We talk to a lot of businesses on a daily basis, and if there’s one common thread that comes up with just about every business that’s looking to upgrade their accounting software, it’s this: Choosing is confusing.
To help with the confusion we’ve put together an in-depth guide to give you a side-by-side comparison between two of the biggest names in business accounting software: Sage and Xero. This Sage vs Xero comparison will help small businesses make an informed decision about their accounting software needs.
What is Sage 200?
Sage 200 is a comprehensive business management software solution that features a set of essential tools to help you manage your company’s accounting, inventory, sales, manufacturing, supply chain, and more. It is an all-in-one suite that can help your business perform several essential tasks more quickly, such as invoicing, banking, cash flow management, project accounting, order processing, stock management, and customer relationship management.
Sage 200 is marketed as an end-to-end business management solution for small to medium-sized businesses that want to grow themselves and become more profitable and efficient. The reason it is called “Sage 200” is that it is designed for companies with no more than 200 employees. As a sage software for accounting, it offers robust features for financial management and business operations.
What is Xero?
Xero is an advanced cloud-based accounting software program that offers robust financial management tools and solutions for small businesses, including startup companies and independent freelancers. Xero accounting was designed with a user-friendly interface and tools that make it easier to manage all aspects of your business, such as bookkeeping & accounting, payroll, financial reporting, invoicing, inventory tracking, and bank reconciliation.
Businesses in several different industries can easily adopt Xero software into their operations, including e-commerce, hospitality, retail, manufacturing, accounting, finance, wholesaling, and technology. Xero can also integrate with hundreds of other app add-ons to further enhance its functionality and cater to your specific business management needs.
Sage 200 vs Xero Price
One of the first things we do with each of our clients is to look at their turnover and use this as an initial gauge to get an idea of what kind of accounting package they’ll need.
As a rough guide, we find that most businesses that are a good fit for either Sage 200 or Xero (along with an accounting add-on) have an annual turnover that lies somewhere between £1 million and £25 million. If your business lies outside of this range, your needs are probably either too complex for what these packages offer – or not complex enough to justify the cost.
Most established small to medium-sized businesses will have an annual turnover within the £1 million to £25 million range. For these businesses, both Sage accounting and Xero accounting offer suitable small business accounting solutions.
What does a move to Sage 200 cost vs. a move to Xero?
Incorporating new business management software into an existing company is not cheap and simple. It takes time and money to integrate all the existing financial records, inventory, payroll, and other business operational data into a new business and accounting management software program like Sage or Xero. The data migration process can be complex and requires careful planning.
The entire process can temporarily slow a business’s productivity until the official move has been completed. Reduced productivity can be quite costly for a company. However, the good news is that the long-term profits and benefits far outweigh the short-term expenses and setbacks. So, whether you choose Sage or Xero, the move will be worth it if it means managing your business operations faster and more smoothly.
A move or upgrade to Sage 200 will usually cost £15k to £80k. This doesn’t consider any additional costs, like the price of servers, upgrades, or an annual support fee. A move or upgrade to Xero (with inventory apps) will usually cost £7k to £25k.
Clearly, it is much more affordable to move to Xero than Sage 200. Now, all you must do is compare the features of each business management software suite to see which one can benefit your company the most.
But what about Sage’s cloud package?
If you’re looking at one of Sage’s newer cloud offerings (like Sage 200cloud), you might expect an ongoing cost of around £200 per month per user.
Sage 200 Cloud is a 100% online version of the Sage business management suite. It allows you and your team to access and synchronise financial records and inventory information from any location 24/7. Moving your financial accounts into this cloud space makes managing your business much easier.
What is the cost of Xero’s cloud-based service?
All of Xero’s membership plans offer cloud-based services, including the cheapest ones. The four different Xero packages UK and their prices are as follows:
- Ignite Plan – Small businesses and startups will be most comfortable with the beginner Ignite Plan. It gives you all the basic accounting tools that you will need for common financial management practices like invoicing and bank reconciliations. The cost per month is £16.
- Grow Plan—Self-employed individuals and growing businesses may prefer the Grow Plan. It includes all the features included in the Ignite plan, plus additional accounting functions and basic business analytics. The cost per month is £33.
- Comprehensive Plan—Small to medium-sized businesses with multiple employees will need the Comprehensive Plan. It has the advanced payroll tools needed to manage the payouts for several employees. It also features advanced analytics, multi-currency support, and expense tracking tools. The cost per month is £47.
- Ultimate Plan—Larger businesses with up to 15 employees and sophisticated operations will need the best plan that Xero has to offer, the Ultimate Plan. It offers advanced payroll features, project tracking tools, and robust analytical features with insights to improve strategic decision-making. The cost per month is £59.
You can clearly see that the cost of each of Xero’s monthly service plans is much more affordable than Sage 200’s monthly service price. Even if you choose the Ultimate Plan, it is a much better deal than Sage 200’s best plan.
If you need additional features added to your Xero software, you can always select from amongst the hundreds of add-ons available to enhance its functionality. This gives you much more control over your business management software, as you only pay for the additional functions that you need to run your business better.
So what’s the verdict, Sage 200 or Xero?
There’s a substantial difference in cost when you compare a move to Sage 200 with a move to Xero. And Xero comes out ahead as a clear winner in terms of pricing – even with an additional inventory app added on.
Xero also offers lower monthly service prices for its cloud-based software than Sage 200. Therefore, a small or medium-sized business owner can find more cost savings by moving to Xero and purchasing a cloud package. When considering Xero vs Sage, pricing is definitely a factor that favors Xero for many small businesses.
Inventory Management
For any product-heavy business, the vanilla version of Xero alone won’t be enough to manage its operations adequately. So, if you run a business that buys and sells products, you will need to utilise the vast selection of essential inventory add-ons to make the Xero software work well for managing it.
Xero’s inventory add-ons can cover the following critical aspects of running your product-based business in Xero:
- Bills of materials
- Traceability
- SKUs (Stock Keeping Units) limit of 4,000
- Discount rules
- Assembly and Disassembly
- High numbers of product categories, or custom fields
- Or stock alerts and warehouse management
Sage, on the other hand, does come with some of these features as part of their standard package. However, it doesn’t come with things like:
- Accepting online quotes
- Links for paying invoices
- Automated invoice reminders
- Flexible reporting
- And e-commerce integration
So who’s the winner?
Xero combined with best-in-class inventory add-ons, becomes a complete suite of tools that’s both more customisable and feature-rich than Sage. Xero’s customisation possibilities make the software much more attractive because it allows business owners to manage their operations in ways that are specific to their needs. That is not something that Sage 200 will let you do.
Customisation
Sage has extremely limited options for add-ons
Since Sage doesn’t use an API (Application Programming Interface) there just isn’t really a marketplace of external apps and add-ons that can integrate with Sage. This also means these add-ons need to be constantly updated and modified, which makes them costly to maintain. That is why Sage is not a good option for business owners that want additional customisation options.
Xero has a huge marketplace for add-ons
Because of its modular design, there’s an entire ecosystem of add-ons out there for Xero – and it’s growing every day. As well as the smaller, quality-of-life add-ons you might expect, the Xero Marketplace can give you access to more than 700 powerful tools. You won’t need to use all these tools, but at least you have plenty to choose from in the marketplace. That way, you can decide how you want to manage your business using the Xero software add-ons.
Accessibility
By far, one of the biggest things that our clients love when they switch to cloud accounting is how accessible everything becomes.
Sage is server-based and static. If you want to access it remotely, you’ll need a VPN (Virtual Private Network) – which just isn’t convenient for the average business owner or accountant.
Xero is cloud-based and mobile-friendly, you can get access to it anywhere, on any device. Xero’s mobile app allows users to manage their accounts on the go, making it a more flexible solution for busy entrepreneurs. Xero’s external add-ons (such as inventory apps like Cin7) come with in-depth reporting features that can be customised to your business’s needs.
So which is more accessible?
Based on the reporting alone, Xero and its add-ons are a game-changer for many of our clients. We’re constantly getting positive feedback about the level and depth – and ease – of its advanced reporting functions.
Integration and Scalability
API stands for Application Programming Interface.
This just means a consistent piece of code that allows external apps and add-ons to interact with the accounting package. And when it comes to integrating third-party apps and upgrading your software, this API is crucial. Xero uses an API to easily integrate with over 700 add-ons
Sage 200 doesn’t use an API – and that makes add-ons difficult
There’s a reason why most of the ‘add-ons’ available to businesses on Sage 200 are modules built by Sage themselves. This limitation can make Sage less flexible as an alternative to Xero for businesses that require extensive third-party integrations.
Here’s a quick summary to help you remember all the big differences:
- Sage 200 comes with a much higher initial cost than Xero – even with the addition of Xero’s essential inventory add-ons.
- Sage 200 has some decent inventory options – but the combination of Xero and the right add-on covers everything a business needs, including advanced features like accounts payable and accounts receivable management.
- Xero has over 700 external apps and add-ons to choose from – Sage 200 has very few third-party add-ons to help you customise your package as your business scales.
- Xero is mobile-friendly and accessible on the go, with insightful reports that can be heavily customised. Its mobile app provides flexibility for businesses that need to manage their finances from anywhere.
- Xero offers better support for VAT submissions and is fully compliant with Making Tax Digital requirements, making it an excellent choice for UK businesses.
- Both Xero and Sage offer CRM integration capabilities, but Xero’s extensive marketplace provides more options for businesses looking to connect their accounting software with other business tools.
When comparing Sage vs QuickBooks vs Xero, it’s clear that Xero offers a more modern, flexible, and cost-effective solution for many small businesses. However, the best choice will depend on your specific business needs and preferences.
Still confused about whether Xero or Sage is right for your business? We’d love to help. Book a call or find us on social media and we’ll help you out with any questions you have about choosing the right small business accounting solutions for your needs.
