Xero vs Traditional Accounting Software: What's the Best Choice?

There's a reason the debate surrounding accounting platforms keeps flaring up. For UK accounting practices, there has always been a real choice to make—stick with a desktop-based, long-standing traditional system or embrace the more modern cloud-native providers such as Xero. When considering Xero vs. Traditional Accounting Software: What's the Best Choice for You?, neither choice is inherently right or wrong, though.

The suitable solution is dependent on the makeup of the firm—number of clients, workflow, size, and future expansion plans.

This article will help you pinpoint the fundamental differences between the two, highlight where the true excellence lies, and make determining what truly is best much easier, without falling back on all of the marketing talk.

What does every type of software actually provide?

Traditional accounting software—which refers to systems installed locally on desktop computers (take Sage 50 or earlier versions of QuickBooks Desktop, for example)—all works by keeping your data stored locally on a hard drive or internal server. Your calculations are made on your device, and you receive updates via pressurized downloads installed on your machine; access is limited to (presumably) the person operating the device at any given time.

Traditional software

Having stood the test of time, the appeal is clear.
It's operable, reliable, stable, and well-understood.

Most UK practices sticking with traditional file-based systems have been using the same computer programs for well over a decade now, with staff learning the layouts, menus, errors, and navigation pathways themselves.

They are customizable and can be used to cope with a myriad of financial tasks, and when requiring immense transacting volumes and complex postings, processing on a local device may even be more effective than the cloud equivalent. However, limitations are certainly faced—collaboration difficulties being chief among them, local access constraints, and the inability to work from anywhere in real-time.

How Xero simplifies the working process

Xero embodies the total opposite: software operating solely on a cloud basis.

Your data is accessible from any device and location. You. You can access the online portal, bank feeds flow in immediately, reconciliation proceeds at turbo-charged speed, and your clients can view their own bits of the data without needing shared access to a local system.

It is already overwhelmingly popular for accountancy practices servicing numerous clients across numerous locations, yet the flexibility provides even a sole practitioner the time to optimize their practices far beyond the conveniences practicalities provide.

The practicalities of the two options

Optimisation of your workflow

If you are comparing the two options, you'll notice immediately that it isn't all about the software.

It is how a team interacts and cooperates around the technical setup that will determine how fast a practice gets to the point of truly utilizing the benefits it can provide.

Here are the two fundamental issues:

Collaboration and remote working

Traditional in-house accountant practices find multi-user access a real roadblock.
Typically two people cannot work on the same file at the same time, creating delays and extra cost during 'busy' periods. Remote working arrangements involve the IT setup of either a VPN or a remote desktop connection to ensure the accountant finds themselves logging in to access files, adding extra complexity and recurring annual expenditures.

Xero avoids this entirely.

It facilitates instant concurrency, working on one file at one time or multiple concurrent worker arrangements depending upon roles predetermined by admin permissions.

It always incorporates ready access for the owner without the need for VPNs, remote desktop configurations, or on-premise server arrangements.

Cost Structure and manageability

Whereas traditional has a tendency to carry a slightly higher initial fee, packed with costs for upgrades, added hardware, and scheduled backup arrangements, Xero works on a monthly subscription basis, making it easier to budget for everything. Growing practices tend to find the predictability of the fee structure much more bearable.

- Traditional: high one-off costs, and lower recurring monthly costs
- Xero: lower initial costs, and a steadily rising monthly subscription fee

The two options will never be cheap, and regardless of which setup you pivot to, the initial investment in staff upskilling will always be there.

Cloud operators as a whole can save money over time with regard to tangible hardware, and software costs are eliminated as well.

Xero vs Traditional Software: What's Best for You?

Here is the truth behind the decision: choosing the right software is ultimately just the first hurdle.

Often we find that the changes made to the environments of practices reveal that they just do not have enough highly qualified staff members to meet the paperwork processing needs of their work.

The staffing issues

Routine operations, however, can become much more manageable with the right outsourcing partners.

UK practices that work in partnership with an experienced offshoring team are able to expand the capacity of their operations without having to hire, train, and accommodate either administrative or technical staff internally.

The benefit to scale is undeniable.

- Xero efficiency benefits will not completely negate the fact that tax returns still need to be prepared, accounts still need to be compiled, and precision still needs to be maintained in produce figures
- Offshoring means a reliable offshore accounting support team who can streamline the work, add to capacity, and dramatically drop the cost structure for practices.

Exuberant Global is a specialist Indian offshoring partner, with a treasure of expertise built up over 11+ years working solely with UK practices. Our team is well versed in all major platforms, including Xero, and covers the following:

- Processing of all transactions; including sales, costs, nominal coding
- Producing the final accounts and reports
- Organizing the self-assessment documents
- Computing the information required for payrolled processing
- Creating the settled input and output schedules for clients' organizations

Our dedicated team works with any setup, providing scalable work to support periods of overwork and additional resource requirements if needed, as well as providing an outsourced alternative for any practice. You'll never need to worry about software compatibility ever again!

If you're trying to cut overhead, manage holiday/holiday service surges, or 'free up' senior staff to do real value-added advisory work, doing business with Exuberant Global is a very real, logical next step.

Call us now to see how their specialists can help you too.