The Backstory of Become a Bookkeeper - Part 3: Why is Xero My Preferred Bookkeeping Software?
Feb 26, 2024
Welcome to Part 3 of the Become a Bookkeeper (BABs) miniseries, where I’m walking you through my program that teaches the technical skill of bookkeeping so that you can ultimately turn it into a simple, scalable business that actually gives you time and financial freedom.
Become a Bookkeeper has been around for over three years, and it is undergoing a revamp right now, which is hugely exciting.
Because of the revamp, this seems like a good time to share a bit about the program as well as a behind-the-scenes look at what we are doing inside the program, why we're revamping it, and what changes we're making.
Today, I am coming on to share why I focus on the bookkeeping software Xero inside the program rather than QuickBooks.
QuickBooks Online is definitely the name of the game for bookkeeping software. Business owners who are doing bookkeeping, if they have existing books, are still probably mostly going to be in QuickBooks Online. And a lot of accountants will likely know about QuickBooks before they know about Xero.
So when I was thinking about how to create a program to teach people how to become a bookkeeper, one of my hesitations was that I'd have to teach QuickBooks, because that's what people would be looking for.
Then I took a step back and thought, “Why are they wanting QuickBooks? Why do I think that they want QuickBooks?” And, most importantly: “Why do I not use QuickBooks?”
After I thought that through, Xero is the bookkeeping software that I chose, and it's the one that I still choose over and over. As long as I can choose it, I do choose Xero, and I convert a lot of clients into that bookkeeping software when it makes sense.
Here are six reasons why I will always promote Xero as my bookkeeping software of choice:
A Game of Clicks
First of all, I choose Xero as my preferred bookkeeping software because bookkeeping is a game of clicks.
I love this phrase, so I’m going to say it again: bookkeeping is a game of clicks.
And yes, you need to know what to click and why to click, but ultimately you are sitting in front of a computer, you are categorizing through transactions, and you're clicking.
This means that if you have to click three times more in another software to get the same job done, then it's going to take you three times longer to complete that task.
That means you either need to charge three to five times more—and convince your client that they should pay three to five times more—or it means that you're going to get a fraction of what you could be earning per hour because you're spending much more time on tasks that really shouldn’t take that long.
So what I've noticed after working in both QuickBooks and Xero (because many clients come to me with QuickBooks in place) is that as I take on new clients, the cleanup is the worst part of onboarding.
I can take a new client for an entire year and get their books done in probably 10 hours if I'm putting them into Xero’s bookkeeping software—yes, an entire year in 10 hours. But if I went into QuickBooks, I would have to click through so many different screens and the way that I would sort through the data is much more inefficient.
Because of that extra time, I would have to put a price on that task that I don't think most clients would be willing to pay. I would actually feel bad trying to quote them that price even if they were willing to pay it. So that's when I will convince them to go to Xero, or I will force myself to quote the price of QuickBooks cleanup, but that part is a little painful.
Bookkeeping is a game of clicks. So when choosing a bookkeeping software, you have to ask yourself how many clicks you have to do to get the job done in one bookkeeping software compared to another. And Xero reduces my number of clicks every time.
Cash Coding
The next reason I choose Xero as my bookkeeping software is the cash coding feature.
Let’s say both bookkeeping softwares have the data already in, and let’s say you’re doing a year’s catchup.
There will be thousands of transactions that you need to go through for each bank or credit card, so let’s say we have 1,500 transactions to go through in both QuickBooks and in Xero.
Here’s how that screen looks in QuickBooks: you’ll have a banner up top that shows each account that's connected. That could be one account or multiple accounts.
You’ll click on one of those, and you’ll see some of the transactions you have to work through displayed on about half the screen.
It will default to looking at 50 transactions at a time, but you can change the settings to look at up to 300 transactions at a time, and that will be your limit.
So in this 1,500 transaction scenario, which actually could be a low estimate, you're going to have to go through five different screens to get through all these transactions in QuickBooks’ bookkeeping software.
In Xero, however, you will be clicking on each account at a time through a drop-down box that allows you to toggle between bank accounts. So right off the bat, you can see more transactions on the screen without scrolling.
You can then go into this cash-coding tab (which isn't available on all plans, but it is available on the partner plans, which I will get to in a moment) and hit the “See more” button to display thousands of transactions. You're not limited to 300. In the example of the 1,500 transactions, you would be able to click the button and see 1,500 transactions all at once on the cash-coding screen.
With Xero’s bookkeeping software, you can then sort by vendor. You can sort by amount. You can sort by date. You can create rules and see them applied and click through them quickly and easily while still reviewing them.
Now, I've looked at accounts where there are thousands of the exact same or similar transactions, and you could end up looking at 300 of those in QuickBooks. But the fact that you'd have to continue to click through the next screen and do it…that makes me want to stab my eyeballs out. I don't know how else to say it. It’s just tedious.
You’re losing clicks. You're losing efficiency. Your brain is getting tired. You have a greater likelihood of making mistakes.
I don’t just pay attention to efficiency while picking a bookkeeping software; I also pay attention to how I can reduce the risk of human error. And when you're looking at screens and numbers and systems and you go cross-eyed from all the brain fatigue, it's easy to click the wrong thing and make a mistake.
Getting Accurate Data
The third reason I use and recommend Xero’s bookkeeping software is that it allows you to get data in a granular, accurate way.
One example of this is being able to view Stripe as a bank feed.
This was one of the things that originally wowed me about Xero’s bookkeeping software. The floodgates burst with possibilities for increasing efficiency, increasing accuracy, reducing the risk of human error, and providing high-level detail that I could give my clients that made me stand out as a great bookkeeper. It’s low-cost, high-value, highly profitable for me, and it gives them what they actually need, which is understanding and visibility on their books.
If you’re not familiar, Stripe is a payment processor. For your clients that do high-volume transactions, you’ll see the sale happening in Stripe, Stripe taking their bank fee, and then the money clearing from Stripe into the bank account for your client on whatever cadence they choose.
It could be daily. It could be weekly. It could be monthly. But these are essentially a batch of transactions that come through all at once.
Even if it's just one day, my clients can have hundreds of transactions in a day, or at least dozens. Plus, those income items could be going to different income accounts—for instance, they could be going to different courses they have.
With Xero’s bookkeeping software, you're able to create rules so that your client knows where their income is coming from, and it lists the gross amount—not the net of what's received, but what was charged.
So if the price is $25 and then you pay $2 for a fee (I'm making up numbers, don't check my math) but you want to know what you charge your customer, then you want to know what you paid to Stripe, and you want that information sorted by account.
The way that you can do that with Stripe and Xero is a seamless, free direct bank feed integration that pulls through each transaction.
You can create a rule that either works by amount, by a customer name, or by description that puts it into an income account. It then takes the Stripe fee and puts that into “Bank Fees” for Stripe and then transfers that money into the account so that you're not just seeing the payout.
You see the payout in their bank, but you don't know what comprises that, and I have had to use painful, convoluted methods to get that information and get it accurately.
I do know that there is a tool that integrates Stripe to QuickBooks, but I believe you have to pay for it, and it's not as seamless.
Cost Effective
The fourth reason I use Xero for bookkeeping software is cost.
When you can save money on things like subscription fees, you either get to keep more profit for yourself, or you get to make it easier for your clients to say yes to the all-in cost of your services.
Before I knew about partner plans, I would be quoting for my service plus a reimbursement of the fee for bookkeeping software. Now I can bundle it into my Xero partner plan and can offer an all-in cost on everything that will end up lower than their all-in cost if I was paying for bookkeeping software separately.
In addition, paying separately for bookkeeping software means you have no guarantee you won’t have to raise the price on your client. I had that happen a few times over the course of working with one particular client I had to use QuickBooks for; every time the QuickBooks subscription fee increased, I had to raise her price.
Report Packs
The fifth benefit of Xero bookkeeping software is something I just started rolling out: report packs.
Report packs are amazing. My clients have not yet gotten them, but we will be giving them out for the January books. Let me explain these beauties to you:
Historically, in the beginning, I used to just give my clients two reports: the balance sheet and the profit and loss statement.
Then about a year ago, we started adding in an account transactions report (also called a general ledger report), and in we’re going to be rolling out a cash summary report for my clients, which is basically a cashflow statement.
That means we're up to four reports. And if we’re pulling four reports manually for each client, formatting them, downloading them, and sending them over, even if it's fairly easy, it's still taking time.
Luckily, there is a way in Xero to (with a little bit of setup involved) create a report pack at the firm level. And even with a bit of work required on the front end, it’s a pretty easy process.
I have a standard report pack now at the firm level, and I can customize that pack to exactly what my clients need.
We have cover letters. We have explanations of what these reports are. And with one click, you can pull a PDF that combines all of them, adds a table of contents with your logo, includes explanations of what these reports are, and shows all of those reports together. And if you have a client that's looking for something in particular (for instance, maybe they want to see their software and subscriptions in a separate report each month), you can add that as well.
With just one click (remember, this is a game of clicks!), you can run all the reports that they want per month.
I hear that there is something kind of similar in QuickBooks, but not with the same robust ability to customize and format them in a way that, in all honesty, looks beautiful. I'm so excited to be able to give these to my clients.
Find and Recode
The sixth and final feature that makes Xero’s bookkeeping software stand out (well, not really final—there are dozens of reasons I love Xero, but this is the final one for today!) is the find and recode feature.
In Xero’s find and recode feature, you can search for parameters and recode them.
For example, I had a client reach out after we had already coded her January transactions but hadn't sent the report yet, and she wanted to start seeing her contractors by department. She told us where to find those people, and I was able to change the way that the system was mapping from Gusto into Xero so that it would be a seamless integration going forward.
It might have taken me 15 minutes to set that up, which…no big deal. But for the January reports that we’d already run, I needed to recode them.
So I went in and I searched January’s contractor category, saw all of those transactions. saw who they were to, sorted and highlighted all the ones that needed to be in this specific new category, and chose “Recode to this category.”
Done. Boom. All of them done. You can easily reclassify hundreds of transactions with a single click.
I Could Do This All Day…
I could literally sit here all day and tell you all the reasons why I find Xero’s bookkeeping software to be more efficient, more robust, simpler on the eyes, cheaper, and better for your clients. But I’m sure you’ve got places to be, so we’ll leave it at six…for now.
This is why I chose Xero to teach in BABs, but even if you haven’t joined BABs yet, don’t worry—you can still get into Xero with a partner program!
You can go to my website, click the link, get started as a partner, start in your demo company, and get a feel for the bookkeeping software to see how it works.
Then, if you want to learn how to actually use that, how to work with clients, how to systematize it, and how to bring that whole picture together, then you want to be in BABs, which you can join today, even though the revamp isn’t live yet.
A lot of people have been asking how long the revamp is going to take, and if they should wait to buy. Here’s my answer:
If you think you need BABs, I can confidently say that you will get more than the cost in value over and over again. If you think you want BABs, you will benefit from BABs. If you've read or listened to me blab on about bookkeeping this long, and you have a desire to be in there, the program is going to benefit you. I am 100% confident in that.
You will not be getting an outdated, poor-quality program. You'll be getting a great program that we're currently working to update and improve.
The best time to join BABs is now, because the price right now is the price right now…and may not be the price forever.
Though the revamp isn’t live yet, you're going to have access to BABs for life. You're going to get the updates when they're ready. And with the changes that we're making, it's likely that the current price will be going up pretty soon for this program.
So if you buy now, you get it at the current price. You get the current existing information, which means you can start learning now. You’ll have access to the revamp when it goes live, so you’ll be getting the new + improved BABs for the current BABs price, which just can’t be beaten.
So I recommend buying now. And if you’re curious about what exactly will be changing in the revamp, stay tuned—all will be revealed very soon!
EPISODE RESOURCES:
Want a peek behind the curtain into what it really takes to have a simple and scalable (and successful) bookkeeping business? Get access to my free, on-demand four-part series, 6 Secrets to a Simple, Scalable Bookkeeping Business: www.katieferro.com/6-secrets
Need to boost your bookkeeping basics? Join BABs now: https://www.katieferro.com/become
Xero is my bookkeeping software of choice for a reason. Learn about the perks, sign up as a partner (for free!) and begin your Xero journey today: https://www.katieferro.com/xero
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