Bill.com vs quick books

I have been following the board for awhile but this is my first post. I have been digging into Bill.com (BILL) after seeing a number of posts in monthly/year summaries in the past few months. A number of people on the board I really respect have taken positions and so I took a small 2% position to learn more. Talking to a buddy who is a small business owner and his take is that the clear leader in this space is QuickBooks. That is what he uses and he said he is not aware of another owner in his network that uses something else. Saw this question posted back in early November but didn’t see any response so I thought I would bring it up again - https://discussion.fool.com/been-following-the-board-for-some-ti…

Found this comparison article from July 2021 - https://fitsmallbusiness.com/bill-com-vs-quickbooks/ My takeaways are that BILL users pay more in monthly fees ($39 per month per user) vs QuickBooks ($15 per month). BILL can automate A/P processes and integrate with QuickBooks but it can’t do ALL the accounting features that QuickBooks provides. Examples of gaps in BILL are listed below

-bank reconciliation
-track sales tax collection and payments
-time tracking
-multiple currencies
-capture and organize receipts
-track activity by class and location

BILL does allow customers to do the following items that QuickBooks cannot
-create approval workflows
-team collaboration
-import/export data

So essentially a small business owner would need to buy both services (BILL and QuickBooks)to get all needs met? Acquisition of Invoice2Go likely helps with some of the gaps but does it do all of the items listed above? I just think buying 2 services would be a tough sell for small business owners. BILL is going to have to fight an uphill battle against a clear leader (in my opinion) and lower cost while not meeting ALL of the a small business owners accounting needs.

BILL does have a lot of attractive numbers that this board likes

-164% you organic revenue growth
-124% NRR
-83% Gross Margin
-growing customers 22% yoy, transactions 35% yoy, and total payment volume 64% yoy
-85% of their core revenue is from existing customers
-transactions fees really growing with organic increase of 127%

I just am struggling to get over the competitive advantage that QuickBooks has over them as I see it right now. Going to keep studying as I hold my small 2% position. If anyone can help me out with this comparison I would be grateful.

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Re: Bill.com vs. Quickbooks.

I suggest you go to the bill.com website and check out their product. They actually have a lot up there that will help you understand the difference between the two.

Quickbooks is basically accounting software. Bill.com sits on top of accounting software - does not even try to compete (although I don’t see why they can’t one day far into the future). What bill.com does in a nutshell:

  • Enables a small business to have bills sent to their company email address at bill.com which automatically uploads the bill using AI (IMHO probably “light AI”, everyone uses that AI term now) and “reads” the bill so that it’s put into the system with the correct name, amount, etc.

  • “Approvers” see a list of bills that they can just scan through and approve with the check of a box. They never touch the bill but can see a scan of it online if they need to.

  • Then the “payer” can come along, see that the bill has been approved and pays it. They never touch the bill either.

  • Finally an “overseer” can see the big picture of all this - bills coming due rolled up etc - to get a financial picture of their expenses. (I am not necessarily using the correct bill.com terms, I am just explaining it in a way I hope is clear)

Bill.com offers transactional services to pay electronically and even pay with no charge to other bill.com members. It also cuts old fashioned checks if you need it to. They make money off the subscription and of the transactions. So the more you use it, the more they make.

And finally, it downloads all those transactions into your accounting software so that the record keeping is automatically handled through the act of paying the bill.

So basically bill.com eliminates ALL the paperwork, lost bills, record keeping, and huge annoyances of bill paying in both directions (bills being received and bills being paid.). All for a relatively cheap monthly cost - and only approvers and payers and the “overseer” need to pay for this service, not everyone in the company.

On top of it they have bought Divvy which is a credit card that businesses can give to their employees that defines the spending limits for the employee. They make a cut off the credit card transactions and Divvy brings in exactly the users they are looking for to cross sell in both directions.

Finally, they have a down-market solution through the acquisition of invoice2go, a mobile product. I think this is a longer term play because I think this addresses the tiny businesses but you can see them growing into the other products over time, and having some of the mobile features moving to the other customers.

What’s cool about this product is if they can achieve network effects… we will have to see but definitely a possibility.

Hope that helped, but if it didn’t check out the website because it’s really easy to understand especially if you go through the demos.

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I have been having my bookkeepers use bill.com and QB for a multitude of companies over the past few years.

Using your monthly cost examples, $39 for bill.com and $15 for QB, we are talking about $54/month or $648/year to use both. If you only use QB then you spend $180/year and “save” $468/year.

Bill.com is vastly superior to QB in the accounts payable (A/P) function. Having used many ERP and basic accounting software packages like QB over the years, bill.com is the best A/P software I’ve ever used. The CEO’s of my companies, those that have been CEO’s previously, agree 100%. The approval workflows save hours of work over the course of a year. How much is the time of a CEO and/or CFO worth? Pick any hourly number you like and if just a fraction of one hour of time is saved using bill.com it has paid for itself.

Maybe a small one-person shop where the owner does their own bookkeeping needs to worry about $468/year, but that isn’t a company it is a job. Any company where the owner/CEO is approving invoices that are entered by a separate person and is too cheap to pay $468 for an A/P solution that will save hours of time shouldn’t be an owner/CEO.

The point here is that bill.com has the entire SMB world as a floor for it’s TAM. Add in middle market companies and bill.com has the potential to grow for a long, long time.

Lee

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Hi mcantrell,
There’s misconceptions on investing from general publics. We don’t invest in companies based on their current market share or current revenue/profit amount. We don’t care if it has 80% market share if it’s only growing 15% per year. We invest for growth rate because revenue growth rate drives stock price gain. It’s not the obsolute market share or revenue dollar amount to drive the change of stock price.

I don’t know how fast quickbook is growing but INTU revenue grow rate from past few years range from 15% to 25% / year vs BILL’s organic growth rate of 60%/year annualized and last quarter accelerated to 79%/year annualized! And it’s just organic growth. Note that 60% per year organic growth was before COVID. During COVID month, BILL’s organic revenue grew around 40% annualized. That shows the strength of BILL’s business model. BILL’s platform is not an accounting platform. It’s to digitize analog back office financial operations.

When a small player is growing rapidly. It means two things ( either or both): 1.it’s taking market share from other companies. 2. It’s winning customers from new businesses.

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I just think buying 2 services would be a tough sell for small business owners. BILL is going to have to fight an uphill battle against a clear leader (in my opinion) and lower cost while not meeting ALL of the a small business owners accounting needs.

I think you are wrong. They don’t really compete with Quickbooks. SMB’s who use quickbooks and need the extra features Bill.com offers integrate Bill.com with their quickbooks software - seemlessly.

Intuit has always been a main integration partner with Bill.com (well at least since they went public and I followed them). Don’t forget, Rene LeCarte, the founder and CEO of Bill.com, founded PayCycle, the first and largest online payroll solution, which was acquired by Intuit in 2009.

They often talk about this relationship. A quick scan of some old notes I made (and posted here):

From my conf call notes:
8/9/2020: “They have relationships with numerous accounting software firms including their biggest with Intuit (Quick Books). … They announced an expanded relationship with Intuit’s QuickBooks Online Advanced Program.”

2/4/2021: “We currently serve mid-market customers with the integrations to Sage Intacct, Oracle NetSuite and Intuit’s QuickBooks Enterprise.”

Mike

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