive budgeting functionality, but budgeting is a process so few micro businesses do, so I don’t rate this too highly.
- QBO has separate tabs for Customers, Suppliers, Banking etc so options within each centre are visible from the Home page and there is one less click to get to an option. Xero lumps everything under Accounts so options are less visible immediately.
But: (i.e. the things I don’t like or where Xero has a heads up)
- The layout of the Customer/Sales page in QBO is different from that of the Suppliers/Purchases page – consistency is really important especially during the learning phase.
- Each account in the chart of accounts as well as being assigned to a main class such as Income, Expense, Current Asset is assigned to a sub class which has no relevance anywhere – an extra and confusing step for the micro business owner.
- Only the Accountant’s version has the ability to open a menu option in a new tab and thus have a report and an entry form open at the same time. This is a major let down.
- Neither product is particularly strong in managing GST and producing the BAS and both are looking at enhancements so I will reserve judgement here.
However the coup d’état for Xero is its bank rules that so comprehensively, seamlessly and effectively remove a lot of the hack work of data entry for the micro business owner (and reduces errors). For me that has been the clincher for many a recommendation in the micro business space. QBO really doesn’t compare here.
Overall from a functionality perspective, the two compare reasonably evenly. Although functionality is the most important factor in software selection, other factors should be considered including:
- Support – I haven’t tried contacting Intuit support so cannot compare but I have always been favourably impressed with Xero.
- Price – QBO is way cheaper than Xero – virtually 50% especially with the price decrease that came into effect this week. As this fee is paid monthly, over a period of time, this does add up, however I very rarely make a software recommendation based solely on price. If the software doesn’t fit the business needs, the cost in extra time and extra processes can more than wipe out licensing costs.
- Community acceptance – there is no need t be a guinea pig, there are tried and tested solutions that work – right at the moment this remains a deal breaker for me. There are too few businesses using QBO in Australia, I would have to have a compelling reason to select the product over Xero which does have a huge installed base which confirms it is a good product and means that there are many accountants, bookkeepers and consultants available to support users.
Right now, I am still hesitant to recommend QBO to a client even in the situation where the client needs functionality such as sales orders that are not in Xero and otherwise fits the QBO model. Over time as the newness gets ironed out, I expect this will change. Meanwhile it’s a case of watching to see how well Intuit swims in the Australian market place.
Margaret Carey For Box IT writes: Review: The ‘New Look’ QuickBooks Online
At the recent Intuit VIP Accounting Summit in the US I was introduced to the new user interface for the QuickBooks Online cloud accounting software and was instantly impressed. For so long one of my main reasons for not recommending QuickBooks Online was the user interface – it was cumbersome, inconsistent, disorganised and dated. Now that appears to be a thing of the past.
Gone is the forever blue, gone is the imposing array of tabs across the top with intensive drop down menus, the inconsistencies between the different centres and the total lack of uniformity between data entry screens.
The new home page for QuickBooks Online
Code named Harmony, this release is available only to new users; existing users will have to wait a couple of months before they can enjoy this revitalised and re-energised user interface. And note – if you log in as a new user you must use Google Chrome or Firefox as your browser, if you use Internet Explorer, you will get the old interface.
As soon as I returned to Australia, I set up a new QuickBooks Online account, entered some details about my business and learned that 500,081 businesses worldwide use QuickBooks Online, 2793 were in the accounting and bookkeeping businesses, but there were no businesses like mine nearby!
After that, my first view of the new QuickBooks Online was the Home page with its neatly laid out, multi coloured dashboard. Now it doesn’t have the customisable dashboard which is a great feature of the soon to be released Reckon One accounting software but it does clearly show the major health indicators of the business with links into the relevant data.
QuickBooks Online is much more of an industrial strength product than Xero for example. Its breadth of functionality is much greater which means that it can be suitable for a wider range of business models. However the conundrum then is, with so many functions, how can a novice user easily navigate to the right place without a bewildering array of options?
In Harmony, Intuit have come up with a really neat solution, firstly there is a simple navigation bar on the left uncluttered by a host of options that allows you to directly access the major areas of the software and then at the top is the killer feature – a neat little plus sign that clearly lists all the transactions available to create (although interestingly, paying supplier bills wasn’t there). Just click on one of these and there you are.
QuickBooks Online uses simplified menus for faster navigation.
These two navigation features are available throughout the software (apart from when you are entering a transaction) so it is usually just one or two clicks to get to where ever you need to go.
Another welcome feature in Harmony is that all the transaction entry screens from a supplier invoice to a customer payment are consistently and clearly laid out with a header, body and footer. A user no longer has to learn how to enter each type of transaction individually – a welcome relief.
An interesting user feature in this release is the panel of information that will deftly slide in from the right hand side of the screen to provide additional information relevant to the current task. For example, when paying a particular supplier, the panel will display other open bills that could be paid and you can just select Add to bring them in.
This new release concentrates mostly on the user interface not a new functionality but we do have some re-energised bank feeds. Disappointingly you can only assign Australian GST tax codes to payments out of the bank account. For customer receipts – it is necessary to have already entered the customer invoice and match the bank receipt to the invoice. But for items such as interest income and other miscellaneous deposits – the ability to allocate a tax code to the transaction is not available. I also didn’t seem to be able to record multiple dissections on the one bank payment line.
QuickBooks Online’s customer list.
In Harmony the whole user interface is packed with a host of neat features that can make interacting with your accounts a real pleasure – even those people who hate accounts. I have only touched on some of the major features, there is much more to explore.
A thumbs up to the designers at Intuit, it ticks all the boxes in that it is visually appealing, looks modern and uncluttered, is easy to navigate, has lots of pop ups with supplementary information and there is uniformity across all screens.
I am pleased that Intuit has understood the importance of the user interface – it doesn’t impact the underlying functions, but if the software is difficult to use, it is difficult to sell. Although the code name Harmony will disappear, right now it aptly describes the release.
COMMENTS
. So assuming even a nominal gain, is plan 2 in my OP workable? Or should I simply go with plan 1?
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