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QuickBooks, Xero and Freshbooks

QuickBooks, Xero and FreshbooksIn the previous article we talked about the parts that make up any accounting software. In this article, I get more specific by comparing features in QuickBooks, 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 OnlineXeroFreshbooks
InputsThe 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
ProcessesThese 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

OutputsAllows customized report. Here is a list of pre-determined reports
Business 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 feature
Performance 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 BalancesCustomer 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 Reconciliation
Audit trail

  • Notes and accounts activities


Single entry accounting system. Not made for those who need more extensive internal control
Who is it forQuickBooks is more for the business owner with little accounting background or plans to completely outsource bookkeepingXero 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 bookkeepersFor the freelancer who needs more advanced tracking and invoicing features.
Interface

Full disclosure: the QB link is an affiliate link.

 

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