CPA_Practice_Advisor_April_2020 - 12

REVIEW: NONPROFIT ACCOUNTING SYSTEMS
QuickBooks and Xero Offer
Some Nonprofit Tools

We generally think that software designed specifically
for nonprofits is usually a better solution for nonprofit
organizations, even if you're just beginning a venture
into the nonprofit realm. While some nonprofit software
applications are priced out of a smaller nonprofit's
budget, others are priced comparable to the more
generalized small business solutions from QuickBooks
Online and Xero, and offer the features that nonprofit
organizations need such as fund accounting, donor
management, and grant management.
One major advantage to QuickBooks Online and
Xero is that they are so widely used, that finding users
with experience in those systems is very easy. However,
while they both do an admirable job of managing
standard financial transactions and organizational
management functions, neither offers true fund
accounting, which is what most nonprofit organizations,
both large and small, really need. However, either
product is a better option than not utilizing accounting
software at all.
Read our overview of the nonprofit management
functions in QuickBooks and Xero.
* QuickBooks Online
* Xero
And be sure to check out our review section on
accounting systems designed specifically for nonprofits.

QuickBooks Online Nonprofit Features

Xero Accounting Nonprofit Features

QuickBooks Online allows users to choose 'nonprofit' as the business
type during setup, but aside from slight differences in account names,
there is no difference in software functionality from a for-profit setup.
Users are able to create custom accounts to track funds or grants
by adding a sub-account number, which is the same process used if
tracking departments. It does a good job of tracking various financial
transactions with bank connectivity, as well as the ability to handle sales
transactions. The customer option can track donors and donations as
cash receipts or AR. There is no real way to handle campaigns or other
fundraising options within QuickBooks Online, though it does integrate
with a variety of nonprofit apps, enabling users to import transactions.
Budgeting features are only available in QuickBooks Online Plus
and Advanced versions, with budgets able to be created based on
location, class, or customer, but multiple budgets cannot be combined.
Users do have the option to export budgets to Microsoft Excel for further
customization if necessary. Tracking of funds, programs, and grants
is limited in QuickBooks Online, although the sub-account method is
available if tracking is necessary.
QBO reporting options include nonprofit specific reports including
Statement of Financial Position, Statement of Cash Flows, and Statement of Activities. Reports are easily customized and can be viewed,
emailed to the recipient, exported to Excel, or saved to PDF.
QuickBooks Online is a good option for smaller nonprofits and currently offers four plans: Simple Start (1-user), which is available for $12
a month; Essentials, which is $20 per month for up to 3 users; Plus,
which runs $35 per month for up to 5 users; and Advanced, which is
$75 per month and supports up to 25 users. A 30-day trial is available.
Several payroll systems can be added on.

Xero is not designed for nonprofits, but can be used by smaller nonprofits.
A cloud program, Xero includes a default chart of accounts with limited
customization, making it difficult for nonprofits that need to manage numerous
funds. It offers bank connectivity and handles multiple financial transactions
including invoicing, bill payment, fixed asset tracking, inventory, cash receipts,
and customer quotes.
Budgeting capability allows a new budget from scratch or copying. While
only one organizational budget can be created, users can create unlimited secondary budgets; useful for managing funds or grants. Budgets can be exported
to Excel. Xero does not offer donation or fundraising tracking, but integrates
with third-party nonprofit applications that can be used to track donations,
manage donors and pledges, and create campaigns. Users have the option
to add a sub-account in order to track funds and grants, which is adequate
for those tracking one or two funds or grants, but is not recommended for
nonprofits that need to manage multiple funds or grants simultaneously.
Xero includes decent reporting capability. The product dashboard offers a
good look at current financial status and is totally customizable, so users can
view only the information they need. Xero recently added a Statement of Cash
Flows to its list of available reports, and all standard financial statements are
available in the application as well.
Xero currently offers three plans: the Early plan, which provides a limited
number of invoicing, billing, and reconciliation transactions, and currently runs
$9 per month; the Growing plan, which includes processing for an unlimited
number of invoices, quotes, bills, and bank transactions, which runs $30 per
month; and the Established plan, which includes the same features found in
the Growing plan, along with multi-currency capability, expense management,
and project tracking, and runs $60 per month. Xero also offers a free 30-day
trial so those interested can try out the product to see if it's a good fit for them.

https://quickbooks.intuit.com/online

www.xero.com

AccuFund helps nonprofit organizations streamline workflows, improve
accountability, and deliver relevant reporting for better financial control.
Community services, human services, foundations, endowments, and arts
organizations all use AccuFund financial software to:
n Make better decisions with real-time dashboards and reports
n Save time handling requisitions, approvals, payments, and fundraising
n Integrate seamlessly with CRM, case management, and other data systems

Advance Your Clients' Mission
with Industry-Leading
Financial Software.

Deliver Solutions in the Cloud or On-Premise Free White Paper
Help ensure your clients are using the right financial management/ ERP
system to meet their needs. Learn about the 6 Key Factors when assessing
financial management/ERP software in "Cloud Vs. On-Premise, A Nonprofit's
Guide to Selecting Accounting Software," a free white paper available at
accufund.com/cloudvsonpremisewp.

To help your clients advance their mission with AccuFund financial
software, visit accufund.com or call 877-872-2228.

accufund.com | 877-872-2228

http://www.xero.com https://quickbooks.intuit.com/online http://www.accufund.com/cloudvsonpremisewp http://www.accufund.com http://www.accufund.com

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