Comparison of XERO and MYOB Accounting Software for Wesfarmers

This report compares the software features and functionalities of XERO and MYOB accounting software for Wesfarmers, a retail giant in Australia. It analyzes the key business processes of Wesfarmers and the software requirements for supporting its business activities. The report recommends the use of XERO accounting software based on its compatibility with the business needs and software features.

Accounting Information System
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Executive Summary
This report has been undertaken to examine and analyze the software features and
functionalities of two selected accounting software that is XERO and MYOB. It has presented a
comparison of the features and functionalities of the two selected accounting vendors to identify
the best feasible to be used within the client company. The overall analysis of the business needs
of Wesfarmers and the software features of XERO and MYOB the company has been directed to
implement the use of XERO accounting software.
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Contents
Introduction.................................................................................................................................................4
Brief Information of the client and its business activities............................................................................4
Brief Information and business activities.................................................................................................4
Key business process of Wesfarmers.......................................................................................................5
Software Requirements...............................................................................................................................5
Software Features and Functions Required by the Selected Company for Supporting the Business
Activities..................................................................................................................................................5
Selection of Software...................................................................................................................................6
Selecting two different accounting vendors & their product description................................................6
Xero.....................................................................................................................................................6
Myob...................................................................................................................................................6
Contrast and comparison of the functions of two cloud-based products of accounting.........................7
Recommended Cloud Accounting Software for the Client Company......................................................8
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10
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Introduction
This report has been carried out from the perspective of a management consultant in
order to evaluate and recommended the use of cloud-accounting software for a clients company
to improve the efficiency of its accounting systems and processes. In this context, it has
primarily provided a description of the key activities of the company selected to determine the
software requirements for the company that can be met with the adoption of cloud-based
accounting software. The recommendations are developed on the basis of examining the two
selected accounting software vendor such as MYOB, SAP or XERO and their relative features
and products. Lastly, it provides the suggestions regarding the selection of a suitable vendor and
accounting software package for the client company based on the overall analysis carried out.
The client company selected for analyses purpose is Wesfarmers Limited, an ASX listed retailing
company of Australia.
Brief Information of the client and its business activities
Brief Information and business activities
Wesfarmers is one of largest retail organization in Australia who started its business in
year 1914 in the name of Western Australian Farmers Cooperative. Since its starting it has grown
from small cooperative retail shop to multinational giant retail company who has business in
many countries. Wesfarmers deals in diverse business portfolio such as supermarket, liquor
shops, departmental stores, office equipments and supplies, hotels and industrial & safety
products. It also deals in supply of coal, energy, and fertilizers to various parts of Australia. The
business of Wesfarmers has been divided into two major segments and description of each of
business segments and its division has been provided below:
 Retail Segment: Retail segment of Wesfarmers comprises of major percentage of overall
business share and it consists of four divisions or units. Detail of each division has been
discussed below:
 Coles: This division deals with supply of liquor, food and other retails products. It
acts as the convenience retailer and also functions to provide all the groceries to
the customers.
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 Home Improvement: This business unit provides all the products and services this
required for home decoration and other utilities. It also sells offices products,
outdoor living furniture and building material goods.
 Target: Deals in clothes and house ware products
 Kmart: It is discount department store
 Industrial and other business segment: This business segment has 5 business units and
they are insurance, resources (Coal and other products), chemicals, Industrial products,
and safety products (Who we are, 2019).
Key business process of Wesfarmers
Wesfarmers is retail giant in Australian who procures goods from various manufactures
and sells at reasonable price to the customers through their stores. The aim is to look the at the
key business process of Wesfarmers that need to be considered for accounting information
system purpose, so only those business process will be discussed that are important for
implementation of cloud based accounting software. The major business process is the supply
chain management that comprises of procurement of finished goods, storage, transfer, packaging,
selling, after sales etc. Apart from the supply chain management, the key business process
includes sales, customer service, production (Only few products), human resources management
and accounting and financing processes. All these key business process are further divided into
multi stage depending upon the requirement and work level. So, it can be said that business
processes of Wesfarmers is very extensive and there is requirement of highly advance accounting
information system (Who we are, 2019).
Software Requirements
Software Features and Functions Required by the Selected Company for Supporting the
Business Activities
Wesfarmers operates within the retail sector of Australia and is involved in providing
various types of grocery items and other products across Australia and New Zealand. As such, it
is every essential for the company to streamline its different operational processes to achieve cost
reduction and maximizing the productivity. The different business processes of the company
involve recording and interpreting and analyzing the large volume of accounting and financial
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data. It is very important for the company to conduct accurate accounting of its inventory
activities, meeting the tax obligations on time, developing and managing payroll, automatic
processing of accounts payable and receivables and also developing annual accounts. The
different accounting requirements associated with the key business activities of the client
company could be adequately addressed with the use of online cloud-computing software
applications (Hossack, 2015).
The reason for the company to integrate the use of cloud-based accounting software is to
improve the accuracy in the accounting and financing functions and also reducing the time
involved in maintaining and interpreting large volume of financial data. The cloud-based
accounting software would enable in supporting the accounting functions associated with its key
business processes (Ramsey and Ramsey, 2010). The traditional desktop software based system
of the company does not prove to be largely effective in improving the decision-making as it
requires desktop for accessing the financial and accounting data at the time of taking decisions.
On the other hand, the use of cloud-based accounting software would improve the decision-
making as the accounting data can be accessed by business managers from any part of the world
and at any instant of time (Kosalge and Ritz, 2015).
Selection of Software
Selecting two different accounting vendors & their product description
MYOB and ZERO are two accounting vendors that give package of cloud, based
accounting, their description is provided below.
Xero
This firm gives products and software which are attractive in usage and can be utilised in
most of the business. XERO is a software company which operates in Australia and New
Zealand and is an ASX listed company. XERO has started its carrier in software line in the year
2006 and now it has become the largest used software accounting service in Australia.
Software provided by the Xero is only one but according to the usage of the customer it provides
with the suitable features and functions. Product with different features and function are being
divided into three categories namely, starter, standard and premium (Xero Limited, 2019).
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Myob
Mind your own business (MYOB) is company operates in Australia, it provides cloud, based
software for accounting which are used by the business firms. it is a multinational firm and
operates in Australia and New Zealand, it provides software for accounting and taxation which
are required by the huge business firms. products offered by MYOB is different in accordance
with the needs of the customers, detailed information about its products and features are
discussed below.
 MYOB Accounting right/right plus: job tracking, inventory management, multicurrency
option etc are some features available in this scheme and these are present in both online
and offline mode.
 MYOB essential: this is available only in online mode and provides with same features as
that of right plus (About MYOB, 2019).
Contrast and comparison of the functions of two cloud-based products of accounting
The two selected software are Myob and Xero. Functions and features of both the software have
some similarities as well as differences but they both operates on cloud, based accounting.
Identifying the differences and similarities between the two will require it to be performed
through main feature or function. Listed below is the comparison between the two.
 Cash management and banking: Both of them, Myob and Xero, provide with the
similar feature of connectivity with the bank account and download of banking
information in accounting system. Xero and Myob deals with the banking system in
Australia so exchange of information and data between the two company is possible
because all the banks are associated with these two companies. Bank transactions and
accounting details of the customers are easy to find and share it within the accounting
system because of wide presence of these company in the Australian banking system.
Myob has more features in comparison to Xero, when it comes to reconcile banking
details and accounts (Brewer, Sorensen and Stout, 2014).
 Billing and invoice: Recorded entries and further creation of new entries are provided in
both accounting software. The entries can be subjected to deletion and adjustment as per
the requirement of the customers it can be changed also. This feature is available in both
Myob and Xero. While both offers this feature Myob has an upper hand over Xero when
comparing the invoicing feature because it provide with some advance features which are
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not available in Xero. Xero has an issue related to issuing offline invoice slip because it
operates in online mode only.
 Payroll: Both of them provide this feature of salary and allowance of the employees are
processed with inclusion of PAYG taxation. Myob and Xero have maintained proper
entries and data of the salary and allowance of the employees per annum and process
payroll. Xero offers less functions and only a limited number of employees can get enrol
within the software limits but this is not the case with the Myob as it offers unlimited
entries (Lane, 2018).
 Inventory management: This feature is available with both Xero and Myob, it offers
similar features and operates on real time basis, feature of inventory management,
depreciation related with the inventory etc features are provided. Real times inventory
system is used to restrict customers from sales as inventory is not present in the storage.
Xero has lesser features in comparison to Myob, as Myob gives advance inventory
management feature.
 Mobile application: Real time tracking of customer information and accounting
transaction is carried out by the mobile application and it is provided by both the
companies. Myob has some advance features as compared to that of xero when it comes
to mobile application.
 Multi-currency: MYOB don’t support this feature only xero has this feature.
 PRICING: Both Xero AND Myob provide this feature, this is available at different level
of pricing which is dependent upon the accounting software. These is no such
differencing in pricing but Myob gives more feature than Xero . Xero gives some
substantial options in low pricing that is why it has many customers. Small and medium
sized enterprise that’s why use Xero rather than Myob. It can be used by the giant
enterprises also when used in a proper manner (Macpherson, 2019).
Recommended Cloud Accounting Software for the Client Company
The company is recommended to integrate the use of XERO accounting software on the
basis of analysis of its accounting needs and software functionalities of both MYOB and XERO
software applications. This is because XERO possess basic inventory tracking features that are
lacking in MYOB as it requires additional cost to be incurred on the part of the company for
managing inventory (Schaeffer, 2017). Inventory management is very essential for promoting
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growth and expansion of Wesfarmers as it can be regarded as a major operational expense
incurred by the company that has a large impact on its profitability. The accurate tracking of
inventory would enable in reducing the cost of production and thereby improving the business
profitability (Ali and Haseebuddin, 2015). In addition to this, XERO provides the feature of
automatic processing of accounts payable and receivables enabling the company to manage its
cash flows required for smooth functioning of its various operational activities. XERO would
also enable in adequately complying with tax obligations and thus avoiding the issue of legal
penalties imposed due to not meeting the tax obligations. XERO has a fast response as compared
to MYOB and thus effective to mange adequately the complex operational activities of
Wesfarmers in a better way (Smith, 2019).
Conclusion
The report has depicted that cloud-based accounting software such as MYOB or XERO
could improve the accuracy and reduce the time involved in conducting various operational
activities of a company. However, the selection of appropriate cloud-based accounting software
should be done as per the business needs and the features provided by the software. Wesfarmers
is suggested to implement the use of XERO cloud-based accounting software on the basis of
compatibility between the business needs and software features.
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References
About MYOB. 2019. [Online]. Available at: https://www.myob.com/au/about [Accessed on: 25
May 2019].
Ali, M. and Haseebuddin, M. 2015. Cloud Computing for Retailing Industry: An Overview.
International Journal of Computer Trends and Technology (IJCTT) 19 (1), pp. 51-56.
Brewer, P. C., Sorensen, J. E., and Stout, D. E. 2014. The future of accounting education:
addressing the competency crisis. Strategic Finance, 96(2), pp. 29-38.
Hossack, S. 2015. Cloud-based accounting and productivity tools for practitioners and taxpayers.
Taxation in Australia, 50(5).
Kosalge, P.U. and Ritz, E., 2015. Finding the tipping point for a CEO to say yes to an ERP: a
case study. Journal of Enterprise Information Management, 28(5), pp.718-738.
Lane, S. 2018. Which one is the best cloud accounting provider? [Online]. Available at:
https://www.listonnewton.com.au/information-centre/xero-vs-myob-which-will-work-better-for-
your-business [Accessed on: 22 May 2019].
Macpherson, S. 2019. The latest in online accounting software in Australia. [Online]. Available
at: https://www.intheblack.com/articles/2018/12/01/latest-online-accounting-software-australia
[Accessed on: 23 May 2019].
Ramsey, D. and Ramsey, J. 2010. The Everything Guide to Starting and Running a Retail Store:
All you need to get started and succeed in your own retail adventure. USA: Simon and Schuster.
Schaeffer, E. 2017. Industry X.0: Realizing Digital Value in Industrial Sectors. Germany: Kogan
Page Publishers.
Smith, H. 2019. Xero For Dummies. USA: John Wiley & Sons.
Who we are. 2019. Wesfarmers. [Online]. Available at: https://www.wesfarmers.com.au/who-
we-are/who-we-are [Accessed on: 25 May, 2019].
Xero Limited. 2019. Accounting software made for your retail business. [Online]. Available at:
https://www.xero.com/au/why-xero/your-business/retail/ [Accessed on: 25 May 2019].
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