Choosing the right accounting software for your business model is crucial to its success story. For established SMEs, the choice usually comes down to a two-horse race between Xero and Sage. Micro businesses and sole traders have more choice, but these packages, such as QuickBooks, are limited in functionality and are unsuited to most larger SMEs.
So, which of the ‘big two’ accounting software providers is best suited to the needs of your business?
Not So Straightforward
The Xero vs Sage conundrum used to be fairly straightforward. Sage did offer a basic cloud-based accounts platform for small businesses, but its real strength was its locally installed, licence-based platforms, such as Sage 50. This was expensive but feature rich, so was often the go-to choice for larger SMEs with complex accounting needs – and arguably you saved money long-term compared to Xero because you only paid once per licence. Xero, on the other hand, was the new kid on the block, offering a premium accounting software solution on a Software as a Service (SaaS) basis, with a wide range of financial management tools for a monthly subscription. This was the logical choice for smaller SMEs because of the lower upfront cost and short learning curve for non-accounting specialists.
The picture has changed, however, now that both Sage and Xero have migrated to a subscription model, and Sage 50 is also available as a cloud-based solution. On what grounds, therefore, do SMEs make the right choice?
Infrastructure
The key difference between Xero and Sage still lies in the infrastructure used by each platform. Xero is a native cloud-based platform, allowing business owners to access their financial data quickly and securely from any Internet connected device, at any time, and it works seamlessly with all mobile and desktop based operating systems. On the other hand, while Sage 50 does provide a cloud-based system, it does so as a bolt on to its traditional desktop-based system.
Current Sage desktop users can upgrade their service plan to cloud-based software, with a free trial period, and Xero also offers a 30-day trial period, giving you the opportunity to test out both platforms before committing to an ongoing subscription. Unfortunately, however, there is no longer the option of buying Sage 50 outright – only by subscription – so the choice between Xero and Sage really comes down to functionality and budget.
Cost
Sage 50 is a more expensive platform than Xero, with the Standard package starting from £92 per month plus VAT, and Professional starting from £186 plus VAT per month. Xero is more affordable, with pricing plans starting from £15 per month, and extending to £55 per month for Ultimate, covering payroll and accounting for up to 10 people, as well as analytics.
Usability
Xero is a step above the entry level accounts packages aimed at micro businesses, but is still generally praised for its usability, simplicity, and ease-of-use. It’s easy to get started with Xero, and once set up, provides a streamlined experience with intuitive features, minimising the time that business owners have to spend on accounts admin. Sage, on the other hand, is still primarily aimed at people with accounting knowledge, such as financial professionals in a mid-sized business. With robust functionality and extensive customisation options, Sage may have a steeper learning curve for users who are not already familiar with accounting software.
Integrations
Both Xero and Sage offer various connections with third-party applications to enhance their functionality, and it is straightforward to import transactions from your business bank accounts. Xero also integrates with various online payment processors, CRM applications, project management tools, and e-commerce platforms, making it a strong choice for independent online retailers and B2B SMEs that take payments online.
Find Out More
To find out more about Xero and Sage and which platform offers the best value for your business, please get in touch with one of our small business accounts specialists today by clicking here.
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