Accounting Software Faceoff: Xero Vs MYOB [2018]

Accounting Software Faceoff: Xero Vs MYOB [2018]
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Whether you’re running your own business, working as a book-keeper or accountant for someone else, or the the IT guy making sure the business has access to the tools they need there’s one software category you have to keep in your business’ application kitbag. That’s accounting software. But today’s applications go far further than double-entry accounting, raising invoices and producing a monthly or quarterly report for the tax office. They integrate with warehouse and logistics applications, point of sale terminals and other systems making them the heart of your business’ backoffice. Two of the biggest players on the market are the veteran MYOB and Xero.

Accounting Software Faceoff: Xero Vs MYOB [2018]

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MYOB Essentials

There was a time when the default answer, whenever you asked any small to medium buisness what accounting software they used was MYOB. With decades of experience and the broad respect of the accounting community MYOB developed a strong reputation. However, it took MYOB a little while to hit its straps when it came to cloud. But, eventually, they updated their platform and have produced an application that makes it easy for business people to get things done without needing to take a course in advanced book-keeping.

Accounting Software Faceoff: Xero Vs MYOB [2018]

Their online software, MYOB Essentials, makes it easy for business people to focus on their core business and not waste time navigating a system designed just for accountants. A good example of that is how the software avoids the use of technical terms such as debtors and creditors, and uses plain English terms such as “Money in” and “Money out”.

As someone who runs a small business, I want to be able to carry out everyday tasks quickly with as few mouse clicks or screen taps as possible. If you want to create an invoice, you simply open the Sales menu and choose Create Invoice. You follow a similar process when it comes to processing payments or entering bills. One of the really useful features is the ability to save scanned documents into MYOB.

When you enter a bill, the “Link Document” button lets you upload a scanned document such as a paper bill from a supplier. That means when you look back at a transaction, all the data pertaining to that is held in one place., The feature could stand some expansion so it links to cloud storage services. I already scan and store documents and MYOB’s process means I end up with two copies of each scan, one in MYOB and the one on my hard drive. That potentially adds the extra step of deleting one of the copies.

As you’d expect from modern accounting applications, there’s a direct connection to bank accounts for downloading transactions and carrying out reconciliations easily. The number of bank feeds you can connect is dependent on your subscription level.

Generating reports is a very easy with a bunch of canned reports ready to go. For example, preparing your BAS is easy using the GST report. And with the tax office simplifying GST reporting in the new financial year, that process should get easier. Other reports such as Profit and Loss (there’s a graphical version in beta testing), Balance Sheet and Trial Balance are easy to produce.

One of the things that is critical when choosing a cloud service, and often missed by buyers, is the ability to easily export data, either so you cna keep your own copy or for sending to an accountant. MYOB has a straightforward export function that makes that process easy.

The only real disappointment I had with MYOB was the MYOB on the Go app for sending invoices and receiving payments from your smartphone. Although it works with the MYOB PayDirect Reader so you can receive credit card payments, the application is looking a little dated.

As well as working with that payment system, MYOB Essentials can hook into other systems such as point of sale.

Although there is a free 30-day trial of MYOB Essentials, you’ll need to enter a bunch of data in so you can get a feel for how it works. While many other systems provide you with trial data or a test company, I couldn’t do this with MYOB Essentials. If you like the software, monthly subscriptions range from $27 to $55 depending on the number of bank feeds you need, monthly transaction volumes and payroll.


Although Xero is a newcomer compared to MYOB, it has managed to capture significant market share. As one of the earliest cloud-only business software companies, Xero was able to swoop in as incumbents like MYOB and Intuit struggled to adapt, not just to the cloud but also to a business user, rather than accountant-first, user experience.

When you first launch Xero, you’re greeted with a dashboard that displays essential information such as bank account balances, how much money you’re owned and what bills you have to pay. Right next to the list of outstanding invoices, there’s a button on the screen so you can create a new invoice right from the home screen without the need to go through a menu. It’s a small touch but reflects the needs of business operators. Money in and money out are front of mind for small and medium business owners so putting the most frequently used commands up front makes like a little easier.

Accounting Software Faceoff: Xero Vs MYOB [2018]

One of the areas Xero has heavily invested in integrations with third parties so specific vertical industries can make the most from Xero. For example, there are add-ins for education, hospitality, manufacturing, and not for profits as well point of sale and payment systems. These can be accessed from the Settings and launching Add-ins.

Xero’s mobile app – I tried out the iOS version – is easy to use. Xero’s developers wisely decided to focus on core functons that would be neeeded by a business perosn on the road rather than trying to fit every form and report onto a small display. So, everyday tasks like adding invoices and expenses are easy. The app uses Touch ID or a PIN for access.

There are plenty of reports ready to use for keeping track of essential business metrics and for completing your regular tax office obligations.

The one thing about Xero that I found perplexing was their pricing tiers. There are three main price points – $25, $50 and $60 per month. The two cheapest tiers are identical except the $25 per month deal only includes five invoices, five bills and 20 bank transactions from one bank per month. You also get payroll for one employee – which is fine for sole traders. In order to enter more invoices, bills or bank transactions you’ll need to jump to the $50 per month tier.

Premium plans take that but add payroll for five users as a starting point at $60 per month. That goes up to $100 per month once you hit 100 employees. Extra emplyees cost $2 each per month.

Which would I buy?

It’s a really tough call. I first looked at these products a few years ago and, back then the decision was very easy. Hands down, Xero was the better software if you were committed to cloud-based business software. But MYOB has made great improvements to their platform and responded to the market’s need, developing into a very competent application.

In terms of usability, both are very user friendly. I probably give the edge to MYOB when it comes to the desktop application while Xero’s mobile app is greatly superior in my view. And then there are the matters of which program will make it easier for you to work with your accountant and which third-party integrations are most valuable to you.

With both applications, the least expensive tier is unlikely to meet the needs of anyone running a business full time as both limit the number of bills and invoices to just five of each per month.

If I was laying out my one money, I’d go with Xero. Neither application’s entry level offer enough transactions for my needs so Xero is a better value proposition.

This story has been updated since its original publication.


  • You’ve missed the best solution for small to medium businesses in Australia – Quickbooks Online. It does everything Xero does and more, at a fraction of the price. Though its connection to the old Quickbooks can be seen in some of the terminology, its is nothing like that awful, clunky software.
    I’ve run my own bookkeeping practice for over 20 years so I do have clients on Xero and MYOB. The main problem with Xero is that what it calls bank reconciliations is nothing of the sort – its just matching transaction from the bank feed. There is no simple, straight forward way to do a proper bank reconciliation which is the main way to pick up missed or duplicate transactions.
    The problem with MYOB is its either the hybrid version which means it only runs on PC’s and you must download the software, the truly online version which is so basic as to be crippleware or the desktop version which is not accessible online. The desktop version is still the most flexible and robust accounting software though, none of the online offerings match it yet.
    And Reckon, well thats the old Quickbooks and ís just tired.

    • I agree. I recently reviewed all of these options for my business. I actually ran all 3 simultaneously for the full month and went with Quickbooks. Its cheaper, the mobile app is better and the help function is much better. I can solve most things myself with the Quickbooks Help rather than having to ask my accountant everything for Xero.

    • Whilst this is an old discussion I hope it is still live. We use MYOB Account Edge (MYOB for Mac’s) It is a reasonable double entry bookeeping system. We also use accrual accounting, for GST and tax and our monthly reporting. The trouble we have with MYOB is that it is only single user, The boss wants to change to Zero, mainly because it is cloud based and multi user. Whilst multi user cloud based access would be great, how is something like Zero on accrual accounting? Also your comment on Zero “reconciliations” is interesting, The accuracy of our whole accounting is based on reconciliations, of all the accrued expense accounts, the credit cards, and various bank accounts we use. Last year I had an issue with a supplier who uses Zero, whose account I reconciled on his behalf using print outs he gave to me from his Zero accounts. I picked up payments he thought he had made to us (per his Zero accounts) but we had never received. He said his (single) bank account was reconciled and we must have the payments. He later agreed that they had not been made and “there must be something wrong with his reconciliation”. It seems really odd that you cannot do proper reconciliations in Zero (almost unbelievable). Would a change to Zero, from an accrual based accounting system, be a step backwards? I would appreciate any comments.

      • I’ve been using Xero since my start in Australian accounting career (it started in 2013). One reason that bank reconciliation will be off that way (the payment being reconciled when in fact it did not reach the supplier) is wrong supplier bank account when making a payment. And if the payment bounced, it was not acted upon and just coded to a forced balanced account (like suspense account).

        There could be other reasons like mismatch of payment to purchase invoice just because they have the same amounts outstanding. I haven’t tried Quickbooks yet. 🙂 If you want to know more about Xero you can contact me at [email protected]

        To your success!

      • Hi

        I am Xero’s biggest Fan. I have my own bookkeeping practice and used mostly MYOB for the last 20 years with 2 clients on quickbooks. I’m now proud to say i have transfer my entire client base to Xero. I have never used such a wonderful program. I’m not sure what you mean about your bank reconciliation. I have over 40 clients and some on it as longs as 4 years and i can honestly say I havn’t come across a problem yet. It is all cloud based so you can access it anywhere and on any machine/ipad. Their offering just continues to get better and better. They even offer the practice the software completely free and I have just started to lodge all my BAS directly from Xero so no need to even log into the ATO portal. I can honestly say this is the program of the future and with so many apps that can feed into this software it will become more and more prominent in the bookkeeping market. IMO it just leaves all the others for dust.

  • Something else to consider is the ATO’s app as well. Free to anyone, hidden somewhere in it is the ability to take a picky of your invoice, record the details, and upload to your MyGov account to prefill your tax return.

    Its certainly not going to replace either MYOB or Xero, but in a pinch, it serves a purpose, and if your business is small enough it might be enough.

    Theres also a log book process in it as well with several ways to calculate your logbook.

  • Do we know of any integration services so I don’t have to manually key in all the information from my eCommerce into MYOB, Xero or QuickBooks for that matter? Maybe if we have a few options, we could do this comparison with them as well.

  • I personally love MYOB’s Essentials product but like Doone I think you’ve missed a significant player being Intuit’s Quickbooks Online (QBO). QBO has a far superior mobile app which for me a big thing….I love being able to check my P&L on my phone whenever I want. It’s also very competitively priced at less than 1/2 the cost of the others. As a long time consultant in this space I think you can’t go past Intuit’s QBO on features, mobility, ease of use and price.

  • I changed from desktop Reckon to Xero 4 months ago on the advice of my accountant. There are so many aspects of Reckon that I miss: the clarity and transparency of reports that allow you to drill down pretty much from anywhere, as far back as you can go, the “search amount” function that brings up any transaction of that balance, no matter where in the system, the fact that the double entry accounting system is visible if you look for it. I find Xero’s data opaque. Its modules don’t fit together seamlessly (i.e. using a number to bring up an account works in one area but not in another). The payroll is especially clunky: employees MUST earn the type of pay you set up in their employee records, leave seems to apply automatically to some pay types and not others, the default super process – which initially seems seamless – has a few bugs. Hopefully they will iron most of these out but at the moment the standard response to the Xero community appears to be they have lots to work on and these items are not priority. Maybe they are spread too thin for their rate of growth?

  • MYOB still has a financial calculation problem on its main Dashboard screen (shown in this article) which is surprising considering it is trying to give financial snapshot advice.

    For example, you may owe $10K-$20K of GST but as soon as it goes over the end of a quarter it shows you owe no GST. Go figure – you have to remember the GST you owe in the previous quarter as MYOB doesn’t think you owe it anymore (just wish the government would do that as well :-)).

    This has been outstanding for probably a couple of years now and they know about it but apart from not fixing they’re not warning people that the financial information that they are showing is incorrect.

    Maybe it’s time to try and shame them into fixing a fundamental problem with a financial ‘state of the business’ dashboard – especially since there is not ability to modify it ourselves.

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