Xero and Sage Business Cloud are competing in the same space - for SME market share. However, that's where the similarities end, because these 2 powerhouses are best suited to 2 very different types of business. Not sure which one's right for yours? We've put them through their paces for you. We did this based on five things:

1. Ease of use
2. Functionality
3. Interoperability
4. Customer Support
5. Price

Want the quick version? Skip to the end!

Ease of use

Sage Business Cloud

Since changing their name, Sage still haven't update their web domain — https://uk.sageone.com — so, assuming there's no confusion, we’ll move straight on to the app.

Menu headings are in a simple, recognisable language that everyone can understand: Sales Ledger, Purchase Ledger, Cashbook and VAT. This is a welcome escape from the bells and whistles home screen some of us are used to. In Xero, you'll need an extra click to access the same options.

Once into Sales Ledger or Purchase Ledger, you can easily search and customise the invoice list screen. Just click the cog to the left of the menu bar. Features like this feel intuitive and consistent throughout the app, and you'll find that pop-up menus are pleasantly easy to work with.

You can create invoices and cash entries individually, with minimal input and fuss (Customer/Supplier, Date, Description, Amount). Extra input is required in Xero, because it doesn't automatically default mandatory inputs such as Quantity. By the way: extra clicks don't sound like much, but they add up when accounting and bookkeeping regularly.

Overall, we find it hard to fault Sage Business Cloud when it comes to ease of use. It's simple and friendly for everyone.

10/10

Xero

Xero's menu headings are less immediate than in Sage. In Xero, you'll have to click four times to bring up a list of invoices that can be searched or filtered (just once in Sage). The general journey is a bit scattered too, and certain things are a little tricky to find. Once you know your way around, it's no problem really, but it makes the overall user experience less pleasant.

All that said, Xero does give you greater flexibility in reporting. You'll be able to heavily customise existing reports, create new reports and assign favourites directly to the main ‘Reports’ menu. Reporting in Xero isn't perfect (more on that later), but it has a wide range of easily customisable features using dropdowns, selections and filters, which is a nice touch.

Many of Xero's reports have a different feel in terms of design, layout and options available. That means you'll need to take time to learn everything, rather than finding your way around using intuition, like in Sage. This isn't a problem if you're a dedicated accounts person, but it still brings the ease of use score down a fair bit compared to Sage.

6/10

Conclusion

Sage Business Cloud is a delight to use; anyone can pick it up and use it without training. On the other hand, Xero requires you to know where to look. To us, it feels like the various screens in Xero were created by different developers and/or teams, which have been stuck together into one app. Also, the additional clicks required in Xero to find the same place make the user experience frustrating at times. On ease of use alone, we'd pick Sage Business Cloud every time.

Functionality

Sage Business Cloud

Sage does the basics extremely well — like the logical way it manages payments on account: when a bank feed or cash item can't easily be allocated to an existing invoice, Sage allows you to simply pick the customer/supplier and select ‘payment on account’ from a drop-down menu. 2-3 clicks and you're done. Xero makes this much more complicated.

Sage isn't all powerful though; it doesn't support mass imports of Sales, Purchase or Bank transactions. This makes entering high volumes of transactions a heavily manual process. Unfortunately, you'll need to enter them one by one. The plus side is that the direct bank feeds drop the need to import any bank transactions.

5/10

Xero

Xero's import functionality is easy to use and super accessible. You can download templates from the app and re-import them to reflect 100s of transactions at a time. If you're importing more than 1000 transactions at once, the app sometimes runs into time out problems, but that's in line with the Xero guidance on limits.

Xero takes a step backwards when it comes to the basics. Posting a payment on account — they've called it ‘Overpayments’ for some reason — takes far too much time fora simple task. It takes a minimum of 7 clicks to perform something that can be completed in less than half this in Sage Business Cloud. The bank feed gets a thumbs up though, especially with additional helpful features like the ability to enter notes on unreconciled transactions.

The reporting in Xero is comprehensive compared to Sage Business Cloud, but there are some strange oversights. For example, it's not possible to report on foreign currency transactions in both the foreign currency and base currency. You'll need to report each currency in a different format. This makes it very difficult to cross match the two reports, because there's no unique identifier applied universally in Xero.

7/10

Conclusion

So, Xero has its pitfalls. It's not the perfect solution for larger volume businesses, particularly if you work with foreign currencies. It does have an import function though, which is helpful. This feature alone makes it technically more powerful than Sage Business Cloud, and this is really where the two diverge in terms of their customer base. Xero is well-suited to small and medium sized businesses that handle few foreign currencies and have transaction volumes within its limits. Sage Business Cloud is better suited to low volume businesses and if Directors themselves want to dive in to the bookkeeping and accounting.

Xero is a hands down winner when it comes to connected apps. The Xero API is easy to connect to and once integrated, we’ve experienced very few issues, even at high volume loads. In our experience, integration issues have primarily been concerned with the integrated app rather than Xero, so it’s best to test integrated apps before committing to one.

Customer Support

Sage Business Cloud

Sage offers live chat, email and phone support. We’ve found Sage to be fast to respond to emails (a couple of hours, usually) and very good at resolving problems. The Sage response team are well trained technically, with those answering the phone often able to resolve technical problems live via screen sharing. The only downsides are the costs to call the support line.

9/10

Xero

Xero only offer email support. Responses tend to come back between 7 and 12 hours, and not only for an initial response, but between email correspondence too. This is probably to do with Xero being based in New Zealand. There's no number to call either. We've found the quality of responses to be less thhan ideal, and usually point people to material on the Xero help pages. We have pressed for a phone call before, which we did get, but found that they pretty much repeated what was said over email.

2/10

Conclusion

Xero support is very poor. Resolutions usually come from procedures documented by other Xero users on the community pages. The users and accountants that contribute on the community pages are an invaluable resource that goes a long way in making up for Xero customer support shortfalls. Potential customers need to be confident in their ability to research and resolve problems themselves or with a supportive accountant when using Xero. 

Final Conclusion

Sage Business Cloud is better suited to businesses with low transaction volumes, mainly due to the lack of import functionality and advanced reporting customisation found in Xero. Professional service businesses or slow-moving goods businesses (e.g. luxury goods sales) would be well suited to a platform such as Sage Business Cloud.

Sage is also easy to navigate, which we think supports the bookkeeping/accounting process in general. When it comes to Xero, we recommend using a professional accountant for the setup and management of the accounts, particularly if you're inexperienced with accounting systems. This is particularly poignant when users realise the poor customer service offered by Xero.

Assuming your business has a Xero partner on hand to help, the platform is very well suited to high transaction volume businesses, particularly where transactions are in company currency only, due to Xero’s restrictions in handling and reporting on foreign currencies. Its integration partner base is broad, which may be useful to those business utilising numerous other web apps containing financial information such as PayPal.