Wednesday, February 4, 2015

Quickbooks vs. Xero – Perspective on Bank Reconciliations

AngelBiz for writes: n what is becoming an interesting race for superior accounting software, two companies are leading the way. Most have heard of QuickBooks, an industry standard that has been around in some type of iteration for several years. The newcomer, Xero, is relying on cloud technology and a savvy design to win over a new generation of small business owners.

There are countless facets of both pieces of software that can be debated. Each likely does one thing better than the other, but here we will talk about some key features, beginning with bank reconciliations.

What are bank reconciliations?
Reconciling bank accounts is the reason small business owners are even in the market in the first place shopping for accounting software. In buying software, the goal is to make sure all the money going in and going out on your screen actually matches up with what’s going on in your bank account. An Excel spreadsheet relies on a numbers person to do that manually.

Bank reconciliations also make sure invoices clear on time and bills are kept current paid on time. It’s essentially the real-time cashflow ticker of your entire business and it can help you make better decisions.

Ok, so who’s better?
Instead of who’s better, the better question is what does QuickBooks and Xero offer when it comes to bank reconciliations? Both can handle the task, but the user experience is drastically different.
QuickBooks takes a search engine-type approach to reconciliations. As you write checks or make deposits, transactions are recorded in your QuickBooks and then matched in a separate portal with the bank’s records. If you want to review and refine those transactions, you need to find the transactions on the QuickBooks workbook end and have the software search for it in the separate portal with bank records.

Xero does things a bit differently. It matches invoices and receipts with account transactions, with a goal of preventing errors and potentially any fraudulent charges. It’s designed to automatically import all expenses from credit card, checks and bank account withdrawals automatically.
To verify information is correct, it’ll line up a check, for instance, with an amount that was withdrawn from your account. If it looks legitimate, simply hit the big green button and presto. Instead of recording that information essentially in two portals, Xero’s automated approach speeds things up a bit.

Xero is built from the ground-up with cloud technology in mind, meaning the business owner who’s on the go can always be connected to the financial health of his or her business.
QuickBooks has started offering its services, as well, in the cloud, feeding the demand from consumers.

Is one better than the other? As long as you can accurately make sure money coming in and going out is reflecting correctly to the dime, than you’re doing ok. If you’d want a more efficient way of doing things, you might want to explore switching vendors.
Accounting software does a lot of the same thing, but the user experience can make or break a business’ financial department.