TL;DR
- Xero dominates UK agency market (70%) due to agency-specific integrations with Harvest, Monday, Teamwork
- Xero costs more (£33+/month) but accountant fees are lower due to 80% of UK accountants knowing it
- Xero handles multi-currency from Growing plan; QuickBooks needs Plus tier (£35/month)
- You can switch mid-year using Xero's conversion tool - budget 3-4 weeks for full migration
💡Quick reference summary. Continue reading for comprehensive analysis and context.
The software itself matters less than you think. Both Xero and QuickBooks handle VAT returns, bank reconciliation, and invoicing competently. Both are Making Tax Digital compliant. Both will keep HMRC happy.
The real question is what happens around the software. Who can help you when something breaks? How does it connect to the tools you already use? And critically for agencies: can it track work-in-progress and tell you which clients are actually profitable?
About 80% of UK accountants specialise in Xero. That's not a marketing stat. It reflects how the industry developed here. Pick QuickBooks and you're narrowing your options for bookkeeping support, which usually means paying more per hour for someone who knows the platform.
Quick Answer
Which Software Fits How Agencies Actually Work?
Agencies have financial patterns that generic small businesses don't. You're billing in arrears for work done weeks ago. You're tracking time across multiple clients simultaneously. You're often passing through significant costs (media spend, contractor fees, production expenses) that inflate your revenue figures without adding margin.
The right accounting software needs to handle this complexity. That means project-level tracking, multi-currency support for international clients, and integrations with whatever time tracking system your team actually uses.
But there's a second consideration that matters more than features: who's going to help you when something goes wrong? About 80% of UK accountants work primarily with Xero. That's not a preference. It's market reality. Pick QuickBooks and you're choosing from a smaller pool of specialists, which typically means higher rates and longer response times.
QuickBooks doesn't track unbilled WIP out of the box.
If you're passing £50k+ media spend monthly, you'll miss billing without custom workarounds. We've seen agencies lose £2k-8k annually this way.
Quick Comparison Overview
Here's how the two platforms stack up for UK marketing agencies:
| Factor |  Xero |  QuickBooks |
|---|---|---|
| UK Accountant Support | 80% of UK accountants | Limited availability |
| Project Tracking | Native, with WIP | Plus tier only, basic |
| Multi-Currency | Growing plan (from £33/mo) | Plus tier only (£35/mo) |
| Agency Integrations | Harvest, Teamwork, Monday | TSheets, limited PM tools |
| Learning Curve | 2-3 weeks to master | Easier for beginners |
What Will You Actually Pay?
The sticker price isn't the whole story. Here's what you'll actually pay when you factor in the add-ons most agencies need:
| Tier | Xero | QuickBooks | Best For |
|---|---|---|---|
Entry Level Basic invoicing & expenses | £15/mo Starter | £10/mo Simple Start | Solo freelancers |
Growth Multi-currency, bills | £33/mo Growing | £22/mo Essentials | Small agencies (2-5 people) |
Most Popular Projects, expenses, multi-user | £47/mo Established | £35/mo Plus | Growing agencies (5-15 people) |
What You'll Actually Pay: A Typical 8-Person Agency
- Xero Established£47/mo
- Harvest integration£0 (built-in)
- Dext (receipt capture)£25/mo
- Total£72/mo (£864/yr)
- QuickBooks Plus£35/mo
- TSheets (time tracking)£20/mo
- Dext (receipt capture)£25/mo
- Total£80/mo (£960/yr)
The £96/year software difference is negligible. The bigger cost is accountant rates. QuickBooks specialists are scarcer in the UK, which means higher hourly rates and longer waits for support. Budget an extra £600-1,200 annually in bookkeeping fees if you go the QuickBooks route.
Agency-Specific Features That Actually Matter
Generic software reviews talk about bank feeds and receipt scanning. Here's what matters for agencies:
Xero has native project tracking that shows unbilled time against each client. Connect Harvest or Toggl and the hours flow through automatically. At month-end, you can see exactly which clients have uninvoiced work and convert it to invoices in a few clicks.
QuickBooks has project tracking on the Plus tier, but it's oriented toward job costing for trades rather than time-based billing. Most agencies end up maintaining parallel spreadsheets to track WIP properly.
Both platforms handle basic invoicing competently. The difference is in automation. Xero lets you set different reminder sequences for different clients. Your biggest retainer client gets a polite nudge at 14 days. The client who always pays late gets firmer reminders starting at 7 days.
QuickBooks reminders are one-size-fits-all. When you're managing 20+ active clients with varying payment behaviours, that flexibility matters.
If you invoice clients in USD, EUR, or other currencies, you need multi-currency support. Xero includes this from the Growing plan (£33/month). QuickBooks requires the Plus tier (£35/month). The price difference is negligible.
The implementation differs. Xero handles currency conversion and bank reconciliation more cleanly for recurring international invoices. If you have US clients on monthly retainers, this saves time in manual reconciliation each month.
Neither platform calculates utilisation rates natively. You'll need a time tracking tool (Harvest, Toggl, Float) to see billable versus non-billable hours. The accounting software just receives the data.
Xero's integrations with agency-focused tools are deeper. Data syncs bidirectionally and updates in real time. QuickBooks' TSheets integration works but feels like a separate product bolted on rather than part of a unified system.
Why WIP Tracking Matters More Than You Think
Work-in-progress (WIP) is time you've logged but haven't invoiced yet. In agencies, WIP is cash sitting on the table. If you're not tracking it, you're not billing it.
Xero's project tracking shows unbilled hours against each client in real time. You can see at month-end exactly how much billable work hasn't gone out as invoices. QuickBooks requires manual exports and spreadsheet reconciliation to get the same view.
For a 10-person agency billing £50k monthly, even a 5% WIP leakage is £2,500 in unbilled work every month. That's £30,000 annually walking out the door because no one saw it.
Which Tools Does Each Platform Connect To?
Your accounting software is just one piece of the puzzle. Here's how each platform connects to the tools agencies actually use:
| Tool Category | Xero Integrations | QuickBooks Integrations |
|---|---|---|
| Time Tracking | Harvest, Toggl, Float, Clockify ✓ | TSheets (native), Harvest, Toggl |
| Project Management | Monday.com, Teamwork, Asana, Basecamp | Monday.com, Asana (limited) |
| Payments | Stripe, GoCardless, PayPal | Stripe, PayPal, QuickBooks Payments |
| CRM | HubSpot, Salesforce, Pipedrive | Salesforce, HubSpot (basic) |
| Expenses | Dext, Expensify, Receipt Bank | Dext, Expensify, native receipts |
| Payroll | Gusto (via add-on), PayRun | QuickBooks Payroll (native) |
Xero's app marketplace has over 1,000 integrations, with deeper connections to agency-focused tools. QuickBooks has fewer integrations but owns more of the workflow natively. If you're happy staying within the Intuit ecosystem (TSheets for time tracking, QuickBooks Payroll, QuickBooks Payments), it works. But most agencies use tools outside that ecosystem.
Our Recommendation by Agency Size & Type
Choose QuickBooks Simple Start (£10/mo) if you're just tracking income and expenses. It's cheaper and easier to learn. Switch to Xero when you hire your first employee or start invoicing international clients.
Choose Xero Growing or Established (£33-47/mo). This is where Xero's project tracking and multi-currency support pays off. Your accountant will thank you, and you'll have visibility into project profitability that QuickBooks can't match without add-ons.
Xero Established (£47/mo) + Spotlight Reporting. At this stage, you need proper management accounts and cash flow forecasting. Xero's reporting add-ons (Spotlight, Fathom) are leagues ahead of QuickBooks' native reporting.
Implementation Timeline Comparison
How long does it actually take to get up and running? Here's a realistic timeline for a 10-person agency switching from spreadsheets:
Frequently Asked Questions
Is Xero cheaper than QuickBooks?
Which is easier to use, Xero or QuickBooks?
Do agencies use Xero or QuickBooks?
What's the difference for invoicing between Xero and QuickBooks?
Can I switch from QuickBooks to Xero mid-year?
Do I need an accountant if I use Xero or QuickBooks?
The Bottom Line
For most UK agencies, Xero is the practical choice. Not because the software is dramatically better feature-for-feature. QuickBooks is a competent product. The difference is everything around the software: the accountant ecosystem, the integrations with agency tools, the assumptions baked into how features work.
Xero was built with UK service businesses in mind. QuickBooks was built for US small businesses and adapted for the UK market. That heritage shows up in small ways throughout both products. Xero's VAT handling is native. QuickBooks' feels like an add-on. Xero's project tracking assumes time-based billing. QuickBooks' assumes job costing for materials and labour.
If you're a solo freelancer just starting out, QuickBooks' £10/month entry price and gentler learning curve might make sense. You can always migrate later. But if you're running a team, billing multiple clients, and need to track work-in-progress properly, Xero is where most UK agencies end up. You might as well start there.
The more important decision is getting your time tracking and project management tools connected properly. That's where the real visibility comes from. The accounting software is just where the data ends up.
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