Whilst we work with Sage Accounts software for a handful of our clients, Xero is the go-to accounts software for the majority of the businesses we work with.
When we talk with a new enquiry one of our questions will be around what software they are using now, if any, and we will identify what will work well for both them and us if we take on the bookkeeping.
Sage is desktop based. Xero is cloud based. Both have different levels of monthly subscription dependent on your needs. Sage is more expensive than Xero but sometimes it is the better option for the business.
We work with businesses which have intermittent internet which would be extremely frustrating if there was fluctuating internet when you were planning to work on the accounts. So in this case Sage is definitely the better option.
Some businesses use third party software which connects their website or their CRM software to Sage and it would mean a massive disruption as well as a massive expense to change and it would probably not be as efficient or effective for the business.
Xero is great for new businesses because it can be set up specifically for that business and the business owner can immediately see the efficiency, especially when their sales income can be connected and imported.
Xero is also good for business owners who want visibility of their accounts. They might want to check on outstanding sales invoices or the bills they need to pay.
This year two of the customers we took on had completely different needs and where Xero was the right move for one, Sage was the better option for the other. This summary shows how and why we recommended the most appropriate software for them.
Sage to Xero
We were approached to take over the bookkeeping for a long established local business which had always used Sage accounts software. The bookkeeper collected the paperwork every month and input it into Sage. They didn't have sight of the accounts and its only use really was to produce VAT returns and reports at year end for the accountant. We talked about retaining the accounts on Sage or moving to Xero, which we felt would be more efficient and cost effective for them. We set up Xero for them at the start of the second quarter of their financial year - not ideal as we would always recommend starting new software at the start of a new financial year - but the start of a new VAT quarter is the next best option and they didn't want to wait another 9 months to make the change.
Four months in and they can already see the efficiency of using Xero. They receive around 200 purchase invoices a month which they send directly to Hubdoc - no more manual inputting of each individual invoice and the bonus of electronic storage as well as eliminating printing and filing. They have been using CRM software for 4 years which records their sales and payment by customer name. It was straightforward to connect the software to Xero and whilst it is a manual process to download each day's sales invoices and payments received it is significantly quicker than inputting daily sales by payment method which is required under MTD.
Unknown software to Sage
We were referred to a large business, not local to us, which had extremely old accounts software (green screen they called it!) which needed to change to a software which would link with their new website and import their sales data. And they needed to do it very quickly as they felt their accounts software was on its last legs. We were approached at the end of March to consult with them and at that initial consultation found out their new financial year started on 1st May. We literally had a few weeks to identify appropriate new software and get it set up for 1st May start.
Xero had been recommended to them as it would link with their website but during the consultation we identified criteria that was really important to them which ruled out Xero. Stock management was the most vital need for them and with nearly 20,000 lines Sage 50 Professional was chosen. We also identified software which would link their website with Sage to update sales and stock. The Sage purchase ledger enabled purchase orders to be raised, converted to invoices and stock and pricing to be adjusted for each purchase.
The business is very happy with the choice of software and whilst they weren't ready to ditch their old software at the end of their financial year they have been running the two alongside each other for the first three months so that they have time to get used to it and ensure the figures from the software they are comfortable with match with the new software. It has given them time to understand and get used to all the different aspects of Sage.
This was never to be a bookkeeping role for us but we were happy to support them with the research, implementation and training from our many years of experience with Sage accounts software.
Summary
VAT registered businesses and those who will have to submit quarterly income and expense reports from April 2024 will need to use MTD compatible software (or otherwise bridging software) in order to meet HMRC requirements. So it is worth identifying the accounts software which is the best option for your business. We work only with one cloud based option - Xero - because we and our clients find it straightforward to use and it has different levels of subscription to suit different needs. There are other cloud based accounts software, all very similarly priced but Xero is generally the software we recommend but, as in our scenario above, we do use Sage and recommend using this in some instances.
If you would like to get started with Xero or Sage and need someone to do your ongoing bookkeeping please get in touch. We have a team of bookkeepers with experience working with lots of different types of business. Give us a call to find out how we can help you.
