The following Blog Post is an article written by Pam Madytianos, director of 2 Peas. The article was discovered by CA Managements Director Colin Atkinson. Colin felt this would be a good article to include in our blog as it shows the benefits of both Xero and MYOB as well as what each product features in a similar way and which product will be best for a Micro-Business.

Cloud accounting has certainly picked up momentum. Accounting software companies are continually improving and releasing programs in the battle to capture the SME market in cloud accounting. In this review, we compare the entry-level cloud programs offered by MYOB and Xero.


MYOB Essentials Accounting dashboard is simple and easy to use. It relies on the traditional MYOB style with tasks along the top menu bar which are easy to select. It gives you snapshots of Money In, Money Out, and Bank balances at a glance. With the click of an arrow you can see all the bank/credit accounts and balances of each.

Xero’s graph-based dashboard is attractive. It can be tailored to include the preferred accounts you wish to see. Users can click on the menu bars of each graph to drill down for further information too. The Xero menu screen has tasks listed under tabs which navigate to other areas of the application.

Bank Feeds

MYOB uses its BankLink service to provide reliable and secure feeds. BankLink, a 25-year-old financial data aggregator acquired by MYOB, has a team of data accuracy specialists that review the feeds using internal processes. Once checked they are uploaded into the MYOB file.

Xero uses two types of feeds. Xero has established relationships with most of the major banks and imports bank feeds directly. For other financial institutions Xero uses a third-party provider, Yodlee. Yodlee requires the user to provide their online bank credentials to Xero. Yodlee automatically logs into the business’s internet banking account, copies the transactions and sends them to Xero.

Bank Reconciliations

MYOB Essentials allocates transactions to accounts in the Bank Transaction screen. Transactions will auto-match if you have bank rules set up. When you are ready to finalise your bank reconciliation, you go to the Bank Reconciliation screen. At this point, the balance should agree to the closing balance on your physical statement. The statement balance and your MYOB balance are also on this screen.

Bank reconciliation in Xero requires you to approve (OK) all transactions matched to bank rules or invoices and bills. Transactions with bank rules automatically match and adjust your calculated statement balance. Xero has running statements and cashbook balances on screen so you can see what your balance is at any time. Xero advises users to check the balance in Xero against physical statements as there are sometimes duplicate or missing transactions.


Neither MYOB Essentials Accounting nor Xero have inventory tracking. Both systems can create a list of item codes for sales and purchases, but there is no record of inventory quantity kept on hand. Both systems have third-party products available for more advanced inventory requirements. (MYOB AccountRight Live also has inbuilt inventory tracking.) So both products are on par in this area.


MYOB Essentials Accounting has unlimited invoices. Invoicing is nicely laid out with a drop-down menu to select the customer or you can create customers on the fly with all details including name, address, etc. Essentials also offers quotes.

Xero Starter allows only for five sales invoices and five bill transactions per month. Xero Standard ($50 per month) gives you unlimited invoices and bills. When entering invoices, adding a new customer/supplier does not allow for the recording of address, contact and other details. There is no drop down to select the customer from a list but when you start typing, the customer name appears.


Payroll for Essentials Accounting allows for unlimited employees at present.  This will change in the latter part of the year when payroll will be sold as an optional extra. Payroll is easy to use and follows a three-step process. Just follow the prompts.

Xero Starter allows for only one employee, while Xero Standard ($50 per month) allows for up to five employees. You have to purchase Xero’s Premium packages for more employees – Premium10 ($60) for up to 10 employees, Premium 20 ($70) for up to 20 employees and Premium 50 ($80) for up to 50 employees. One feature I love in Xero is the employee portal where staff can enter timesheets, apply for leave and view payslips online.

A pain point with Xero payroll is the lengthy process to raise a draft bill after you post your payrun, appro