Struggling to keep on top of your finances? Looking for a more efficient way to analyse your business’s financial health? When it comes to finding the perfect software for managing your business accounts, the question on many people’s minds is Sage vs Xero? What are the differences between these two leading accounting and bookkeeping giants, and which one is best for my business? If you’re feeling confused and conflicted about whether to make that conversion, then worry no more. Read through this practical guide to find out why Xero is the hero of modern accounting solutions!
1. Immediate Access to Important Financial Data
Unlike Sage, with Xero online accounting, you don’t have to be at a laptop or computer to access important business information. Xero data isn’t restricted to a local drive; it is securely stored in the Cloud, which means that an overview of your financial information can be found on your phone. This way, you don’t even need to be in the office. It is because of this flexibility and convenience of being able to access your data anywhere, anytime, that so many people are making that switch from Sage to Xero. While Sage 50 accounting does offer cloud-based solutions, you will have to upgrade to the Sage 50 plus package and pay a monthly fee to use this feature.
2. User-Friendly Accounting for Small Business Owners
Sage was initially designed for accountants, and because of this, to make the most of Sage software, users need to have specialist knowledge of accounting principles and practices. This isn’t the case for Xero. Designed with small business owners and start-up companies in mind, Xero offers a more accessible, streamlined platform for meeting your day-to-day accounting needs. Thanks to its user-friendly dashboard, simplified financial administration tools and features, Xero breaks down your important business data into digestible information. Make the most of features such as project time-tracking, receipt management, and automated purchase orders.
3. No Back-ups, No Problem!
The problem with software like Sage is that it is designed for desktop use, which means that that your data needs to be constantly backed up. With Xero accounting software, because your data is safely stored in the Cloud, you don’t need to worry about corrupted drivers and your computer breaking down or being stolen. Also, you know you’re up-to-date when it comes to the latest version of the software, which ensures that your version is compliant with new legislation and any changes to tax rates. Share databases, credit card numbers and more, safe in the knowledge that your sensitive information is securely stored in a data server.
4. Collaborate in Real Time
Xero’s open ecosystems allow you to harness the power of collaboration and build a stronger relationship with your accountant or financial advisor through collaborative cloud tools. Through this new technology, your finance team will be able to access your financial figures, which means they are always there to offer support and solutions when it comes to making important business decisions. You can even use Xero’s video conferencing feature to share data with investors in a fast and efficient way. If you don’t have an accountant or bookkeeper, Xero can also help you with that too, through their extensive advisor directory.
5. A Clear Financial Overview
One of the most significant advantages to using Xero accounting software over Sage 50 accounting software, is that it offers a user-friendly overview of the financial health of your business. Its dashboard display feature is specially designed to illustrate in an easy to grasp manner just how much money is going out and coming in, so you can stay on top of your finances. The way that the dashboard is laid out is to help you access the most crucial parts of your financial accounts, displaying key information regarding your bank balance and overall expenses. This allows you to analyse your financial data effectively, helping you to keep track of your payments and identify any issues easily
6. Automated Daily Bank Feeds
What makes Xero so convenient and efficient for managing your business’s financial data, is that it allows you to set up a fuss-free bank feed status that is automatically updated and imports all your bank transactions securely. This makes it easy for you to keep track of your paid and unpaid invoices, and instantly matches your business payments against your purchases, making it easier to manage everyday bookkeeping and admin tasks. No more manual imports! You can even set up feeds from multiple banks and bank accounts. To help you familiarise with Xero’s automated accounting features, why not take one of our Xero bookkeeping courses, and develop your proficiency online?
7. Get Paid Faster
No business likes to chase customers. The Xero integration with Stripe and PayPal allows you to manage your invoices in one digital space, featuring a “pay now” button to speed up the process. Xero also offers customisable templates which enables you to add a professional touch by including your company’s logo. Xero accounting reviews have shown proven results of up to 15 days faster payments! No more fussing around with PDF files, and you even get informed if the recipient has read them. You also get automatic reminders to help you stay on top of your finances. Also, there’s no need to worry about security risks, as each invoice you send will be protected from unauthorised changes, with the option to use two-step verification.
8. Design Your Own Invoices
Xero’s add-on marketplace allows you to tailor your software to specific accounting needs, ensuring that all financial activity is managed efficiently in one place. There is also no limit to the number of users you can add, and you can create custom permission levels too. Browse through Xero’s custom templates for invoices, credit notes, statements and purchase orders, or create your own in a few simple steps, and choose your own layout and format.
9. Easy-Peasy Payroll Management
Xero simplifies payroll management by being single-touch payroll compliant, which means that you can instantly submit your financial data to the government. Xero also allows you to update your accounts automatically and creates HMRC submissions. The Xero Me mobile app also allows employees to access and view their payslips, submit their timesheets and apply for leave on-the-go. Not only that, but you’ll get in-depth payroll reports which will help you to keep track of your payroll history and send employee pension information to Nest and other pension scheme providers.
Once you set up payroll, you can share your information with other team members, accountants or bookkeepers, with the option to restrict access to manage the information they are able to view. Once you have completed payroll, you can submit your financial data straight to HMRC.
10. Currency Conversion
One USP of Xero accounting software is its currency conversion feature, which automatically converts entries made in different countries in real time and allows you to set a default currency for a specific contact. This means that a British company can add an entry for a bill in U.S. dollars, and the unit price calculation is made completely automatically. With Xero’s multi-currency accounting software, you can manage your gains and losses for over 160 currencies in total – and there’s no extra charges for this tool. It also lets you compare popular currencies at the current market rate and revalue transactions based on your reporting date for bank accounts, accounts payables and accounts receivables.
11. Cut out the Jargon
Because Xero was created with small business owners in mind, you will find that there are a lot fewer technical terms used than traditional accounting and bookkeeping systems. This makes the software easy to learn and navigate; and if you’re stuck on a process and need some support, Xero offers free training to guide you step-by-step through its key features and tools, explained in layman’s terms, or as they call it “plain English accounting” for beginners. You don’t have to be an expert at financial management to benefit from Xero’s features – but you soon will be with their easy to follow tutorials.
12. Boost Your Productivity
Xero is loved for the fact that it is an all-in-one accounting tool that saves you valuable time for addressing other crucial matters of business. From its automated bank feeds to its time-tracking and resource planning, all your financial projects can be streamlined and managed efficiently through this user-friendly accounting software. One of the most innovative features in Xero is its uncoded statement lines, which enables a simple feedback process through an editable PD that is sent to clients and colleagues, which they can then return to you with comments and suggestions. You also don’t have to spend a whole lot of unnecessary time looking through files, as Xero Files lets you store contracts and documents in your own library, which you can upload or send through by email.
13. Pay-as-You-go Subscription Service
Another reason why Xero is so popular with accountants and small businesses alike is its simple and affordable monthly subscription service, with the starter subscription costing just £5 a month for the first 3 months, and then £10 per month from them on. And there are no hidden fees, training costs, or extra charges for additional users, which saves you time and money to focus on other crucial aspects of running your business. If you’re a new user, you will get to trial the service by getting the first three months free for up to five payroll employees.
14. Seamless Mobile Integration
With the nature of our busy lives, it’s so important to have the option to work on the move. The Xero mobile app’s user-friendly design and tech-savvy features make it easy to check important data or access your company’s financial health from anywhere with an internet connection. They’ll even send you a notification when you have new transactions for an account. This way you can stay connected to your business at all times. You can also seek support from a certified advisor who can help with any of your questions and queries.
15. Xero is HMRC Recognised
With the implementation of Making Tax Digital, which was introduced by the government in April 2019, it has revolutionised the way businesses submit data to HMRC. The government also stated in their spring statement that Making Tax Digital will not be extended for any new taxes or business in 2021. With Xero, you can rest assured that its software is fully compliant with these changes, as it automatically runs system updates so that you are guaranteed to be working in compliance with HMRC regulations at all times. You can find out more about how to make digital tax returns through Xero here.
So, What’s the Verdict…?
Overall, Xero is the better option for small business owners and start-ups who don’t have that specialist accounting knowledge. It offers better flexibility when it comes to managing your business accounts on-the-go, provides a real-time overview of cashflow, and it’s more cost-effective to run. The fact that you can install a multitude of add-ons also makes it the perfect customisable platform for meeting all your accounting needs. So, if you think you want to make that move and convert to Xero, we say, do it! You won’t regret it.