The Quickbooks vs Xero Bookkeeper Battle

Watch out, because you definitely don’t want to piss off a bookkeeper. And that’s something that Intuit appears to have done recently. Xero, then put out an indirect response to Intuit on where they stand on the matter. With that, it’s clear there’s a Quickbooks vs Xero Bookkeeper battle that is now brewing, where each vendor are now positioning themselves for where they see the future of the role stand. Who would have thought the bookkeeper space would have been so interesting?

The Quickbooks vs Xero bookkeeper battle all started with this:

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Bookkeepers and accountants alike picked up on this immediately. Intuit was no longer selling software, but they were now also selling bookkeeping services. The scope of this service was indeed murky, but their intention was clear.

Intuit’s response was that this move was only a test:

Still, loyal Quickbooks supporters felt betrayed. They saw it as a way of commoditizing what they were doing, undercut their pricing and essentially, replace them. And with Intuit’s recently similar play with their TurboTax product, it’s hard to argue that Intuit is not trying to take a cut of an accountant and/or bookkeeper’s top line.

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What’s interesting is that if you navigate to the US Quickbooks pricing page, the “live bookkeeping” option no longer appears, this only after about 2 weeks time.

It took about a week, but fuelling this Quickbooks vs Xero bookkeeper showdown, Xero hit back, with Keri Gohman, President of Xero Americas, making a statement called, “Xero’s commitment to bookkeepers“, which read a bit like a manifesto of sorts. Xero’s position, essentially, is that they will treat bookkeepers as partners, they will not take a cut of what they earn, nor will they look for technology to replace them. They will use technology to augment the relationship between client and bookkeeper.

So in this Quickbooks vs Xero bookkeeper battle, who is right and who is wrong? And should Quickbooks users even be so upset? Let’s take a look.

The Quickbooks Side of Things

Let me just be clear on one thing. I like Intuit’s play here. Was it rolled out properly? Maybe not. People are sensitive what you encroach on their livelihood. It’s only natural for bookkeepers to be upset. Especially when they act as a valuable channel for business that you have relied on for so many years. They are the ones helping you get more subscribers and then when they see Intuit offering bookkeeping services on top of their software all of a sudden with basically no mention of anything, it’s easy to see that a loyal supporter would be upset.

But, ignoring the messaging part of things, I think exploring the marketplace side of things is a smart move in the accounting space. Uber has connected drivers with passengers, Airbnb has connected renters with those looking for short term stays, and so on. The marketplace space is super hot. So why not foray into this space when it comes to accountants, bookkeepers and tax professionals?

The hardest part of a marketplace business is actually getting users on to your platform. Without users, the platform is virtually useless. You need the buy side (the small business in this case) and you need the sell side (the accountant/bookkeeper). Intuit has that already, and millions of them. Now, on top of selling their software, they can make a cut from connecting these users together.

Keeping in mind that Intuit is now a SaaS (Software as a Service) company and one of their biggest KPI’s is their MRR (Monthly Recurring Revenue), what better way to increase their subscription revenue than by bundling in their software with services and then sourcing those services, on-demand via their vast network of professionals.

What Intuit is likely testing at the moment is if the market actually has interest in shopping for your bookkeeper à la Uber model, essentially, something that’s more on-demand. It’s an interesting move, but one that no doubt kicked off a Quickbooks vs Xero bookkeeper showdown.

Another interesting part of this test is that it seemed like Intuit was not actually offering bookkeeping services, but bookkeeping support, for those businesses that handle their bookkeeping in-house and want the assistance of a bookkeeper for questions from time to time. This is interesting because it seems to assume that bookkeeping is getting easier and more automated, where the average person can handle this on their own without the need for a bookkeeper (an assumption that Xero seems to have made as well as this point is addressed in their response on the matter).

Last observation. I think what we are beginning to see here is something I wrote about as a top trend trend over the next few years for accounting firms (trend #3 in the article) discussing how the gig economy is going to greatly impact firms down the road. Trends were pulled from a recent World Economic Forum report which specifically talks about how traditional job roles are being deconstructed into tasks and are being re-bundled into new talent platforms. This will create opportunities for workers (much more flexibility for when/where/how to work), but will cause create strain on firms (less and less interest in a steady full time job means recruitment/retention becomes even more difficult). I think we are very much at the beginning of this starting to happen.

The Xero Side of Things

Xero played things pretty smartly the other day and likely won over a few supporters in doing so. Seeing the backlash, the President of Xero Americas released a statement of where they stand with regards to their bookkeeper partners, thus fuelling the Quickbooks vs Xero bookkeeper battle. In it, Keri says:

“We must avoid the temptation to believe the hype that the future will soon be dominated solely by technology. This is a future, already alive in the imaginations of many, where the work traditionally done by bookkeepers is eliminated and replaced by AI and on-demand, Uber-like services.

At Xero, we are proud to deliver some of the most innovative technology that the bookkeeping industry has ever seen. But we are also determined to forge a future where the distinctly human contributions of bookkeepers continue to shine through. We want to use technology not to replace the work of bookkeepers, but to enhance the positive impact bookkeepers have always delivered.

Our industry is at a crossroads. We are facing a clear choice. Do we believe that the role of a bookkeeper is simply to collect and process data? Or, do we believe that the role of a bookkeeper is to engage deeply and understand what makes each and every small business unique?”

This seems to be a direct shot at Intuit. She also seems to be saying that Xero would not look to Uberize the bookkeeping profession and instead they will create software that will enhance how bookkeepers work with clients.

At the same time, there is an admission that the way that many bookkeepers work today will likely disappear. Technology will replace large chunks of what bookkeepers do and what Keri is getting at is that bookkeepers will need to retool and be able to advise clients on their business rather than just process data.

Who Wins, Who Loses?

So who is winning the Quickbooks vs Xero bookkeeper battle at the moment?

From a PR perspective, Xero just took the prize.

But as I mentioned above, I do like what Intuit has attempted. Ultimately, I think a marketplace approach may be the future for some, but certainly not all, bookkeeping, accounting and tax tasks. I am thinking about this from a business standpoint for the software vendor but also from a customer experience perspective. If parts of the Uber model can be successfully applied to the bookkeeping/accounting/tax space for some aspects of the process, I think it will greatly enhance the way accounting gets done from a customer perspective.

At the end of the day, Intuit are both basically saying the same thing, just in different words. The role of the bookkeeper is changing, bookkeepers need to adapt. Technology is automating more and more of what bookkeepers have based their livelihoods on. Intuit has said this through release of a test business model to Uberize parts of what bookkeepers do and Xero more explicitly stated this when they indicate that technology will enhance the way that they will need to work with clients (but also replace what they were doing previously).

If the marketplace approach does succeed, I think the big losers in this will likely be firm owners. This will almost certainly increase commoditization of services and squeeze profits for those that don’t adapt and will perhaps make recruitment/retention of employees that much harder (already one of the top issues facing firms today) since employees now have the option of the ultimate flex-schedule.

One thing is for certain, the Quickbooks vs Xero bookkeeper battle has just begun. Who would have thought that bookkeeping would have been one of the most exciting things to hit the profession as of late?


Ryan Lazanis

I’m Ryan Lazanis. I’m a CPA by trade but definitely don’t consider myself a normal accountant. I identify more with being an entrepreneur and I love disruptive technologies and business models. My aim is to help modernize the old, traditional accounting profession by giving firms the tools they need to modernize. Each week I send off a curated newsletter recapping the top 5 things on the internet affecting your modern firm. Click here to subscribe to my Future Firm Top 5 Weekly newsletter today!