This article outlines the main differences you can expect to see between Finaloop and traditional accounting platforms like QuickBooks Online (QBO) and Xero. Understanding these distinctions can help you choose the right accounting solution tailored to your ecommerce business needs.

It also gives you a good idea of what to expect when getting started with Finaloop.

If you’ve previously been using Quickbooks or Xero as your accounting software, you’ll notice some glaring differences between your old books and Finaloop.

Here is the main difference: Finaloop provides full accounting services, while QBO and Xero are do-it-yourself (DIY) accounting softwares.

Finaloop offers a complete accounting solution that includes both technology and a team of ecommerce finance experts to handle your books from end to end. We are focused on giving you financial visibility and tax optimization, so you can be free to focus on your business operations.

Accounting platforms like QBO and Xero are both software-only, DIY tools. They require a significant amount of manual work or require you to hire a bookkeeper to manage it.

In addition to the unlimited email support you get from our expert team that does the books for you, we can also introduce you to a dedicated expert if you’re looking to hand-off the financial supervision and financial operations of your business. Learn more about this here: What support do I have access to in Finaloop?

Here are other key differences you can expect to see:

Let’s dive into each difference in more detail.

Finaloop is designed specifically for consumer brands and is built to handle the complexities of online businesses.

We seamlessly integrate with your ecomm apps to automatically sync and reconcile your data from the sources of truth into your books. We break down your data into a carefully built ecommerce-tailored chart of accounts, so you can see the data that is most meaningful for your business, like sales per channel, COGS, merchant fees, advertising & marketing by vendor, and more, based on industry best practices.

QuickBooks and Xero are built to be generic accounting tools, not designed for ecommerce. They require extensive customization, additional connectors, and manual input to track ecommerce transactions, which can lead to errors and inefficiencies.

While a Finaloop subscription fee is higher than QuickBooks or Xero, the overall cost is often lower when considering the time saved and the reduced need for external bookkeeping services. Finaloop’s accuracy also minimizes the risk of costly errors and IRS audits.

QuickBooks and Xero have lower subscription fees. However, the additional costs of external bookkeeping services or your own time if you choose DIY bookkeeping, time investment, and potential inaccuracies can make them more expensive in the long run.

Finaloop uses advanced machine-learning technology based on a database of thousands of consumer brands to automate over 94% of bookkeeping tasks. It runs transaction categorizations, continuous reconciliations, including 3-way order-payout-bank reconciliation, independent app validations, 'money-in-transit' reconciliation, timing difference mitigation, FX adjustments, inventory reconciliation, interest recognition, and full revenue reconciliation. This ensures 100% accuracy, with data consistently validated against your apps and banks.

Both QBO and Xero rely heavily on manual data entry and reconciliation by either the user or a bookkeeper. Even when setting and creating rules, it relies heavily on human input. This increases the risk of errors, inaccuracies, and delays, especially when dealing with high volumes of transactions typical in e-commerce.

Finaloop syncs and categorizes your data in real-time, providing always-ready reports (with some inputs needed from you) and a dashboard with financial insights, allowing you to make informed decisions quickly. Your financial data is always up-to-date and accurate, with no need to wait for month-end reports.

Because QuickBooks and Xero are both driven by a human, updates are as fast as the person managing the books. Typically, financial reports are available at least 15 days after the month is over, limiting your ability to react to financial trends promptly.

Finaloop has native integrations with your sales channels, payment processors, and other apps built into the platform. This allows us to have automatic mappings and data flows into the right categories with constant, order-by-order reconciliations to ensure the data is completely accurate and up-to-date.

QuickBooks and Xero have some native integrations but many times the ecommerce connections are managed by 3rd party connectors, like A2X or Webgility, and have to be mapped by the user, often causing reconciliation issues, double counted transactions, and major COGS issues.

Finaloop includes an option of a built-in inventory management system (learn more about our InventoryIQ module in this video) specifically designed for ecommerce. This integration allows for seamless inventory tracking, automated COGS calculations, and reconciliations without needing to rely on external tools. We automatically sync with your sales channels, keeping your inventory data accurate and up-to-date across platforms.

When using a more generic accounting software, you’ll often be required to manage inventory outside of your books, such as in an excel or in an external inventory management system (IMS), unless you invest BIG BUCKS into an ERP, like Netsuite. Integrating an external IMS or working with an ERP that you don’t need is complex and costly, and often requires manual reconciliation to ensure accuracy between systems.

Finaloop focuses on delivering unparalleled accuracy and speed. We built our system based on ecommerce best practices and 24/7 reconciliation tools. In certain cases, this can mean less flexibility, such as creating a chart of accounts that is super customized and not commonly used. This trade-off ensures your books are reliable and compliant with industry best practices. Having said that, we aim to create as much flexibility as possible, offering 700+ categories so you have exactly the breakdowns you need for your specific business. To learn more about our chart of accounts, check out Understanding your chart of accounts.

QuickBooks and Xero are super flexible platforms where you can create a chart of accounts to look like whatever you wish. These more flexible platforms often lead to inaccuracies when applied to the complex needs of ecommerce. The result is often a need for month-end adjusting journal entries to account for “reconciliation adjustments,” or numbers you can’t otherwise tie out to a source of truth.

Now that you understand the difference between Finaloop and your previous bookkeeping solution, if you want to learn more about the platform itself, check out our article on navigating the Finaloop interface.