Pam Madytianos & Bookkeepers4U for BoxFreeIt writes: Cloud accounting has
certainly picked up momentum. Accounting software companies are
continually improving and releasing programs in the battle to capture
the SME market in cloud accounting. In this review, we compare the entry-level cloud programs offered by MYOB and Xero.
MYOB Essentials Accounting
is an updated and rebranded version of MYOB LiveAccounts. Priced at $29
per month, MYOB Essentials Accounting has unlimited transactions, bank
feeds, unlimited customer invoicing, supplier bills and unlimited users.
At time of writing it also includes payroll for unlimited employees but
this will soon be sold separately.
Xero’s Starter edition
costs $25 per month and includes bank feeds, unlimited users, payroll
for one employee, 20 bank transactions per month, five customer invoices
per month and five supplier bills per month. Xero’s Standard edition,
which costs $50 per month, adds unlimited bank transactions, invoices
and bills and payroll for up to five employees.
Dashboards
MYOB Essentials Accounting dashboard is simple and easy to
use. It relies on the traditional MYOB style with tasks along the top
menu bar which are easy to select. It gives you snapshots of Money In,
Money Out, and Bank balances at a glance. With the click of an arrow you
can see all the bank/credit accounts and balances of each.
Xero’s graph-based dashboard is attractive. It can be
tailored to include the preferred accounts you wish to see. Users can
click on the menu bars of each graph to drill down for further
information too. The Xero menu screen has tasks listed under tabs which
navigate to other areas of the application.
Bank Feeds
MYOB uses its BankLink service to provide reliable and
secure feeds. BankLink, a 25-year-old financial data aggregator acquired
by MYOB, has a team of data accuracy specialists that review the feeds
using internal processes. Once checked they are uploaded into the MYOB
file.
Xero uses two types of feeds. Xero has established
relationships with most of the major banks and imports bank feeds
directly. For other financial institutions Xero uses a third-party
provider, Yodlee. Yodlee requires the user to provide their online bank
credentials to Xero. Yodlee automatically logs into the business’s
internet banking account, copies the transactions and sends them to
Xero.
Bank Rules
Bank rules are very easy to use in MYOB Essentials
Accounting, however they are quite basic. There is no separation between
deposit/withdrawal types and not enough allocation rules to avoid
errors or to capture enough information.
Xero’s bank rules are comprehensive and allow up to seven
rule conditions for matching transactions. This increases the accuracy
in finding matching transactions in the live bank feed. It takes a few
goes to get it working but then it works well.
Bank Reconciliations
MYOB Essentials Accounting allocates transactions to
accounts in the Bank Transaction screen. Transactions will auto-match if
you have bank rules set up. When you are ready to finalise your bank
reconciliation, you go to the Bank Reconciliation screen. At this point,
the balance should agree to the closing balance on your physical
statement. The statement balance and your MYOB balance are also on this
screen.
Bank reconciliation in Xero requires you to approve (OK)
all transactions matched to bank rules or invoices and bills.
Transactions with bank rules automatically match and adjust your
calculated statement balance. Xero has running statements and cashbook
balances on screen so you can see what your balance is at any time. Xero
advises users to check the balance in Xero against physical statements
as there are sometimes duplicate or missing transactions.
Inventory
Neither MYOB Essentials Accounting nor Xero have inventory
tracking. Both systems can create a list of item codes for sales and
purchases, but there is no record of inventory quantity kept on hand.
Both systems have third-party products available for more advanced
inventory requirements. (MYOB AccountRight Live also has inbuilt
inventory tracking.) So both products are on par in this area.
Invoicing
MYOB Essentials Accounting has unlimited invoices.
Invoicing is nicely laid out with a drop-down menu to select the
customer or you can create customers on the fly with all details
including name, address, etc. Essentials also offers quotes.
Xero Starter allows only for five sales invoices and five
bill transactions per month. Xero Standard ($50 per month) gives you
unlimited invoices and bills. When entering invoices, adding a new
customer/supplier does not allow for the recording of address, contact
and other details. There is no drop down to select the customer from a
list but when you start typing, the customer name appears.
Payroll
Payroll for Essentials Accounting allows for unlimited
employees at present. This will change in the latter part of the year
when payroll will be sold as an optional extra. Payroll is easy to use
and follows a three-step process. Just follow the prompts.
Xero Starter allows for only one employee, while Xero
Standard ($50 per month) allows for up to five employees. You have to
purchase Xero’s Premium packages for more employees – Premium10 ($60)
for up to 10 employees, Premium 20 ($70) for up to 20 employees and
Premium 50 ($80) for up to 50 employees. One feature I love in Xero is
the employee portal where staff can enter timesheets, apply for leave
and view payslips online.
A pain point with Xero payroll is the lengthy process to
raise a draft bill after you post your payrun, approve then authorise,
then apply separately to a multi-payment on the bank feed.
Contacts
MYOB Essentials Accounting has a very basic card listing of customers and suppliers.
Xero has a more comprehensive card listing allowing for
default print invoice templates, payment terms and tax code default by
card.
Accountants
MYOB Essentials Accounting and Xero users can invite
accountants, bookkeepers and advisers into their file to collaborate
with their client.
In Xero, accountants can also publish end of year reports straight from the software in the correct format.
Add-on Programs
MYOB Essentials Accounting recently added the ability to
connect to third-party programs. The first bunch of add-on programs
include Shoeboxed, ServiceM8 and SmartJobs.
Xero has a vast array of third-party products that
integrate with it. Add-ons include Unleashed, Vend and Re-Leased to name
a few.
Support
MYOB has an online library of support notes, phone support,
a community forum and live chat. There is also dedicated support for
MYOB partners.
Xero has a community forum, but it does not have a phone
support line. There is a good online self-help Q&A site and 24/7
email support.
Other Benefits
Inter-company accounts: Xero To Xero files makes it easy to deal with inter-company transactions.
Documents: Xero allows you to attach documents and photos
against transactions, invoices and bills. Xero Starter gives you 1GB
storage and Xero Standard gives you 5GB.
MYOB PayDirect: PayDirect allows smartphones to take
payments which then update the software instantly so no more waiting for
payments – handy for tradespeople on the road. This is in pilot stage for Essentials Accounting but will be available later in the year.
Conclusion
At the entry level, Xero is an appealing and easy to use
program. Its main problem is the severe restrictions that are placed on
the number of transactions that can be used per month in the Starter
package. The next edition, which is closer to MYOB Essentials in
features, costs double the price.
MYOB Essentials Accounting has no restrictions on the number of
transactions, so would be suitable for a business that has grown beyond
the micro stage.
This review was written by Pam Madytianos, director of Two Peas, an MYOB consultancy in Victoria, and Bookkeepers4U, a bookkeeping agency accredited in MYOB, Xero and QuickBooks. Two Peas was the MYOB Bookkeeping Partner of the Year in 2013.
BoxFreeIT is an independent news site covering cloud software for
Australian and New Zealand businesses which launched in July 2011. The
site is published by Sholto Macpherson, a business technology journalist
in online and print media for over 11 years. BoxFreeIT operates in
accordance with the MEAA (Australian Journalists Association) Code of
Ethics.
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