For the last few years, I have been using the bookkeeping tools Wave (free) and Xero.
Now, international tools do not comply with the German tax laws, which led me down a rabbit hole of finding a German bookkeeping software for my German company.
And whilst I run a German company, we mainly receive foreign income and work with international freelancers all around the globe. This turned out to be a true challenge!
Finding a bookkeeping tool sounds simple since this is a core function of any business, right?
Not so much. Turns out that German bookkeeping tools are far from being ready for the global gig economy. And I am far from writing proper software requirements.
In January 2021, I spent six working days and
- 563,36 EUR on Fastbill Premium
- 32,96 EUR on Xero
- 20,11 EUR on Lexoffice
- 15,00 EUR on Debitoor
- 135,00 EUR on my old bookkeeper (a true rockstar)
My main learning is this: Do not take features for granted.
But let’s dive in!
Don’t take features for granted
I had to relearn this learning.
Because I had the same experience when opening a bank account for my company in 2020. I picked a modern bank with great interface, fast support and even faster setup. The account was set up within a few days, and I proceeded to founding my company.
It is only after clients began having their payments rejected that I learned that this bank account cannot receive (and convert) USD payments.
For a company that makes 88% of their revenue in the USA, this is a true problem.
What I took for granted with big banks such as Commerz Bank and DKB should have been a specification that I checked when creating a new bank account.
I just did not even realize this should be a feature that I checked for, as I took receiving USD for granted.
To work around it, I implemented two things:
- Credit card payments via Stripe (as built into Xero)
- Bank payments using a virtual bank account from Transferwise
I started receiving USD payments, and Xero connected to both Stripe and Transferwise. My bookkeeper recorded and booked the payments. Everyone was happy!
Until now – when I realize that I need a German bookkeeping tool, and I am AGAIN taking features for granted. These are some of the features that Xero offers that I took for granted:
- Writing invoices in USD
- Adding receipts in USD
- Writing invoices and emails with English templates
- Editing my invoice templates
- Accepting credit card payments
- Connecting a huge variety of bank accounts
The easy booking of multi-currency invoices and receipts is a feature that I did not find within German tools. Fastbill was the only one to book receipts in USD. Lexoffice cannot even send an invoice in USD.
Fastbill can only connect Paypal if you have a business account. And whilst Lexoffice could easily import the bank transaction of my main bank account for the last year, Fastbill could only pull the last three months, and the support team (that is super fast and helpful) had to manually insert a CSV for older transactions.
There is no way around testing tools
Because feature descriptions are limited and everyone promises easy invoicing and great reporting, I saw no other choice than signing up for all of the tools and actually comparing the details.
Who would think that Fastbill could send an invoice in English but the email stays German? The solution to fix this was to switch the entire account to English (my poor tax advisor).
Point being: You never know this until you try!
Who would think that Debitoor allows you to take credit card payments (via SumUp) if the invoice is created in EUR – but not when created in USD?
After playing around, I realized that every tool has its own shortcomings and limitations. So, step by step, I created a punch card of features that Xero has and that I need to test for:
- Offers credit card payments in USD and EUR
- Creates invoices in English
- Creates invoices in several currencies, at least USD
- Allows to edit the invoice template to display several payment options
- Books receipts in several currencies, at least USD
- Connects to my main bank account and can sync all historical transactions
- Connects with Stripe, Transferwise, Paypal and Payoneer
- Imports client contacts
- Imports supplier contacts
- Imports old invoices (or allows to recreate them)
- Monthly report (profit and loss)
- Exports in DATEV format (SKR04 format which my tax advisor uses)
- My tax advisor approves of it
The point on reporting was probably my biggest shock of them all: How can a bookkeeping tool not offer monthly reporting?
Turns out this is more common than I knew. A bunch of German tools need your tax advisor to process the data and for him/her to hand you the monthly report.
I understand: I, too, need my tax advisor to double check everything. BUT, I can not wait for him to process all my receipts to get an idea about my finances. I check these every two weeks to keep a pulse on revenue expected and outstanding payments.
I am impatient, and looking at the profit and loss statement is my favorite moment of the month. I simply cannot wait!
And whilst Fastbill Premium sounded amazing (they book your receipts for you, saving you tons of time), this is what almost killed them for me.
Test their support, too.
As you are picking a vendor, make sure to test their support team, too. Fastbill and Debitoor have been super responsive and fast. But, their knowledge base is a bit rough.
After three emails and several chats, Lexoffic replied to me days later – even though my questions have been clear pre-sale questions. This is not a tool where I would expect excellent and fast support.
How to pick a software vendor
Here is what I learned from spending most of January on bookkeeping tools.
- Do not take features for granted. Create a punch card of everything that you love about your current tool and every single feature that you use – and those that you miss and need. You never know which feature that you consider basic is missing when you migrate.
- Create a detailed list of specifications. Nothing is too small or too stupid if you use it on a regular basis.
- Sign up for a few trial accounts and test the features. I would have never figured out the kinks of each tool if I had not imported client data into the tools, connected my bank accounts, sent test invoices, paid via credit card and filed a few different receipts. This is also how I learned whose text recognition (OCR) works better: I preferred Fastbill and Debitoor over Lexoffice.
- Test their support to see their response time and if they actually care.
In conclusion: I really wish Xero would expand to Germany. I have not found a tool that connects all my modern virtual bank accounts or offers a complete multi-currency environment.
It seems German bookkeeping tools are not set up for the global gig economy where digital services and tools are bought and sold across countries. My other software vendors come from countries such as the U.S., Ireland and Malta. My clients are in the U.S., Switzerland, Germany and Sweden.
I get paid in USD and EUR. I save money on international bank transactions by using providers such as Transferwise and Payoneer.
It seems my business is a bit too global and too digital for German bookkeeping tools right now. But, my guess is that it is time for them to start catching up.
And for you: There is no way around testing tools. I do not regret having spent 766.43 EUR on software licenses this month to find the one that works best for me.
After all: Understanding your cash flow, revenue and cost structure is the foundation for making good business decisions.
So, good data is key.
For myself, not just the German tax office.