One of the biggest headaches for small business owners, and accountants alike, is the necessity of bookkeeping cleanup.
It goes something like this:
Mr. Business owner talks to his accountant and hands over the books so that a review and cleanup can be performed. The business owner doesn’t want to do the tedious stuff himself, but frankly, neither does the accountant!
The work traditionally required spending hours at a time reclassifying, exporting to excel, making journal entries, and leaving a very difficult audit trail behind.
But now, online cloud accounting platforms have changed how this work is being done. Let’s take a look at how two of the top accounting software companies for small business do this process, head to head…QuickBooks vs Xero!
QuickBooks released an amazing feature last year in their cloud version that allowed for accountants to recode transactions all at once to a different account. The QuickBooks feature predates the recently released “Find & Recode” feature by Xero by several months, so they were the first to market
QuickBooks allows for already reconciled expenses to be coded to an account in bulk. You can even sort by transactions type (bill, check, etc), date, or contact. So in bookkeeping cleanup, if you noticed a specific contact was always coded to the wrong account, you could easily search that contact under the filter area and reclassify all of their transactions in just a few clicks.
Unreconciled Transactions (updated 5-1-2015)
For transactions that have not been reconciled that have come through the bank feed, QuickBooks has a few great features to make life easier.
1. QuickBooks guesses how you want to code the transaction based on previous history
2. QuickBooks allows you to sort your transactions by category, amount, and description so you can code a bit faster.
3. Quickbooks has a “rules” feature that provides for automatic coding of transactions based on set criteria
There are however a few notable features missing here that you’ll see in Xero:
- More flexibility in bank rules that allow for better rule coding (using “any” and “all” conditions). A review of this was done by the Sleeter Group here
- The ability to code transactions in bulk
Overall QuickBooks does a pretty good job of making it easier for bookkeeping cleanup. Their bank feeds bring in the transactions automatically and from there the user has many options to speed up the bookkeeping cleanup process.
Xero has unleashed a plethora of updates thus far in 2015 including quotes, inventory, and practice report templates, but they didn’t stop there. They just released a feature I’ve been waiting on to drop for several months called “Find & Recode”. The aim of this feature is to make it easy to code transactions that have already been classified in just a few clicks.
The “Find & Recode” feature is only available to users with the “Advisor”permissions, so you won’t see the feature if you don’t have that access.
Xero takes a universal approach to the cleanup process by creating a completely separate screen for the recoding area. The aim of this screen is provide one place where an accountant can do bulk transactions changes, whether they are sales, expenses, bills, checks – any type of transaction.
Xero uses the same structural approach they have with other similar features, such as bank rules, which include the ability to add “conditions” to your search to pull up transactions that you want to recode.
As far as I could tell, any number of conditions could be entered. For cleanup, many times we are faced with recoding numerous amount of transactions from one account to another. This is usually solved by doing a journal entry, but is horrible for an audit trail. I was happy to see that I could even search by G/L account here and reclass everything in the account in just a few clicks. I could even reclassify any transaction entered by a specific user if you wanted to review how they’ve coded transactions. Powerful stuff.
Once you have entered your criteria, you can select the transactions you want to recode.
Xero then allows you to recode three different things about the transactions:
If the cleanup work requires bringing in transactions from a bank or credit card account, Xero headlines a feature called “Cash Coding”. This screen basically puts the user into an excel interface where they can sort and bulk edit, and reconcile transactions on the fly. This allows the user to quickly classify hundreds of transactions at a time.
In addition, as mentioned above, Xero uses bank rules to automatically classify transactions that meet the rule criteria. The rules are completely customizeable and allow for a large range of rules to categorize, even those transactions with very specific criteria.
Here is a screen shot below of the bank rule form:
Xero has put together a beautiful package of features that make bookkeeping cleanup amazingly easy. With the ability to bulk code new transactions, and find & recode existing transactions, Xero has tackled the two most time-consuming tasks of bookkeeping cleanup. As an accountant or small business owner, these features will save you countless hours on client onboarding, year end tax cleanup, and staff reviews.
Yes, QuickBooks was first to the game with a bulk recoding feature, however, with Xero’s new release they have jumped far out ahead. We’ll see what QuickBooks has up it’s sleeve next, but the “Find & Recode” feature from Xero will be tough to beat.
Now over to you
What do you think of the new Xero feature? Do you feel the QuickBooks version is still better? I’d love to hear any and all comments, questions and concerns in the comments below!