myob xero quickbooks logos

Xero, MYOB or Quickbooks for a small manufacturer?

With all the software packages out there for small business owners, which one should you pick? Xero, MYOB or Quickbooks? It’s not that simple for a manufacturer, even a small one like my business.

When I started The Refoundry, I struggled to decide because none of them seemed to calculate inventory and Cost of Goods Sold for manufactured products properly. So, I ended up doing all my books on a complex spreadsheet. When it came time to do my company taxes last year, it was horrible! I couldn’t even file electronically without using an agent.

Having learned my lesson after that very time consuming, end of year process, I decided that had to make up my mind and choose something this year. My soap maker was using Xero, but needed to add another manufacturing app to make it work. Given the size of their business, it made sense, but I couldn’t justify the additional cost for mine yet.

I also found Xero extremely restrictive at the lower level plans. It was cheap if you only had a few transactions a month like I do with my consulting business. However, The Refoundry did more than 300+ transactions last year. Also, I didn’t like how restrictive it was for things like customising the invoices.

With MYOB, it’s a more complex system and allows for a lot more customisations. While I used MYOB a bit at my last job, I still found myself looking at the help page too often because it wasn’t as intuitive. I also found it limiting to set up automations for future transactions.

Quickbooks was my favourite of all the packages that I tried, but it too had its quirks. For one, my bank was not on their list. So, I actually had to set up a new account with a new bank to download the transactions. I wouldn’t have bothered if it were not for the fact that it allowed the most customised features and automations for the price.

To be clear, none of these packages calculate Cost of Good Sold properly for a manufacturer. It will only do it if you’re reselling products. Instead, you have to add another inventory management package that integrates with the accounting software. I can’t justify that additional price tag or the time to set that up right now. Instead, I’ve decided to continue to do that part in a spreadsheet and manually transfer that over as needed via a journal entry.

So, is it Xero, MYOB or Quickbooks?

I chose Quickbooks because it was the most intuitive and would save me time later via the automations. Still, it certainly isn’t a perfect fit for my manufacturing needs, but neither are the others.

xero versus myob

Pain of choosing an accounting software

I’ve been managing all of my expenses in a spreadsheet up to this point. Now that it’s time to upgrade to a proper tracking system, I never anticipated the pain of choosing an accounting software. I just thought that I would automatically choose Xero because it was taunted as an easy cloud based software. I’d say false advertising.

Between my two business degrees, I’ve taken six accounting classes. As such, I’d say that I’m way above average when it comes to understanding accounting and financial statements. I’ve even been a Treasurer for two not-for-profits. Nevertheless, I didn’t find Xero to be intuitive at all.

In fact, it took me most of the morning to really understand that I would not be able to track my Cost of Goods Sold properly in their system because it can only manage inventory that is bought to resale. Therefore, it lacks the functionality to track direct costs if you are a maker like me i.e. how much does it cost to make one product?

Xero doesn’t have the built in capability. Instead, you have to consider adding an app which may be significantly more expensive than Xero itself, and even then I’m not completely convinced how easy that integration is between the two.

So, I’ve also signed-up to trial MYOB as my accounting software too. I have heartburn about this because we used MYOB at my last job, and customer service was painful. The software was also built as a server based solution rather than cloud, and so it limits my ability to review my financial statements on my multi-devices.

I did a quick search of other software options like Netsuite, but they are way outside of my budget.

The good thing about MYOB is that it does already have a proper inventory management functionality available for makers like me. To really understand it though, I need to spend more time on it as I had a Finance Manager keeping everything on track before, and I only had to review the reports.

If I can afford it, I’d prefer to find an accountant that can quickly get me set up and transfer all of my spreadsheet data into the system. Then, I only have to keep it up to date rather than spending so many hours just trying to figure out how to do this.

Ugh! The pain of choosing an accounting software when I really don’t have time! Still, I’m glad that I waited this long before choosing because I’d likely be stuck on Xero if I considered my earlier needs only.

Milestone: Request for Quotes sent to Manufacturers

I sent the design and tender documents to the three manufacturers today. Since I didn’t have any industry experience, that was actually a huge milestone for me and the business. I should be celebrating.

Instead, my monkey brain wants to think about the potential worst case scenarios: the manufacturers not wanting to work with me or the quotes coming in way too high to have a business case.

In a weird way, I welcomed the distraction of having to figure out widgets and custom theme issues with one of my new websites today. IT help desks are starting to become my best friends!

DIY website

Today, I procrastinated on writing tender documents by working on one of my new websites instead. The software to make them has come a long way since I first used Microsoft FrontPage about 20 years ago. Even so, for a non-store site, I prefer WordPress over the easier ones because of the ability to really customise the functionality and fields. However it does come with a price. Today, I had to reach out to their help desk twice to fix the layouts further. I’m sure it won’t be my last time given my lack of programming skills.

Cost of moulds vs creating more waste

Realised this morning that I can’t take the cheaper mould option for one of my products because I’ll likely create too many extra parts the customer won’t need – resulting in more waste in the process. This is obviously against the mission of the company.

Closed out Microsoft 365 ticket. Good enough for the moment. The help desk guy refunded me for accidentally adding another user. We can’t seem to fix the final issue, and I don’t have the patience to work on it any longer.

Food analogies for the design phase

Provided more feedback for design of Product #2. He completely understood my question about “toasters and bread” versus “hotdogs and buns.” He even answered me using the same terminology!

Spent another 1.5 hours with Microsoft help desk trying to fix email issues. Ugh! Not fixed yet. I think we’ve already spend about five hours just trying to get my new business email to work.