Xero vs. QuickBooks Online: Which Is the Best Online Accounting Software?

obrBy Fergus O'Sullivan — Last Updated: 29 Mar'18 2016-10-30T23:20:50+00:00
Xero vs Quickbooks

Here at Cloudwards we wanted to see how we could help readers who are looking for an online accounting solution, either to help them launch their business idea or to make the running of one easier.

Xero vs. QuickBooks Online 2018: Who is the winner?

We’ve reviewed quite a few online accounting programs, as you can read in our article on best accounting software. Generally speaking we find that Xero and QuickBooks Online are the best of the lot: they’re great all-rounders that offer something for everyone while also being accessible.

This isn’t to say that you have to choose either of these programs as such: there are plenty of options out there and neither Xero nor QuickBooks Online may be your best match. Our conclusion is more that you can’t really go wrong by picking either one of them.

That does leave us with the question which of the two is best, or rather which of the two serves your needs best. In this article we’re going to do a rundown of both programs’ features and try to determine which scores best in our categories.

Read our in-depth analyses: Xero Review 2018 and QuickBooks Online Review 2018

For this comparison we’re focusing on basic functions and user-friendliness. We figure that most of our readers aren’t expert bookkeepers and will need to adjust to such a program.

Table of Contents


The first of these basic functions is the ability to send invoices as it’s likely the main reason you decided to look into cloud accounting programs in the first place. You want a program that’s easy to use and let’s you send professional-looking invoices to your customers without too much fuss.

You can’t really go wrong with either Xero or QuickBooks Online here as they both work very well. Once you have your client uploaded into your contacts list filling out an invoice is a piece of cake: all you need to do is enter what they’re being billed for, how much it’s going to cost and it’s ready to send.

Xero offers nice, clean invoicing.

Both offer some customization options to, if that’s your thing, and produce great-looking invoices that show you mean business. To really find the difference between the two we’re going to have to dig a little deeper.

Merchant services

What makes QuickBooks Online stand out here is that it offers you the ability to attach a payment link directly to the invoice so clients can pay straightaway with either their credit card or, in the U.S., by electronic check. The rates are decent, or at least market standard, and you’re going with a program you can trust.

Xero, on the other hand, does not offer merchant services itself but instead gives you the option to work with third-party providers vetted by the company. This does give you more choice, some of these third parties offer slightly better rates than others for example, but it does involve going through yet another provider which may not be attractive to everyone.


Once an invoice is sent and paid, either via the method above or through another, it’s recorded into your ledger. The nice thing about QuickBooks Online’s built-in links as well as Xero’s third-party solutions is that the payment is recorded automatically; if you have clients pay directly with a check or bank transfer you’ll have to enter it yourself.

Quickbook Online Reports
QuickBooks Online's ledger.

Data entry is a doddle with both solutions and the overview is great either way. Once you click on the right buttons you’re greeted by an overview or ledger that has all your incoming money nicely ordered in an easy-to-check list. QuickBooks Online wins narrowly here as the list is just slightly nicer and a little easier to handle. Data entry is also a tiny touch smoother.


Besides the basics there are also a few extra touches that users may or may not need, depending on their situation. I particularly like Xero’s reminder system, which allows you to set a timer that either alerts you when a client is late or can even automatically send out an email to your client without your interference. It’s handy and QuickBooks Online simply doesn’t have it.

For business owners that bill clients for their time a built-in timer is dreadfully handy and QuickBooks Online has one which records your time and with a single press of a button exports it into an invoice. Xero has several third-party apps that can do the same but they don’t equal QuickBooks Online’s ease of use.

Quickbooks Online Invoicing
Enter an invoice within minutes with QuickBooks Online.

All in all it’s hard to declare a clear winner, but we’re pulling toward QuickBooks Online here since the great features that are already built in as well as the slightly smoother overview. Although it’s understandable that Xero has third parties do some of the trickier tasks, it can be annoying for some customers.

Winner in this round is QuickBooks Online, simply for being a great all-round solution to most invoicing issues small-business owners may face.


Owning a business is about more than receiving money: we all have bills to pay, some more than others. Xero and Quickbooks Online both understand this well and offer intuitive solutions to enter bills and payments you’ve made toward them.

Quickbooks Online Bills
Billing is as smooth as invoicing with QuickBooks Online.

At the basic level QuickBooks Online has a slight edge on Xero simply because data entry is a tiny bit smoother, cycling through entry fields is quicker and expenses are easily itemized. The overview is also slightly better, though the way QB offers information can be a bit dense for beginners.

Paying bills

One feature that makes QuickBooks Online truly stand out is that in some countries, notably the U.S. and Canada, you can pay your bills through the program, making for a lot less work on your end. Once you’ve entered a bill you can click on a button and your money is taken directly out of your account. Lovely.


In contrast, just like with invoicing above, Xero offers reminders on your bills that give you a heads-up when you’re getting close to their due date through email or just angry red lettering on the website. If you’re the forgetful type, this program bears looking in to.

Xero offers easy to fill out spaces, but expect to click a lot.

To wrap this section up, we’re inclined toward recommending Xero. Though paying your bills is great, it’s not a feature available everywhere and we can’t include it as a criterion. Setting reminders is a universal feature, though, and very useful to most people, especially those who can’t pay their bills as they come in (i.e. most of us).

Winner for this round is Xero, because the ability to set a reminder schedule is a great feature to help people stay on top of their finances.

Bank Feeds

The biggest benefit of online accounting programs is automation: many of the tasks associated with bookkeeping in the past simply don’t require the kind of effort they used to because the computer does it. Data entry, for example, has been reduced to entering a few numbers and hitting enter.

One of the biggest advantages of this automation is that reconciliation, the checking of the numbers you entered against the money flowing into your bank account, is now pretty much done for you. By linking your accounting program to your bank account you can download bank statements directly and have the computer check the figures rather than do it yourself.

Xero and QuickBooks Online handle this task extremely well compared to competitors with a streamlined interface and the ability to update at will, making both of them an excellent choice for people that require regular reconciliation.

The problem with bank feeds is that not every program works with every bank; especially if you’re using an obscure institution you will often find yourself out of luck when trying to link your online account.

Winner in this category is QuickBooks Online, simply by virtue of having more banks to choose from and a slightly better way of exporting data. In either case, though, users are encouraged to check whether their bank plays nice as not being able to import feeds could be a deal breaker for many customers.


Both programs offer a 30-day trial, so you’re free to take a month and see which one works best for you. After the honeymoon is over, QuickBooks Online will cost you between $15 and $40 per month, while Xero ranges between $20 and $40. Do note that if you forgo the trial on QuickBooks Online you get a 30 percent discount for 6 months, which may work out, depending on your situation.

QuickBooks Online’s pricing plans

PlanSimple StartEssentialsPlus
Price Plan
$ 20 00monthly
$ 35 00monthly
$ 60 00monthly
Users 1 3 5

Features tailored to U.S. sole proprietors, such as:
- Schedule C entry;
- Tax forms.

- Track income & expenses;
- Create estimates & invoices;
- Sync bank accounts & apps.

- Track income & expenses;
- Create estimates & invoices;
- Sync bank accounts & apps;
- Manage & pay bills;
- Instant sales & profit reports.

Xero’s pricing plans

Price Plan
$ 9 00monthly
$ 30 00monthly
$ 70 00monthly
Users Unlimited Unlimited Unlimited

- Send 5 invoices and quotes;
- Enter 5 bills;
- Reconcile 20 bank transactions.

- Send invoices and quotes;
- Enter bills;
- Reconcile bank transactions.

- Send invoices and quotes;
- Enter bills;
- Reconcile bank transactions;
- Multi-currency support.

Comparing the plans our two candidates offer isn’t as easy as it may seem: QuickBooks offers more functions the more you pay, while Xero always offers the same functions but limits how often you can use them. It’s a bit weird, but it does make the whole system scaleable, which is pleasant.

Note that one major exception is multi-currency support: Xero will only let you use more than one currency if you pay the whole $40. That won’t matter too much to people who only deal in, say, U.S. dollars, but these days there are plenty of contractors with clients all over the world and they will be paying top, well, dollar.

If your company only has a handful of clients, Xero might seem to be your best deal: $20 a month gets you everything you need. If you turn it around, though, and take a good look at QuickBooks features per payment tier, you could be losing money by going with Xero.

If you have no interest in being able to pay your bills through your cloud accounting program, QuickBooks saves you $5 every month and you won’t have to worry about how many invoices you’ve already sent.

Considering that the higher-tier features are pretty specific, we feel confident in saying that QuickBooks Online is better bang for your buck, especially if you take multi-currency support into account. If, however, you need to be able to track inventory, Xero might be a better fit for small businesses.

Winner in this round is QuickBooks Online; the price is right.


Besides being able to do things, users need to be able to figure out how an online accounting program works. We feel user-friendliness is probably the most important factor, especially for beginners and both QuickBooks Online as well as Xero have plenty to recommend them here, though both come with their niggles.

One of the big pluses about Xero is that the program is almost completely free of jargon, making it very easy to understand. Rather than accounts payable, receivable etc. users are presented with tabs reading “invoices,” “bills” and so forth.

Xero makes understanding your dash pretty easy.

QuickBooks Online throws out accounting terms to a certain extent, but often replaces them with other specific terms. It’s not a major hindrance, but it can seem daunting to people completely new to bookkeeping.


Another major factor when deciding which online accounting solution to go for is whether it’s easy to use. Both programs have pretty good interfaces but when you compare them it’s QuickBooks that comes out on top, not just because of its own merits but also because Xero’s interface has a few issues.

Quickbook Online Dashboard
QuickBooks Online offers a great interface.

First off, Xero is pretty slow to load. This wouldn’t be a problem in and of itself, but each time you click a button you get either a pop-up or a reload of the page, so expect quite some time waiting every time you initiate an action.

On top of that, you’ll also be clicking a lot since Xero likes to confirm every single thing you, as well as send you back to a central hub after doing something. If you’re the impatient type there’s a decent chance that you won’t enjoy using Xero.

Not that QuickBooks Online’s interface is completely flawless, mind you. The almost seamless data entry found in regular desktop QuickBooks has been replaced by a system that requires quite a few mouse clicks of its own.

On the whole, though, if a good user experience is a priority for you, we recommend you stick to QuickBooks Online. If you don’t imagine doing the books often and ease of use isn’t that important you can opt for either.

Customer service

No matter which program you decide to go with in the end, you want to know that should you run into any issues you can contact someone that can help you resolve any issues. Thankfully both Xero and QuickBooks Online offer their customers this, though they differ in the way they do so.

QuickBooks Online offers 24/7 phone support through parent company Intuit, reviews of this service found all over the Internet differ wildly in opinion. We never had a problem and generally met with helpful and effective assistance.

Xero handles all customer queries through email. Prior experience has shown this doesn’t always work but it has to be said that the few times we interacted with Xero everything was handled smoothly and quickly.

If speaking to a live person is a priority for you, we recommend QuickBooks Online; however besides that both companies do a great job of helping clients out. Do note that since Xero uses third parties for many extra functions, it won’t always be them you need to talk to, so experiences may vary.

Winner by a nose length is QuickBooks Online: though Xero has plenty to recommend it, QuickBooks Online’s features give it a tiny edge over its competitor.

Advanced functions

If you’re looking to do more than just the basics outlined above, or would like to grow into doing them, both programs offer plenty of options. From reports that go beyond simply seeing incoming and outgoing money to analysis, Xero and QuickBooks Online have it.

Generally speaking, QuickBooks Online has more thorough reporting built in, though it’s limited to bookkeeping and accounting solutions. Xero, on the other hand, handles most advanced features through plug-ins but offers many more different solutions that go far beyond merely recording figures, like CRM software and sales tracking solutions..

Depending on your needs, both offer a clear choice: QuickBooks Online has tried-and-true solutions that interface directly with the entire suite without hassle, while Xero offers breadth of options that feed into the program indirectly.


One of the biggest expenses for any company is staff. Thankfully both programs have the option to handle payroll directly in the program, saving you some hassle as well as professional fees (payrolling companies are not charities by any means).

Never miss another wage payment thanks to Xero.

Xero’s payroll solution is pretty comprehensive, with a great overview of each employee’s time worked, hours off etc. As an added bonus, if you’re in the U.S., UK, Australia or New Zealand (for the U.S., you need to be in one of the 30 states on the list on this page), you can file your employment taxes directly through the program.

QuickBooks Online’s payroll is handled directly through parent company Intuit at a reasonable monthly price, though if you tire of handling it yourself Intuit also offers a full service package. It is, however, U.S. only, though it does seem to cover all 50 states and you even get one of those nifty employee compliance posters.

Quickbook Online Dashboard
QuickBooks Online offers a great payroll solution, but isn't available everywhere.

Simply by virtue of being available in more places, Xero wins this round: the overview is also slightly better than it is with Intuit. It’s also proof that when Xero integrates something into their program it usually works well, begging the question why they don’t do it more often.


This is also borne out when it comes to inventory tracking systems: though QuickBooks Online’s is perfectly capable, Xero’s is slightly better, offering better overview and more interactivity. As an added bonus, when you use the one Xero provides you don’t have to get an expensive upgrade.

Entering new items is done in a jiffy with Xero.

If your business relies on an extensive inventory to make money, Xero is probably a better bet than QuickBooks Online, though if it’s not a priority other factors may be more important.

Winner in this round is Xero, when the company integrates functions they work well, their payroll and inventory services prove that.


As was said in the introduction, both Xero and QuickBooks are great programs and declaring one better than the other isn’t simply a matter of adding up pros and cons. Xero is better for people in certain situations, especially if they’re patient, while QuickBooks Online is best suited for people who don’t fit into a particular niche.

Our best advice is to use the 30-day trial each program offers and go from there. Both programs have plenty to recommend them and the actual experience of using them is the only real way to find out which works best for you.

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