Xero VS FreshBooks: Which Is Better For Your Business’s Accounting?

Finding the right accounting software is no easy task. There are so many accounting programs to choose from, so how do you know which is best for your business? Even if you narrow it down to a few options, pricing, features, and navigating various interfaces can be time-consuming and challenging.

You’re in luck because we’re going to do most of the hard work for you. In this post, we’re putting two top accounting software options — Xero and FreshBooks — head-to-head. We’ve tested and researched both options, bringing you the best (and worst) of each software in this one article. Whether you’ve been torn between these software options or you’re still trying to navigate the many choices on the market, keep reading to see how the battle between Xero versus Freshbooks pans out.

Xero VS FreshBooks

Xero and FreshBooks are two top accounting solutions. But which is right for your business? We put Xero vs. FreshBooks to compare accounting features, integrations, customer service, and more to help you make the right software choice for your business.

Xero Overview

Xero is cloud-based accounting software that boasts a number of advanced accounting features for businesses of all sizes. In addition to a host of great features, Xero also offers access for unlimited users — a feature that is typically non-existent or quite expensive with other accounting software.

With Xero, you’ll find everything you could want in your accounting software. This includes live bank feeds, bank reconciliation, invoicing, expense tracking, and journal entries. There are also a number of additional features that you can use within your business, from projects to bill management. In addition, you’ll get access to numerous reports, hundreds of integrations, and strong security to protect your sensitive data.

Of course, there are a few weak points in Xero’s software, including customer service issues. and a lack of built-in payroll. Another problem for some users is pricing, which can get a little expensive, particularly for smaller businesses. However, Xero has still put out software that rivals the big competitors like QuickBooks and is suitable for medium- to large-sized businesses seeking a strong accounting solution.

FreshBooks Overview

FreshBooks, true to its name, has kept its software fresh since it was first launched in 2003. Millions of business owners use FreshBooks, and it’s not hard to see why. FreshBooks offers numerous basic accounting features and continuously listens to its users, implementing updates and changes to help you get the most out of your software.

Everything you need to manage your accounting can be found in FreshBooks. Some of the features include live bank feeds, bank reconciliation, invoicing, proposals, journal entries, and expense tracking. In addition, you’ll also receive some of the best customer service and support in the industry.

There are a few areas where FreshBooks falls short, though. No built-in payroll, few reports, and a lack of advanced features may be a dealbreaker for some users. However, many small businesses that value excellent customer support and want software that doesn’t take weeks of training to learn will appreciate the simplicity of FreshBooks.

Features

Xero is loaded with advanced features that make it a worthy competitor with the top players in the industry. In addition to the standard features you’d expect like invoicing and estimates, you’ll also have access to project management, budgeting, inventory, and more.

On the other hand, FreshBooks has a more basic feature set. While you won’t find advanced features here, you will find software that’s easy to use and built for small businesses and freelancers that want basic accounting software without the bells and whistles.

Let’s take a closer look at the features offered by Xero and FreshBooks.

Invoicing

Xero only has a single invoice template, but you can also create your own fully customized invoices.

Xero has a number of great invoicing features that make it easier than ever to create and send invoices and get paid by your clients. Some of Xero’s time-saving invoice automations include automatic reminders, recurring invoices, bulk invoices, and invoice replication.

FreshBooks has two customizable invoice templates.

One notable feature that it offers is a built-in chat option that allows you to communicate directly with your customers. Automated reminders, recurring invoices, and other automations are also available but are reserved for subscribers of the Plus and Premium plans.

Contact Management

Xero’s contact management feature outshines the basic contact management lists you’ll find with other software. You can add contact information, sales tax, and discounts for your contacts. You can also add your suppliers or create smart lists to target specific groups.

FreshBooks has a simpler contact management feature that lets you input basic client info and internal notes. You can’t add suppliers or vendors through FreshBooks’ contact management feature.

Accounts Payable

Xero has an accounts payable feature that makes it easy to create and manage your bills right within the software. You can simplify the process by setting up recurring bills, too.

Unfortunately, FreshBooks does not have an accounts payable feature that allows you to manage your bills.

Inventory

Xero has an inventory management feature that lets you add products or services. You can add basic item information, internal notes, and other information. Xero also lets you track inventory.

FreshBooks has a basic items list that lets you add products and services, as well as basic information like item descriptions. There is no inventory tracking or advanced inventory features.

Project Management

Both Xero and FreshBooks have a project management feature. Xero lets you create projects, add time and expenses, and create invoices. Xero also has basic job costing. The project management feature within Xero is only available to Established plan subscribers.

The project management feature in FreshBooks is available to all users. Hourly or flat-rate projects can be created. FreshBooks’ projects can easily be converted to invoices. One standout feature of FreshBooks is its internal communication feature, which allows you to collaborate with team members and add images and attachments to your projects.

Time Tracking

Time tracking is only available to Xero users signed up for the Established plan. This feature lets you add billable time to projects. FreshBooks has time tracking available for all users. FreshBooks users can add manual time or use the built-in time tracker. Billable and nonbillable hours can be tracked, and time can be added to projects and attached to invoices.

Proposals

Xero lacks a proposals feature. FreshBooks has a well-developed proposal feature for Plus and Premium plan subscribers. FreshBooks users can create proposals that include sections such as the scope of work, pricing, and terms. Proposals on FreshBooks can also quickly and easily be converted to invoices.

Budgeting

Xero helps you track your finances with built-in budgeting. This feature can be used to create three-month budgets up to budgets for the next two years. Unfortunately, FreshBooks does not have a budgeting feature.

Reports

Xero has a number of reports to help you track the financial health of your business. In total, there are 55 reports.

FreshBooks only has eight reports. If you’re a Plus or Premium user, you can access three additional reports. Still, though, this number falls far short of the number of reports you can access through Xero.

Pricing

Xero has three pricing plans ranging from $12/month to $65/month. The lowest-priced plan is quite limited and is better suited for freelancers or small businesses with few clients. The highest-priced tier offers more flexibility with unlimited invoicing and more advanced features, including multicurrency support, project management, and expense tracking. Xero offers a free 30-day trial for each of its plans — no credit card required.

While there’s no built-in payroll, Xero does integrate with Gusto to provide full-service payroll. Gusto’s payroll services cost $39/month plus $6/person per month.

FreshBooks has three main pricing plans that range from $15/month to $50/month. The more expensive the plan, the more billable clients you can add. The more expensive plans also offer additional features including automated late payment reminders and financial and accounting reports. If you have over 500 billable clients, you can also reach out to Xero to create a plan that’s customized to the needs of your business. Pricing for this service varies.

FreshBooks offers a few add-ons to consider for your business. This includes advanced payments at $20/month, additional users for $10/person per month, and Gusto payroll. Gusto’s payroll plans start at $19/month plus $6/month per person.

Ease Of Use

If you’re new to accounting software, take note. While not as complex as software like QuickBooks Desktop, Xero does have a slight learning curve. You will have to devote some time to exploring all the features and learning the software. The good news, though, is that once you do learn it, you’ll find that Xero is quite easy to use. Xero also offers a number of great resources to help you get the most out of your software.

For accounting newbies, FreshBooks may be the better option. Even users with very little accounting experience can be up and running in just minutes. FreshBooks also listens to its users and has corrected many navigational difficulties, making FreshBooks easier than ever to set up and use. If you do encounter a problem while setting up or using the software, FreshBooks has solid customer support options to help you out.

Customer Service & Support

One area where Xero falls a little short is in its customer service and support. Most notably, the lack of phone support may pose a problem for many users. While Xero does offer email support, response times have increased from a few hours to a day or longer. Users that value good customer service and support may be disappointed in these issues, although Xero does offer other resources such as a help center and “Xero U” training courses.

On the other hand, customer service is where FreshBooks really excels. In fact, the company has even won awards for its exceptional customer service. FreshBooks does offer phone support and responds quickly. Emails are also answered promptly. Customer service reps are knowledgeable and friendly. You can also find the answers you’re looking for through FreshBooks’ other resources like a help center, free webinars, and a company blog.

Reviews & Complaints

Xero has a pretty solid public reputation and has received numerous positive reviews across sites like Software Advice and TrustRadius. However, in recent months, there has been an increase in negative reviews. Common complaints surround the functionality of Xero’s mobile apps, the lack of payroll, new pricing structures, and poor customer support. Users praise Xero’s easy-to-use UI, numerous integrations, and the software’s accounting features.

FreshBooks has an excellent public reputation. Though the company faced an increase of negative reviews, more positives have been rolling in after FreshBooks made updates and changes to address the complaints. Users like FreshBooks’ customer service, mobile apps, and easy-to-use UI. There are a handful of complaints, though, with users requesting more reports and features and complaining about FreshBooks’ pricing plans.

Integrations

When it comes to integrations, Xero definitely comes out on top. This software offers over 800 integrations, including Zapier, which lets you connect to hundreds of apps and add-ons.

FreshBooks falls short with just over 80 integrations, including Bench Accounting, Gusto, and Asana.

The Key Differences Between Xero & FreshBooks

Xero and FreshBooks both provide an accounting solution for business owners. But here are some distinct differences that can help you better choose the right solution for your business. Those differences include:

1. Customer Service & Support: If exceptional customer service is important to you, FreshBooks is where it’s at. This software has consistently provided award-winning customer service. With so many support options, you’ll find the answers you need quickly and easily. While Xero has its own list of benefits, customer service isn’t topping that list. Expect longer wait times and fewer support options for software that’s more difficult to navigate.
2. Ease Of Use: Even if you’ve never used accounting software before, you shouldn’t have any difficulties getting up and running with FreshBooks. FreshBooks is very easy to set up and navigate. Xero, on the other hand, is a bit more complicated, although it is far easier to learn than other software like QuickBooks Desktop.
3. Feature Set: While FreshBooks is easy to navigate, the downside is that it lacks many advanced features you’d find with other software. While Xero is more complicated to learn, you’ll find that it has an abundance of features — both basic and advanced — at your disposal.
4. Number Of Integrations: Xero is pretty hard to beat when it comes to add-ons and integrations, boasting a whopping 800+. FreshBooks offers less than 100 add-ons and integrations.
5. Security: Both Xero and FreshBooks have security measures in place to keep your data secure. However, Xero is known for its strong cloud security. While FreshBooks isn’t quite as secure, it does run security tests often and has security features you’d expect from your software, such as SSL encryption and firewalls.
6. Number Of Users: Xero is one of the few software options out there that supports multiple users without a ridiculously high monthly cost. FreshBooks charges $10/month per user (in addition to your monthly subscription fee), which can add up quickly if you have multiple users.

Which Is Best For My Business Needs: Xero Or FreshBooks?

By now, you should have a better understanding of what Xero and FreshBooks bring to the table. But if you’re still on the fence, consider these points.

Chose Xero If …

Xero is best for:

• Mid- to large-sized businesses
• Businesses that don’t want to pay high monthly fees for additional users
• Businesses that need advanced accounting features such as budgeting, accounts payable, and inventory
• Businesses that want software that integrates with other business software and apps

Chose FreshBooks If …

FreshBooks is best for:

• Smaller businesses and freelancers
• Businesses that will only have one user
• Businesses that are willing to sacrifice advanced features for an easy-to-use UI
• Businesses that value stellar customer support

Xero VS FreshBooks Comparison: The Final Verdict

Xero and FreshBooks have each attracted millions of business owners looking for accounting software solutions. However, there are very distinct differences that make these options suitable for different types of businesses. Xero’s advanced features, numerous integrations, and support for unlimited users make it a top choice for mid-to-large-sized businesses that are willing to put in the time and effort to learn the software. FreshBooks is a better fit for smaller businesses that want easy-to-use software equipped with basic features such as invoicing.

But maybe neither is the right choice for you. Both lack built-in payroll, for example, so you may need to consider other solutions to better fit the needs of your business. Start your search for your ideal software by checking out our Accounting Software Reviews. No matter which software you choose, make sure to do your research and take a few options for a test drive before committing. Good luck!