Moving accounts from Quickbooks to Xero

As I mentioned in my last post, last year we moved the business accounts for edgeofmyseat.com from Quickbooks to Xero. I’ve been asked for my opinions of Xero a few times recently and so thought I’d write this up here and it may be useful to others.

Why move from Quickbooks

Before discovering Xero.com I was already wanting to move our accounts out of Quickbooks. The reasons for this were:

  • In the UK Quickbooks only runs on Windows, I run Linux and OS X, Drew runs OS X
  • The copy of Quickbooks I had was out of date and I needed to upgrade, I didn’t want to pay a hefty upgrade fee for software that didn’t suit our needs
  • Quickbooks was hard to understand if you don’t know accountancy terminology. I knew how to use it as I had been doing so for years but without investing a lot of time Drew didn’t really understand the day to day figures.

Our requirements

The most important thing was that any new software needed to run at least on OS X. So both Drew and I could use it on our Macs, I was less worried about Linux as I need a Mac for work anyway (until the glorious day when a version of Photoshop is available for Linux, but that’s another story) however needing to run a Windows desktop just for the accounting software was a nuisance.

Our day to day bookkeeping requirements are pretty straightforward – I send invoices, receive payments and spend money. We also need to track and reimburse a few expenses incurred by Drew and I – for example travel costs.

Ideally I wanted nice reports so that Drew could get a feel for day to day cashflow and budgets. I still intended to continue dealing with most of the financial side of the business but it was obviously important that both Directors of the company had a good overview on the finances.

I needed to be able to easily see our VAT liability and create the VAT return each quarter without spending days preparing it.

I needed to be able to export the accounts in a way that was satisfactory to our accountant at the end of the year.

Researching our options

The Mac financial software market is pretty limited. At the Mac Expo I saw a demo of MYOB which does run on OS X. It fulfilled most of the above points however was yet another untidy interface and a piece of software that required bookkeeping knowledge to be able to use. The main point in it’s favour over Quickbooks was that it would run on our Macs and so I was resigned to having to use that. As I started trying to set up our accounts in it, I quickly discovered how badly designed the interface was and started to wonder if there was a different way to deal with this.

It might seem odd that as a web development company I hadn’t, until this point, thought to look at web based software. It really hadn’t crossed my mind that there was a web application that could be a fully featured accountancy package. I was aware of online invoicing and time tracking applications but I needed something that would do everything – including the all important VAT returns. It was at this point that I spotted Xero, reading the features list it appeared to tick all of the boxes, had pretty graphs and easy to understand reports and didn’t look like something from the 1990s. I signed up for the trial.

Converting the accounts

Within a couple of hours of playing with the trial I was happy that Xero met all of our basic bookkeeping requirements … and then some! As a well designed web application it worked flawlessly on OS X and on Linux, invoicing and invoice tracking was excellent and VAT returns could be created automatically by the software. I also really liked the dashboard view that you get when first logging in – a quick overview of accounts, sales, unpaid invoices and so on. So I made a pretty quick decision that we would move the accounts to Xero.

To move the accounts I had to get over two hurdles. We were mid year and so I would need to import a lot of invoices and data from the current financial year, and I had to make sure my accountant was happy.

Moving the data ended up being a semi-manual process. I could import our customers contact details from Quickbooks, and then set up the chart of accounts so that it matched what we had in Quickbooks. I then made sure that the starting balances in Xero matched a trial balance taken in Quickbooks for 1 April 2008.

Once I had Xero set up as if it were 1 April 2008 I did a lot of data entry! All in all it took me 3 days to move our entire operations over to Xero – however I did use that time to also check up issues in our accounts, that had been hanging around, so it was a nice ‘fresh start’ leaving behind all the issues that had been hanging around unresolved in Quickbooks. Once all the data was in place I could confirm that everything was correct by checking the trial balance in both Quickbooks and Xero and seeing that everything matched. There were a couple of issues that I had discovered in the process to do with VAT on some very old bad debts, and that were actually a longstanding issue with Quickbooks, so it was time to show my accountant.

I was a little bit worried that our accountant would be unimpressed with our move to Xero, and that I’d need to do a bit more work at the end of year to export accounts in a manner he was happy with. However, I felt that the day to day operations of Xero outweighed that disadvantage. As it turned out though, he was very impressed with Xero, we managed to easily fix the couple of issues in the accounts in a way he felt was satisfactory by adding journal entries and I showed him around the system – he has since recommended Xero to other clients of his!

Benefits to our company

This blog post has become something of a Xero fan post, something I make no apology for. It really has made a huge difference to the admin side of running edgeofmyseat.com. My favourite features, and those that have made the biggest difference include:

  • Importing bank data and the one click reconciliation as Xero intelligently matches entries and creates new ones
  • The fact that the license is per company – so I can add additional users such as my accountant, Drew and anyone else in future with no extra cost
  • The dashboard and at a glance view of our financial situation
  • Invoice tracking – being able to quickly see who hasn’t paid us and chase them up, adding notes to the invoice as we do so

The Xero API

This year we launched a product that made our move to Xero even more beneficial. Until we launched Perch we sent out relatively few invoices every month as we were mainly invoicing for fairly large projects. Perch is a downloadable product, paid for via PayPal and costs just £35. Suddenly I had to deal with a massive influx of small payments, and account for VAT correctly for payments from all over the world.

This would have been an absolute nightmare with my old system, making the cost to us of each Perch license far higher – potentially meaning we would have had to increase the cost of Perch. However with Xero two things were possible. Firstly we could import the PayPal data (and a recent upgrade to Xero made that import happen automatically) so all payments and PayPal fees were imported. Secondly Xero has an API that we could use to create a new invoice for each customer – creating a new customer if needed or looking up an existing record. These invoices go in as a draft and once a day I log in, quickly look over them to make sure nothing silly has happened, approve and match them up with the incoming PayPal data. The VAT is all accounted for correctly and it takes a few minutes each day.

Conclusion

So there you have it, our Xero experience. Hopefully this is useful to someone and if anyone has any questions I’d be happy to answer them if I can.

Comments

Nathan Pitman: 23 Aug 2009 at 06:33:27

Hi Rachel. Thanks for the excellent write up. We’re in a similar position, Jo uses Quickbooks on a creaky old PC in the office but I’d love to get rid of that and have her use her Mac for the accounts.

How did you find the documentation on the API? I’d love to see a write up on that… :)

Rachel: 23 Aug 2009 at 14:17:43

The API is pretty straightforward. There were no PHP samples but the docs are fine. We discovered a couple of things regarding VAT that weren’t clear but the support team at Xero helped us out quickly.

One thing to be aware of in the UK is that as Xero are based in New Zealand we were having to wait overnight sometimes to get answers, but as long as you aren’t trying to do things in a crazy rush that isn’t a problem.

They have a sandbox for testing and once you are ready to go you have to have your usage of the API verified by Xero. They wanted to see 20 or so correct transactions before they would verify us and allow us to use the live server. This was helpful though as it meant we were sure everything was being created correctly and I’ve not had any problems with the data that is coming into our live account now we are live with the API.

Adrian Pearson: 25 Aug 2009 at 08:33:31

Great post Rachael. Just a quick update point, since you did your conversion to Xero they have now added the ability to import sales and purchase invoices, not just the contact (which was all that was available when we did our conversion too).

I have just setup a Xero Users Online Community at www.xerousers.com. It would be great if you wanted to join and could maybe copy this blog posting into your blog at Xero Users.

Best wishes,

Adrian Pearson
Xero Users Online Community

No More QuickBooks: 26 Aug 2009 at 17:01:12

Thanks for the writeup of Xero. We’ve just discovered it too and are evaluating it at the moment.

We moved from QuickBooks to KashFlow initially – which was a definite improvement, but a new multi-currency requirement has made us look around again.

Xero seems to be the best fit so far. Hopefully, we’ll get on with the API and all will be well ..

http://www.nmqb.co.uk/online-accounting-applications/xero/

Verena: 01 Sep 2009 at 13:55:07

Hi Rachel,
Thanks for starting a post about Xero. I am also thinking of using it for my bookkeeping (spare parts business using Excel. I have availed of the trial of Xero and I am quite apprehensive since I don’t have any background in accounting. I tried entering invoices for my sales and inventory, but I am lost now as to how I will tie up my paypal and bank accounts in order to generate my cashflow. Do you have any advice for me on how I will be able to get along comfortably with Xero? I will appreciate very much your advice.

David Radcliffe: 23 Feb 2010 at 15:48:45

Thanks! We are considering making a similar switch soon and I’m encouraged by this post!

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