Before You Start

This guide is for businesses evaluating project management tools within Xero or QuickBooks Online. We’ll focus on features relevant to service-based businesses, consultants, and project managers.

Overview

20 min
Evaluation Time
Intermediate
Difficulty
Ongoing Review
Maintenance

What You’ll Learn

  • How each platform handles time tracking and expenses
  • Comparing budget-to-actuals reporting capabilities
  • Understanding various project invoicing methods
  • Evaluating overall platform cost and scalability for projects

1. Getting Started: Key Considerations

Before diving into features, consider these foundational aspects for your business:

Evaluation Criteria

  • Your specific time tracking requirements
  • Complexity of expense categorization
  • Client billing preferences (progress, fixed, T&M)
  • Level of detail needed for project reporting

Crucial Metrics to Track

  • Real-time project profitability
  • Resource utilization and capacity
  • Variance between budget and actuals
  • Project milestone adherence

2. Core Features Comparison

Let’s look at the strengths and weaknesses of each platform’s project features.

Xero Projects

Xero’s integrated project module focuses on simplicity and ease of use.

Pros:
  • Seamless integration with Xero Accounting.
  • Intuitive interface, easy to get started.
  • Good for small to medium-sized projects.
  • Basic time tracking and expense allocation.
Cons:
  • Lacks advanced job costing features.
  • Limited custom reporting options.
  • Less robust for multi-phase, complex projects.
  • No granular inventory tracking for projects.

QuickBooks Projects (Online Advanced)

QuickBooks Online Advanced offers a more robust project costing module, often ideal for growing service-based businesses.

Expert Tip: For businesses with complex project management and detailed job costing needs, QuickBooks Online Advanced often provides more robust features. Xero Projects is generally better for simpler, service-based project tracking without deep cost allocation.

3. Feature Deep Dive: Project Workflow

Understanding how project data is structured and processed in each platform is key.

Project management in both Xero and QuickBooks Online Advanced typically involves creating a project, assigning tasks, tracking time and expenses against those tasks, and then invoicing the client based on recorded activities or fixed agreements. The depth and flexibility of each step vary significantly.

For instance, budgeting in Xero Projects is generally straightforward, focusing on overall project income and costs. In contrast, QuickBooks Online Advanced allows for more detailed budget creation, often at a task or sub-project level, providing finer control over expected profitability.

4. Key Feature Breakdown

  1. 1

    Time Tracking & Task Management

    Xero Projects: Integrated time sheets, assign tasks to staff, track billable vs. non-billable hours. Simpler, but effective.
    QuickBooks Projects: More detailed time entries, progress tracking, assignable tasks with estimates, better for larger teams.

  2. 2

    Expense & Cost Allocation

    Xero Projects: Allocate purchases, bills, and expenses directly to projects.
    QuickBooks Projects: Robust job costing, allocate direct costs, track indirect costs, and integrate with payroll for labor costs more extensively.

  3. 3

    Invoicing & Billing Methods

    Xero Projects: Generate invoices directly from projects, options for fixed-price, time & materials, or progress payments.
    QuickBooks Projects: Flexible invoicing, including progress invoicing, retainers, and more customizable invoice templates tied to project stages.

Common Pitfall: Granularity vs. Simplicity

Xero Projects prioritizes ease of use, which can sometimes mean less granular data for very complex projects compared to QuickBooks Online Advanced. Ensure the level of detail meets your reporting needs.

5. Evaluating Project Profitability

Key Profitability Checks

  • Review budget-to-actuals reports for variances
  • Analyze project gross profit margins consistently
  • Track billable vs. non-billable hours for efficiency
  • Compare estimated vs. actual project completion timelines

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