In this article, I’m going to delve into how Quickbooks Online and Xero go about categorizing/reconciling and verifying transactions. In my previous article, I tested the speed of entering and reconciling transactions between QuickBooks Online and Xero. While I found that that there were speed differences between them, I couldn’t declare a winner. When you first start working with transactions, I believe Xero comes out ahead, but once you’ve done a few months of reconciliations, I feel the differences in speed between the two wouldn’t be significant enough to warrant a switch from one to the other.
For example, back in the desktop days, this is where QuickBooks Desktop clearly won for me. In Canada, the big two were Sage and QuickBooks Desktop, and I could never get comfortable with the workflow in Sage. It was too rigid for my liking, and not as intuitive and forgiving as QuickBooks Desktop.
Greg Lam will be presenting the sessions, Cloud Accounting Face Off, and Setting Up a Paperless Accounting Flow, at Accountex 2016.
In the early cloud accounting software days I also had my preferences, and QuickBooks Online was not my favorite piece of software to work with. More recently, however, I feel they’ve come a long way and the software is now a lot easier to use and has more functionality.
At first glance, I had reservations about working with Xero. But after actually using the system, I quickly became impressed and felt I understood the software.
Explaining QuickBooks Online and Xero’s Banking pages
While both QuickBooks Online and Xero have Banking pages, they don’t work the same.
In QuickBooks Online, you have the following tabs:
- For Review: Imported bank transactions (whether via a bank feed or file upload) that have yet to be categorized and entered into the QuickBooks system (thus having no effect on your account balances/reports).
- In QuickBooks: Imported bank transactions that have been categorized and entered into the QuickBooks system (thus having an effect on your account balances/reports).
- Excluded: Imported bank transactions that have not been entered into the Quickbooks system (presumabley because they’re duplicate transactions).
Between all three tabs, you’ll find all your imported bank statement transactions.
In Xero, you have the following tabs:
- Reconcile: Imported bank transactions (whether via a bank feed or file upload) that have yet to be be categorized and entered into the Xero system (thus having no effect on your account balances/reports). If matching transactions exist, they are shown in the right column. Likewise, if there are user-created bank rules or suggested previous entries, this will also show up in the right column.
- Cash Coding: A spreadsheet-like view of the Reconcile tab, where you can easily sort and batch categorize transactions.
- Bank Statements: A complete history of imported bank transactions, regardless of whether they’ve been matched to entered transactions (reconciled) or not, and whether they’ve been deleted or not.
- Account Transactions: A complete history of entered transactions, regardless of whether they’ve been matched to imported transactions (reconciled) or not.
The Reconcile and Cash Coding tabs show you uncategorized (unreconciled) bank statement transactions, the banks statements tab shows you all bank statement transactions, and the Account Transactions tab shows you all transactions entered into Xero.
The two big differences between QuickBooks Online and Xero that stand out to me are that:
- The Reconcile tab in Xero gives you a clear look at what’s being imported vs. what’s in the system, since the left column shows bank statement transactions whereas the right column shows entered transactions.
- The Bank Statements and Account Transactions tab in Xero both give a complete history of their respective transactions (imported bank transactions and entered transactions). QuickBooks Online only shows bank statement transactions among its three tabs.
This means you don’t have to leave Xero’s Banking page to get your transactions sorted out, whereas with QuickBooks Online you have to go to the register (which is called Account History) to get a complete history of all transactions entered into QuickBooks.