Finaloop vs. QuickBooks or Xero

Finaloop is a full accounting service for ecommerce businesses that combines technology with a team of ecommerce finance experts, while traditional accounting platforms like QuickBooks Online (QBO) and Xero are do-it-yourself software. Understanding these distinctions can help you choose the right accounting solution tailored to your ecommerce business needs.

These differences also give 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 clear 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 software.

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 in Support you 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, cost of goods sold (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.

Finaloop often costs less overall once you count the time saved and the reduced need for external bookkeeping services, even though its subscription fee is higher than QuickBooks or Xero. Finaloop’s accuracy also minimizes the risk of costly errors and IRS audits.

QuickBooks and Xero have lower subscription fees. Adding external bookkeeping services, or your own time if you choose DIY bookkeeping, 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 keeps your books accurate, 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. With the high volumes of transactions typical in e-commerce, that manual work can add time and room for errors.

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 stays 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.

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 keep the data 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, so it’s worth checking for reconciliation issues, double counted transactions, and COGS issues.

Finaloop includes an option of InventoryIQ, Finaloop’s inventory management product (learn more about our InventoryIQ module in this video), a built-in inventory management system 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 in an ERP, like Netsuite. Integrating an external IMS or working with an ERP often requires manual reconciliation to ensure accuracy between systems.

Finaloop focuses on delivering accuracy and speed. We built our system based on ecommerce best practices and 24/7 reconciliation tools. Finaloop’s 700+ ecommerce categories give you exactly the breakdowns you need for your specific business, on reliable books that follow industry best practices. In return, your chart of accounts stays close to common practice rather than super customized. 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. When applied to the complex needs of ecommerce, that flexibility often creates 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.

No need to pay for any accounting or bookkeeping software, such as QuickBooks or Xero. Finaloop replaces both your bookkeeper and your accounting software. You can view everything you need on Finaloop’s proprietary accounting software.

Instead of importing your transactions from QuickBooks or Xero, Finaloop builds your books directly from the sources of truth. We sync the data directly from your stores, banks, cards, etc. and build your books from the ground up.

Most of our customers export their reports and General Ledger to Excel from their accounting software when migrating to Finaloop as a backup for their records or in case of an IRS audit.

You don't need to, because Finaloop is a one-stop-shop that replaces separate accounting software. Our services include bookkeeping/accounting software, services, and app integrations. Learn more in Can I sync my data to another accounting software?