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Business Central vs. Xero: Which Accounting Software is Right for Your Business?

Updated: Nov 23, 2023

For a growing business, having good accounting software has become more than a convenience—it's essential.


Business Central and Xero are key players in the accounting software world.


Both platforms offer unique strengths and weaknesses.


To make it easier for you to choose, we're breaking down the competition using four straightforward criteria:

  1. How easy the software is to use

  2. What features it provides

  3. Cost of getting started and staying onboard

  4. How well it can adapt as your business grows

This comparison will show you what each software has to offer and help you determine which is the right fit for your unique business requirements.


Contact us today to explore how Business Central can refine your accounting operations and uplift your company.


Overview of Business Central


1. What is Business Central?


Business Central is an all-in-one enterprise management solution primarily aimed at small to medium-sized businesses.


Developed by Microsoft, it offers a comprehensive suite of tools that span accounting, finance, operations, and customer relations.


2. Key Features


When evaluating Business Central, several features stand out:

  • Financial Management: BC excels in simplifying your accounting tasks. It helps you keep an eye on your revenues, costs, and overall financial health without breaking a sweat.

  • Operations Management: Beyond finances, BC provides tools to oversee your entire operations, be it supply chain management, project accounting, service management, inventory control, or even manufacturing.

  • Sales and Customer Service: BC also includes a dedicated module for managing client relationships, ensuring your customer service and sales efforts are always at their peak performance.

3. Pricing Structure


Business Central comes with a variety of pricing plans to suit different business needs and budgets:


BC has a dual-level pricing strategy of $70 per user each month excluding manufacturing, and $100 per user including manufacturing.


There are more advanced packages suited for businesses requiring more comprehensive functionalities and assistance like advanced analytics and project management.


Reach out for further details.


Before picking a package, it's essential to assess the best features for your business.


4. Scalability and Customization


Scalability is one of BC's significant advantages:


The platform easily accommodates additional users as your business grows.


While allowing for specialized apps and add-ons to meet unique business demands.


5. User Experience


In terms of usability, Business Central aims to make things simple.


The dashboard and menus are designed for easy navigation.


In-app tutorials and guidance are available to help users learn the ropes.


While there's a slight initial learning curve, especially for complex features, the software is generally user-friendly.


Overview of Xero


1. What is Xero?


Xero is a cloud-based accounting software solution specifically designed for small businesses and freelancers.


Originating from New Zealand, it offers an array of features aimed at simplifying bookkeeping and financial management.


2. Key Features


Several key attributes make Xero a strong contender:

  • Invoicing: Xero streamlines the invoicing process, enhancing both cash flow and payment tracking.

  • Bank Reconciliation: Xero automatically matches bank transactions with your financial records and offers real-time updates.

  • Inventory Management: Xero helps you keep tabs on stock levels in real-time, making resource planning more efficient.

3. Pricing Structure


Xero offers 3 main pricing plans with increasing, but functionality:

  • Early: $15 per month

  • Growing: $42 per month

  • Established: $78 per month

It's crucial to evaluate your specific business needs before selecting a pricing plan.


4. Scalability and Customization


Scalability is also a highlight of Xero:


As your business grows, Xero can scale to support additional functionality.


While Xero may not be as customizable as other platforms, it does offer a range of third-party integrations to extend its features.


5. User Experience


Regarding ease of use, Xero offers:

  • Intuitive Interface: The platform's layout is designed for straightforward navigation.

  • Guidance: A variety of support resources like tutorials and community forums help users acclimate to the software.

  • Learning Curve: Generally speaking, the software is easy to use, although newcomers might require a little time to get familiar with some of its advanced features.

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Direct Comparison


Choosing between Business Central and Xero is an important decision that can significantly impact your business operations.


Both offer a range of features, but they also have distinct advantages and limitations.


In this section, we provide a detailed comparison across four key parameters: features, cost-effectiveness, scalability, and usability & support.


1. Feature-to-Feature Matchup


Here's a table that places the features of Business Central and Xero side by side for easier comparison:

Feature Categories

Business Central

Xero

Financial Management

Excellent

Very Good

Operations Management

Comprehensive

Limited

Sales and Customer Service

Dedicated Module

Add-on Features

Invoicing

Available

Strong Suit

Bank Reconciliation

Available

Excellent

Inventory Management

Advanced

Good

Scalability

High

Moderate

Customization

Extensive

Limited but Flexible

Cloud-based

Yes

Yes

User Interface

User-friendly

Intuitive

At first glance, Business Central appears to offer a broader range of functionalities, especially in areas like operations management.


This makes it an often-preferred option for businesses that require a multi-faceted enterprise solution.


2. Cost-Benefit Analysis


When it comes to selecting accounting software, it's important to think about both the upfront costs and the long-term value.


Business Central


This software is generally more costly at first, but it provides a wide range of robust features suited for more intricate business needs.


Over time, you may find that its versatile functions—from advanced inventory management to customizable reporting—can result in greater cost-efficiency, especially if you run a small or medium organization.


Xero


Known for being more budget-friendly, Xero focuses on delivering simple, efficient accounting solutions.


If you're a small business owner or a freelancer, you might find that the initial cost savings, coupled with features tailored for less complex operations, deliver strong value.


You get essential accounting capabilities without having to pay for features you won't use.


3. Sizing Up Scalability


When it comes to the growth of your business, you want accounting software that can grow with you.


Here’s how each platform stacks up in terms of scalability.


Business Central


This software is particularly strong in this area.


If you're planning big moves, like doubling your workforce or expanding into international markets, Business Central can keep pace.


It allows for easy user additions and offers specialized modules—such as multi-currency support and advanced inventory tracking—to match your evolving business complexities.


Xero


While Xero is scalable to an extent, its range is generally geared towards smaller operational scopes.


It suits small businesses well and can integrate with other software for added functionality.


However, if your business transitions into a large-scale operation with intricate needs, you may find Xero’s feature set less accommodating.


4. Ease of Use and Customer Support


Good software should not only have robust features but should also be easy to use and come with reliable support.


Business Central


The user interface is designed for simplicity and ease, streamlining tasks so you can get work done with minimal hassle.


This can be particularly beneficial for companies that are growing and need to onboard new staff quickly.


Additionally, Microsoft offers an extensive support network, including 24/7 customer service and a wealth of online resources, making it a strong choice for businesses that anticipate tackling complex challenges as they grow.


Xero


This platform is also user-friendly, featuring a clean and easy-to-navigate layout.


In terms of support, Xero provides a range of options, from step-by-step tutorials to customer support.


However, some users have noted that the response times from customer service can be slower compared to Business Central.


While both Business Central and Xero offer valuable features and capabilities, Business Central might offer a bit more in terms of comprehensive functionalities and adaptability, making it a viable choice for companies that envision significant growth or complexity.


How to Choose Between Business Central and Xero?


Selecting the right accounting software is an exercise in foresight, demanding a keen understanding of your present requirements and future aspirations.


The "right" choice varies dramatically depending on your specific business model, size, and objectives.


Below are some criteria to consider when making this pivotal decision.


1. Business Size and Needs


The first step is to outline the demands of your business.

  • Small Businesses: If you have a small business with basic accounting needs, Xero's straightforward design could be just what you're looking for.

  • Small to Medium-sized Businesses: Business Central can actually cater to businesses of various sizes. For companies that have more complex structures and a range of needs, this software might be a better fit.

2. Compatibility with Other Tools


Software rarely operates in isolation.


You likely already utilize various tools for CRM, data analytics, or inventory management.

  • Business Central: As a Microsoft product, Business Central offers seamless integration with the Microsoft ecosystem, including Microsoft 365 and Dynamics 365. It also supports a broad range of third-party extensions, making it easier to connect with specialized software you may already use in your operations.

  • Xero: With a flexible API, Xero allows you to connect the software to many different third-party applications. Whether you need integration with e-commerce platforms, payment gateways, or reporting tools, Xero’s API can accommodate your needs.

3. Test Drives and Free Trials


It's smart to test out the software before committing.


Both Business Central and Xero provide a way to do this.

  • Business Central: Microsoft offers a limited-time free trial along with comprehensive demo videos. These resources help you dig into the software’s functions, from basic accounting features to more advanced capabilities like workflow automation.

  • Xero: Xero also has a free trial period, where you can get a feel for the software's ease of use and explore its key features, such as invoicing, expense tracking, and financial reporting.

4. Consult an Expert


When stakes are high, third-party expertise can be invaluable.


An industry consultant or software expert can offer tailored advice, dissect your business needs, and help you navigate the intricacies of each platform to arrive at the most informed decision.


The ideal platform will sync with your company's operational complexity, growth trajectory, and the unique challenges you face in your industry.


A blend of self-assessment and expert consultation can guide you toward the accounting software that truly suits your business.


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Conclusion - Business Central vs. Xero


When deciding between Business Central and Xero, it's clear that each has its strengths.


Business Central shines in its expansive feature set, ideally suited for small to medium-sized businesses with complex operational needs.


Xero, on the other hand, offers simplicity and affordability, making it an excellent choice for small businesses and freelancers.


The best fit for your company hinges on a mix of factors like business size, functional requirements, and financial considerations.


Both platforms have their own sets of advantages tailored to different needs.


Making an informed decision requires a thorough understanding of your specific circumstances, including budget, operational demands, and future growth plans.


Reach out to us to enhance your accounting capabilities and optimize operational efficiency with Business Central.

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