Business Central vs Xero Accounting: Choose the Best for Your Unique Business

Microsoft Dynamics 365 Business Central and Xero Accounting are both popular as well as the first choice of small business owners when it comes to managing financial operations. However, choosing a solution varies greatly from one business to another because of the way of doing business.

Businesses that want to manage their entire business, including financial operations, can go for Business Central implementation. But businesses that want to manage their finances only can go for Xero accounting without any issue.

This is a general scenario when we have to choose a solution between Business Central and Xero. However, we are going to perform a detailed analysis of these two solutions so that you can have a sound knowledge of what suits you better and what doesn't.

Before going for an accurate comparison, let’s get an overview of both solutions.

What is Business Central?

Microsoft Dynamics Business Central is a perfect ERP solution for small to medium-sized businesses with sufficient tools and capabilities to manage not only finance departments but other departments as well. Being a cloud-based ERP (enterprise resource planning) solution, it offers automation, real-time visibility across different operations, and powerful scalability options.

For streamlining financial operations, it empowers businesses to control diverse financial data, forecast cash flow, align with compliances (GAAP or IFRS), and support multiple currencies for international organisations.

What is Xero Accounting?

Xero Accounting is a specialised financial management solution built to cater to small businesses with diversified financial demands. It is an accounting solution that isn’t able to manage different business operations like Business Central does.

From bookkeeping to bank reconciliation, Xero accounting assists a business to streamline all financial processes without any error. The best part about this solution for implementing Xero is that it can be accessed from any device or web browser and lets you keep an eye on all your financial operations.

Business Central vs Xero Accounting

The team at Dynamics Square has performed in-depth research to compare these two efficient solutions based on different criteria. Based on our analysis, here is the neck-to-neck comparison between Xero and Business Central. 

Which Solution Suits you better?

If you have been reading this blog since the beginning, you must have sufficient knowledge about Xero Accounting and Business Central, along with a comprehensive comparison of different features. With standard business requirements, you can select a solution that you find better than others based on your terms. But, in case of unique requirements, you need to do further analysis before opting for a solution.

To help you understand better, let's understand some real-world scenarios:

Scenario 1: Small Service-Based Business

A small consulting business with less than 10 employees is looking for a business solution that can manage invoicing, expense tracking, and perform basic financial reporting.

Xero: With its user-friendly user interface, ease of setup, and core accounting capabilities, Xero seems to be an ideal solution for similar kinds of businesses. Also, it is affordable and performs better invoicing and expense management operations.

Business Central: This isn’t suitable as it offers way more features than are required by the organisation. Also, it comes with a higher cost and a comprehensive set of ERP features.

Scenario 2: Growing Retail Business

A growing retail store with 50 employees wants to streamline their inventory management, sales, purchasing, and multi-location finance operations.

Xero: It comes with standard inventory management but lacks the ability to manage complex requirements. Also, it is unable to perform inventory valuation, advanced reporting, and integration with other solutions for a centralised approach.

Business Central: With multi-currency functionalities, it is capable of not only managing finances but also delivers great inventory management with advanced features that include lot tracking, serial numbers, and warehouse management. Also, it connects and manages other departments with sufficient CRM capabilities. BC offers deeper financial insights and can easily establish connections with other add-ons or solutions.

Scenario 3: A Manufacturing Company

A manufacturing company with 100+ employees wants to simplify their complex inventory system, production planning, cost accounting, and detailed financial reporting.

Xero: This isn’t built for manufacturing businesses, so it comes with a few functionalities to streamline certain operations. However, you can still manage your finances in a particular way.

Business Central for Manufacturing: This solution is ideal for manufacturing businesses as it comes with sufficient tools and functionalities to streamline diverse operations without any hassle. BC offers inventory management, production planning, and cost accounting. Also, you can easily integrate Business Central with Power BI or other solutions to enhance the manufacturing performance.

Scenario 4:  A Multinational Business

A multinational business offering its service across international boundaries wants to comply with evolving tax regulations with advanced financial consolidation to manage multi-currency businesses.

Xero: It can manage financial transactions, but when it comes to handling international currency transactions, it lacks the ability the ability to do so.

Business Central: It is a well-suited solution when a business operates in multiple currencies, as it comes with advanced financial consolidation, multi-currency management, and compliance to operate the business effectively.

How do you Choose a Solution that Aligns with Unique Business Demands?

In the previous section, we discussed the common scenarios of businesses with distinctive ways of choosing a solution. It looks easy, but choosing a perfect solution that complies with unique needs and evolving demand is a critical task to perform.

In such a scenario, Dynamics Square is here to help you understand your business and choose the best solution capable of simplifying and boosting your business growth.

In case of need, feel free to write us an email at info@dynamicssquare.co.uk or you can call us directly at +44 207 193 2502 for instant support.