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Whether you’re a freelancer or a multinational company, it’s crucial to find an efficient, organised and easy-to-use system to manage your business finances. Accounting software can help with this, but which tool should you choose?
Among the most popular solutions out there are Sage and Xero. Both offer user-friendly, comprehensive accounting tools and services for businesses of all sizes, including payroll, invoicing and expenses.
In this guide, we’ll give you a head-to-head comparison of Xero vs. Sage, including features, pricing, apps and much more. This should help you figure out which is the best accounting software for your business. So, let’s get started.
|Integrate your accounting software with Wise and start saving time and money today
Xero and Sage are both user-friendly accounting software with cloud-based features, an app and a monthly subscription pricing model. They also stack up pretty closely when it comes to price, and are both aimed at small business owners.
With so many similarities between the two, you’ll need to look closely at the features available with each plan to find the right solution for your business. We’ll look at these in more detail below, before moving onto a quick price comparison.
Xero started life in New Zealand in 2006, and has since become one of the top accounting tools on the market. More than 2.7 million subscribers¹ use it all over the world, and particularly in the UK, New Zealand and Australia.
Xero is all-in-one accounting software that is particularly geared towards new businesses, and a younger demographic of entrepreneurs and business owners.
Xero’s many features include:
- Expenses, invoicing and payroll all on one platform
- Automate invoicing and reporting
- Sync with your bank
- Real-time collaboration with team members and/or your accountant
- Customisation options, including integration with 800+ third-party apps²
- Optional add-ons available like Xero Payroll, Xero Expenses and Xero Projects.
Along with its online version, Xero also has its own free app for Android and iOS devices. This gives you easy, on-the-move access to Xero’s accounting tools, including
- Looking up contacts
- Sending invoices
- Reconciling bank transactions.
- Monitoring spending
- Converting quotes into invoices
- Setting reminders to pay bills
- Accessing reports and insights.
Xero also offers quite a unique add-on feature with its software, which could make managing international transactions much easier.
This is Pay with Wise³, which seamlessly integrates your Wise multi-currency account with your Xero software. You can pay bills from suppliers all over the world in just a few clicks, taking advantage of Wise’s low fees and great exchange rate to save money while also saving time.
You can do it all through Xero, including seeing the status of Wise payments and reconciling bills and payments within your Xero account.
Sage is one of the UK’s leading providers of integrated accounting software, payroll and payment systems. Established in 1981, Sage now operates in 23 countries⁴ across the world, including the UK and Europe. The company doesn’t disclose exactly how many subscribers it has, but it’s believed to be over 6 million worldwide⁵.
Like Xero, Sage Business Cloud Accounting is aimed at small businesses, with options available for everyone from start-ups and sole traders to well-established businesses looking to trade internationally.
The software offers the following features (dependent on which subscription plan you choose):
- Manage, send and track sales and purchase invoices
- Calculate and submit compliant VAT returns - Sage is HMRC recognised and Making Tax Digital ready
- Capture and save receipts in the cloud
- Share access with your accountant
- Connect your business bank accounts for a real-time view of cashflow
- Optional payroll add-on.
Along with its main product, Sage also has a cloud-based solution called Sage 50cloud Accounts. This combines some of the best features of desktop-based accounting software with the convenience of the cloud, meaning you can access Sage accounting tools anywhere, from any device.
All the same features of the Sage accounting software are there, but pricing plans are slightly different. Depending which subscription plan you choose, Sage 50cloud is compatible with Windows, Apple, iOS and Android.
When searching for accounting software, you may also come across the name Sage One. This has now been renamed and repackaged as Sage Business Cloud Accounting⁶. This is the same product we looked at earlier in this guide, with all the same features.
|Unlimited invoices and bills
|Yes (but not with Starter Plan)
|Yes (but not with Start plan)
|Yes - for extra cost
|Yes - (AutoEntry receipt capture tool free with Standard Plan for 3 months)
|Reconcile bank transactions
|Submit VAT to HMRC
|Yes - for extra cost
|Yes - for extra cost
|Free mobile app
|Yes (with Premium plan)
|Yes (with Plus plan)
|Yes - including free telephone support
|Yes - including live chat and callback from small business accounting experts
A multi-currency account that integrates with the major accounting software is one of the most wanted features for global businesses. It's because they're hard to find.
Most high street banks support international payments but they’re often expensive, slow and with limited features and currencies that you can send and receive.
But here’s where Wise for Business shines. You can integrate your accounting software with Wise which means that you can use your Wise multi-currency account to automate international transactions and sync them to your accounting records.
Through Wise, you can reduce the hefty fees most banks charge on international transactions - it's simply one less thing to worry about.
|Xero - monthly cost⁷
|Sage - monthly cost (after free initial 3-month period)⁹
|Sole trader/small business
|Growing small businesses
Xero has three price plans to choose from, starting with the cheapest and most basic - the ‘Starter’ plan. This is designed for freelancers, sole traders and startups and offers up to 20 invoices/quotes and 5 bill payments a month. These limits are lifted if you pay a little more per month for the ‘Standard’ plan. If you’d like a full range of features, including accounting in multiple currencies, you can shell out for the ‘Premium’ plan.
All three plans with Xero have optional extras available to add on, such as Payroll from an additional £5 a month⁷.
Sage offers an impressive 3 months free (at the time of writing) on all of its plans, so you can try out its tools without paying any monthly subscription charge. After this time, you’ll pay between £12 and £30 for its plans, which is broadly comparable with Xero - albeit a little more expensive for freelancers and sole traders wanting a basic plan.
Just like Xero, Sage gives you the option to bolt-on extra services, with access to Sage Payroll costing an additional £5 to £7⁸ depending which plan you have.
One of the most important things to look for in a new accounting tool is reliable, secure and automated integration with your business bank accounts. This means that your banking transactions will flow seamlessly into the software, updating regularly so you always have a good grip on your cashflow.
Let’s see how Xero and Sage compare when it comes to bank feeds:
Xero’s bank feeds are secure, encrypted and update automatically, so you’ll only need to connect it to your bank once at the start and you won’t need to do any manual uploads. Once the initial connection is established, the data will be updated automatically every business day.
With Xero, you can set up feeds from any number of different bank accounts, and import up to 12 months of transactions when you first start using the software.
Sage offers a secure online connection between Sage Accounting and your bank, where transaction details are imported automatically once a day. This means no manual entry or uploads are required. You can set up multiple feeds for bank, credit card and even PayPal accounts.
But how easy this is depends on how you set up your bank feeds with Sage, as there are a couple of ways to do it. The first is to set up a direct feed with your bank - if it's on Sage’s list of supported banks. This can take up to 10 working days and doesn’t include historical transactions. Otherwise, you’ll need to go through the FCA-approved third party that Sage uses to connect banks to its software, which should be a little quicker.
You’ll have lots to think about when comparing accounting software, and not just the cost. It’s important to find the features and functions that will make your life easier and help your business run more smoothly, as well as getting the cheapest price.
After reading this guide, you should have a better idea of what both Sage and Xero have to offer.
Sources used for this article:
- Xero About page
- Xero website
- Xero landing page - Feature and tools
- Sage About page
- Wikipedia - Sage Group
- Sage Website - Products
- Xero Pricing plans
- Sage landing page - Bossing
- Sage help page
Sources checked on 01-June-2021.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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