QuickBooks, Xero and Freshbooks : comparing using the core components of an accounting information system namely inputs, processes, outputs, checks and balances.

Evelyn Ivy, CPA MBA  for Lifestyle CPA writes: In the previous article we talked about the parts that make up any accounting software. In this article, I get more specific by comparing features inQuickBooks, Xero and Freshbooks, the top 3 accounting online solutions ( based on the amount of requests I get to evaluate software choices) in the market.

I will be comparing cloud software using the core components of an accounting information system namely inputs, processes, outputs, checks and balances. All 3 systems are all stored in the cloud and have the same advantage as any cloud accounting software.

QuickBooks, Xero and Freshbooks comparison

		QuickBooks Online	Xero	Freshbooks
Inputs		The following ways can be used to input data: Customer or vendor center: this is useful in analyzing customer or vendor history and tracking customized customer information Makes separation of duties easier An extra layer of checks and balances Beside these centers, QB provides a top level menu to easily add transactions. For example: enter bills, purchase orders, invoices, etc.	Menu entry ( no customer or vendor centers): Company details Contacts and items Fixed assets Invoices Bill payments Bank feeds Journals (for accountants and book keepers only) Apps – Example Harvest or time tracking	Enter transactions with ( all these features are great for the freelancer): Invoices Create client Create project and track time Bank feeds Apps
Processes		These processes are suited for businesses that need more checks and balances. For instance Customer calls or orders online. A record of sale is made using a sales receipt Sales receipt is generated and sent to customer. Banking Make deposits Write checks/ credit card charges Reconcile bank statement Bank feeds Customers and sales Add new customer Add a job Create invoice Online billing Create customer statements Record bank deposit Vendors, purchases and inventory Add new vendor Items and service list Create purchase order Receive inventory Enter bills against inventory Pay bills Pay sales tax online form, verbal order Collaboration Easy to invite accountant and team members. Invitations are limited to your plan	To manage customers at the same level as QuickBooks you will need to integrate with another service like harvest.These processes are better suited for the small business who works with an external accountant. Very easy for the self-employed who has no accounting background to adapt. Banking Bank feeds Match transactions in bank feeds. You can pull up reports to make informed decision once transactions have been matched Customers Add new customer Create invoice Online billing Vendors Add new vendor Add inventory item Collaboration Easy to invite accountant and team members. You can invite unlimited users	Great for the freelancer – does more advanced time tracking and collaboration tools.Banking Bank feeds Match transactions in bank feeds Customers Add new customer Create invoice Enter time Send invoice based on time Share time sheet with customers Online billing Expenses Add new expense Collaboration Easy to invite accountant and team members
Outputs		Allows customized report. Here is a list of pre-determined reportsBusiness overview: Profit and loss (summary & detail) Company snapshot ( graph) Statement of cash flows Balance sheet (summary and detail) Scorecard Audit log (useful for checks and balances) Review Sales Sales by customer summary/ detail Sales by product or service summary/detail List of products/ services Customer contact list Terms of sales list Tine activity by customer detail Unbilled time Deposit detail Income by customer summary Payment method list Transaction list by customer Estimates by customer Unbilled charges Manage Accounts Receivable Customer balance summary Customer balance Detail Collections report Statement list A/R aging summary A/R aging detail Invoice list Review Expense Expenses by vendor summary Vendor contact list Purchases by vendor detail Check detail Transaction list by vendor Open purchase order list Purchases by product/ service detail Manage Accounts Payable A/P aging summary/ detail Bill payment list Unpaid bills Vendor balance summary/detail Manage Sales Tax Taxable sales summary Sales tax liability report Taxable sales detail Manage Employees (Need to subscribe to payroll to get more reports) Time activities by employee detail Employee contact list Recent/ edited time activities Manage products & Inventory Inventory valuation summary/ detail Product/ Service list Sales by product/ service summary Purchase by product/ service detail Sales by product/ service detail	Ability to create custom reports by using the tracking featurePerformance Reports Budget summary Budget variance Executive summary of key numbers Expense by contacts Income by contact Income statement Inventory items summary Sales by item Sales tax report Position reports Aged payables Aged receivables Balance sheet Depreciation Schedule Fixed asset reconciliation Movements in equity Cash reports Bank reconciliation summary Bank summary Cash summary Detail reports Account summary Account transactions Customer invoice report Detailed account transactions General ledger Journal report Supplier invoice report Tracking summary Trial balance Foreign Currency reports Foreign currency gains and losses (need premium subscription) Tax Reports 1099 reports Payroll reports (not available for all states and includes an additional fee) Pay run by employee Pay run by pay item Pay run by pay type Pay run summary For Accountants & Bookkeepers Management reports	Accounting report Balance sheet Expense report Payments collected Profit and loss Tax summary Client reports Accounts aging Revenue by client Time to pay Invoice reports Invoice details Item sales Recurring revenue Revenue by client Revenue by staff Tasks invoiced Time – tracking reports Billing Tasks invoiced Task summary Team timesheets Timesheet details User summary (# of hours worked on a project by user)
Checks and Balances		Customer and vendor centers Account centers provide an additional layer of checking transactions Bank Reconciliations Line by line reconciliation Audit trail reports (who did what when)	Bank ReconciliationAudit trail Notes and accounts activities	Single entry accounting system. Not made for those who need more extensive internal control
Who is it for		QuickBooks is more for the business owner with little accounting background or plans to completely outsource bookkeeping	Xero is focused on the business owner by removing jargon so non accountants can use accounting software in ease. It is more intuitive for the non-accountant savvy business owner who is interested in the basics needed to keep accurate books so they can get on with their business. This business owner also plans to work with external accountant or bookkeepers	For the freelancer who needs more advanced tracking and invoicing features.
Interface