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Closing the Gap – QuickBooks Online and Xero?

I was fortunate to be the guest of Intuit again this year at the annual QuickBooks Connect conference in San Jose, California at the end of October. Nearly five thousand people attending from around the globe with 1,700 of them being accountants – can life get more exciting? It was somewhat of a sensory overload across four days and five evenings with a lot of insights and takeaways on the current direction of QuickBooks Online.

I had come away from XeroCon South in Brisbane in September feeling very positive about the direction Xero was headed as it embraced machine learning, pushed its ecosystem platform and unveiled its sophisticated platform for Accountants -Xero HQ, (due for release this month). So I was keen to understand what Intuit was delivering to assess if QuickBooks Online would be suitably positioned to reduce the gap between its number of paying customers versus those of Xero in Australia. (Currently around 312,000 Xero v 53,000 QuickBooks Online)

It is always a little difficult at a global conference to assess the Australian content of the announcements and with  not many more than a dozen Aussies apart from Intuit staff in the audience there was no real need for the presenters to be specific.  However the good news was that next year – we will get our own QuickBooks Connect – good news for two reasons – firstly Intuit will have to be clear about what we will be released in Australia and secondly hopefully it will be more culturally in tune with Australian attitudes towards future developments, some of our US counterparts can be rather conservative.

Throughout the conference, Intuit continually reiterated its commitment to small business success, which makes sense for a software company providing an accounting application for small businesses. Its deliverables included:

  • Helping small businesses get paid faster through initiatives such as its partnership with PayPal  and the link to ApplePay .
  • recognising significance of self employed workers with the Self Employed app (see below for more details).
  • Stressing the importance of Mobile with the QBO app increasing in functionality.

There wasn’t much that was new in the product itself to entice Australian subscribers but given the importance Intuit places on the relationship between the accountant and small business it was disappointing to see that although enhancements were being delivered to QBOA (the accountants platform to interact with client data), importantly there was no integration to an Australian tax product or to directly file returns of forms with the Australian Taxation Office. This is a major efficiency feature for Xero but Intuit will only deliver this sometime in the future via a partner integration. Big thumbs down here regarding closing the gap.

I do acknowledge that Australian accountants have an edge with Xero in that around 50% of all Xero subscribers are in Australia so Xero can afford to deliver functionality, for Intuit we represent a small dot on the world map, consequently return on investment just cannot be realised.

The Ecosystem

Xero has always emphasised the importance of third party apps to provide functionality that may not be in the core product. Intuit too has followed that approach for many years but this year signalled a new direction when it announced that two key apps T-Sheets and Bill.com would be fully integrated into QBO (Not sure about Bill.com for Australia as it only works on USD) similar

This change was applauded by Matt Paff in his review of QuickBooks Connect  because it demonstrated that Intuit was working towards as single platform with embedded functionality, and a standard user interface. However Blake Oliver also reviewing the same conference came to a different opinion – that by working exclusively with particular app developers, competition could be stifled. Time will tell on this one but from my perspective a single sign on and a standard  user interface are winners for the end user and if the applications selected are best of breed then it is an all round win.

QuickBooks Self Employed

As part of its commitment to small business success, Intuit has released its Self Employed app which enables the small business owner to keep track of expenses – both business and personal and mileage. The app packs some punches as it supports bank feeds and allows for a photo of a receipt to be attached to transactions. Recognising the importance of mobile, the app was launched in Australia as a mobile only app (not available on Windows phones) Disappointingly the Australia version, although it targets 6 vertical markets one of which is Taxi/Limo drivers, does not support GST. It is understood that this functionality will be available at a later date.

QB Bot (QuickBooks Robot)

This was definitely a peek at what is coming in the future. A  robot named “QB” that is equipped with a camera and interactive touch display that acts as a personal assistant, data analyser and business advisor in one. It was impressive and hopefully not too far off enabling business owners to gain valuable insights into their business at the touch of an interactive screen. Watch this space……

Machine Learning

Yes – Intuit has embraced this. Unfortunately unlike XeroCon this was not fleshed out too much at QBConnect – maybe Intuit did not want to spook the myriad of ProAdvisors in the room as many were still clearly grappling with the concept of Firm of the Future. Machine Learning takes automation beyond bank rules to auto-coding and for the less proficient bookkeeper could be akin to playing chess against a computer. But this is where we are headed and the writing is clearly on the wall – embrace or perish.

Other announcements/Under development

  • The integration of Google Calendar and Contacts into QBO to generate invoices – that is for those not using value pricing.
  • Payment of a sales invoice using a Pay Now button will generate an update in the Accounts Receivable ledger (although even if receiving customer is also a QBO customer – it will not update their Accounts Payable).
  • For some time Intuit has been promising enhancement on the BAS functionality which is both complex and incomplete and the cause of much confusion with clients – nothing further on this.
  • Factoring of Accounts Payable by American Express (maybe just US though)

Conclusion

Will the current raft of enhancements help Intuit to close the gap between the number of Xero and QuickBooks Online customers in Australia? I think the answer is probably not. Xero has a more powerful toolbox for the accountant so unless Intuit can generate enough enthusiasm by going direct to small business owners the challenge will remain for many years.

However there are a couple of  positives:

  • Intuit demonstrated conclusively that they are right on track for the future with machine learning and QB Bot.
  • Having an Australian QuickBooks Connect in 2017 demonstrates not only Intuit’s commitment to our region, but also that Intuit is ready to compete with existing players in a conference arena and that it has enough confidence in its solution to be able to face tough questions from Australian accountants and customers.

Intuit is definitely here for the long haul and we can expect to see healthy competition continuing between it and other key players in Australia but I don’t think the gap will be closed in a hurry.

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One comment on “Closing the Gap – QuickBooks Online and Xero?

  1. Thanks Margaret – You write so very well. I personally favor QBO. The bank feeds and flexible reporting are awesome!

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