FreshBooks vs. Xero Comparison

FreshBooks vs. Xero Highlights

FreshBooks and Xero are both excellent platforms for financial management, invoicing and managing cash flow. However, depending on your unique needs, one may be a better solution than the other. Here’s an overview of how they compare.

Who Is FreshBooks For?

FreshBooks is an ideal accounting solution for small businesses, freelancers and independent contractors. In addition to standard double-entry accounting and reporting functions, FreshBooks specializes in streamlined invoice generation. Want to get paid on the go by converting an estimate or billable hours into an invoice? FreshBooks is a particularly appealing option for service-based businesses. Our detailed review of FreshBooks explains more about this platform’s robust features.

The FreshBooks desktop and mobile apps are intuitive and easy to navigate. Source: FreshBooks

Who Is Xero For?

Xero is an excellent option for business owners new to accounting concepts and organizations that want straightforward financial information. This highly regarded accounting platform offers robust double-entry accounting and reporting features; at the same time, it emphasizes ease of use and simplifying accounting concepts. We like that its tiered pricing model supports feature expansion, making it a great choice for growing businesses. Check out our comprehensive review of Xero accounting software for a more detailed overview.

Xero’s interface is free of accounting jargon; it uses color-coded graphs to present your financial information in a clear and organized way. Source: Xero

FreshBooks vs. Xero Comparison

FreshBooks and Xero are well-regarded accounting solutions. Here’s how their pricing and essential accounting software features differ.

Pricing and Plans

Your accounting software must fit into your budget planning and make sense for your team’s needs.

FreshBooks

Here’s an overview of the simple and flexible service plans FreshBooks offers. Note that we’re showing monthly pricing; you’ll receive a 10 percent discount if you pay annually.

Key pricing considerations for FreshBooks include the following:

• Introductory offers: FreshBooks often provides substantial online discounts for new users to attract new customers.
• Free trial: New customers can test the platform with a 30-day free trial.
• Payroll add-on: FreshBooks Payroll is available for an additional $40 per month plus $6 per employee per month.
• Payment processing fees:
  • To accept credit card payments online through FreshBooks Payments (powered by Stripe), the standard fee is 2.9 percent plus 30 cents per transaction. There are slightly higher fees for American Express.
  • FreshBooks Advanced Payments ($20 per month) enables businesses to accept credit card payments over the phone or in person. This service also allows for client card storage and recurring billing, with fees of 3.5 percent plus 30 cents per transaction.

Xero

Xero offers a simple pricing structure designed to support businesses at different stages of growth.

Keep the following pricing considerations in mind when evaluating Xero:

• Introductory offer: Like FreshBooks, Xero often runs heavily discounted specials online for new users.
• Free trial: Xero’s 30-day free trial is an excellent way to test the platform.
• Payroll: Xero works with Gusto, one of the best online payroll services, to offer payroll functionality to its clients. Prices start at $40 per month plus $6 per employee. Our review of Gusto payroll has additional pricing details.
• Payment processing: Xero works with Stripe for payment processing. For most online transactions, you’ll pay 2.9 percent plus 30 cents.
• No user restrictions: Xero doesn’t limit a business’s users, which can save money.

Invoicing

Strong invoicing features are essential for maintaining a steady cash flow in small businesses.

FreshBooks

With an emphasis on creating professional invoices, FreshBooks stands out from the competition. Here are some notable invoicing features:

• Personalization: FreshBooks makes customizing your invoices to match your branding effortless. We were impressed by how easy it is to design and polish invoices with the platform’s tools.
• Billable time tracking: With FreshBooks, you can track billable hours and quickly add them to your invoices. This practice makes billing more straightforward and accurate.
• On-site billing: We appreciate that FreshBooks lets you invoice and accept payments right from the job site. So, there’s no need for separate time-tracking or attendance tools.
• Converting estimates and proposals: Turning estimates or proposals into invoices is straightforward. This simplicity makes FreshBooks an excellent choice for contractors who need to close sales quickly.
• Built-in payment processing: We really like that FreshBooks has an in-house payment system that simplifies the payment process. Customers can easily click a link in their email invoice to securely enter payment details.
• Advanced invoicing features: Recurring invoices, payment reminders, and options to charge interest and late fees on unpaid invoices help ensure you get paid on time.

FreshBooks lets you easily incorporate hours logged in your invoices. Source: FreshBooks

Xero

Xero has serviceable invoicing functions, including the following:

• Invoice customization: We like that Xero provides tools to customize the look and feel of your invoices. However, its design suite isn’t as user-friendly and intuitive as FreshBooks’.
• Converting quotes to invoices: We appreciate that Xero lets you convert quotes to invoices on the spot. However, it’s worth noting that time and expense tracking aren’t included in all plans, which could be a limitation for some businesses.
• Payment acceptance: We were impressed that you can sync Xero with some of the best credit card processors, including PayPal, Stripe and Square. This feature allows you to securely accept payments online after emailing invoices to clients.
• Mobile invoicing: The Xero mobile app lets you create and send invoices while on the go. This feature makes it particularly useful for businesses that need to collect payments in the field.

Customer Support

FreshBooks

FreshBooks provides a variety of support options to meet your needs:

• Availability: Customers can access email, live chat and phone support Monday through Friday, 8 a.m. to 7 p.m. ET. Support is available through your customer account.
• Chatbot assistance: FreshBooks includes a 24/7 automated chatbot, FreshBot, for handling basic questions. However, its functionality is limited to simpler inquiries.
• Online resources: We like that the FreshBooks website shares webinars, blog posts and e-books to help users make the most of the platform.
• Advanced support: Select plan users receive dedicated support and personalized onboarding to ensure a smooth transition.
• Trustpilot rating: FreshBooks scored 2.4 out of 5 on Trustpilot, with 57 percent of users rating it five stars.

Xero

Xero’s customer support options are as follows:

• Availability: Customers can request assistance online 24/7 via a support request. After submitting a request, a Xero rep will reach out via phone or email within two hours. There’s no option to call customer service directly.
• Online resources: Xero’s online resource, Xero Central, has a nice array of videos, blog posts and other educational materials. These aim to help users navigate the software. The company recommends users start there before requesting assistance.
• Trustpilot rating: Xero garnered a 3.7 out of 5 on Trustpilot.

Mobile App

A top-notch mobile app is essential for helping business owners and accounting professionals handle finances while on the go.

FreshBooks

We were impressed that the FreshBooks mobile app is rated 4.7 out of 5 on the Apple App Store and 4.5 on the Google Play Store. It includes the following features:

• iOS and Android versions
• Time tracking
• Instant invoicing
• Receipt capture
• Invoice status tracking
• Customer messaging system

Xero

The Xero Accounting app is rated 4.6 out of 5 on the Apple App Store and 4.4 on the Google Play Store. Its features include the following:

• iOS and Android versions
• Bank transaction reconciliation
• Invoice creation and management
• Cash flow monitoring
• Automatic expense recording
• Supplier and customer data management
• Customer and vendor contact management

We like that Xero also offers two standalone apps: Xero Me, for employees to track expenses, time, and leave, and Xero Projects, for managing specific projects. However, depending on your plan, you may need to add these services.

Xero’s mobile accounting app allows you to handle finances while on the go. Source: Xero

Third-Party Integrations

Integrations help you expand your software’s functionality and allow your systems to communicate smoothly.

FreshBooks

FreshBooks integrates with more than 100 third-party business applications, including the following well-known brands:

• BigCommerce
• Zoom
• WooCommerce
• Zendesk
• Expensify
• WordPress
• Constant Contact
• Slack
• Dropbox
• Microsoft Outlook
• Gusto
• Zapier

Xero

Xero offers seamless integration with over 1,000 third-party business applications, including these popular tools:

• Square
• Stripe
• PayPal
• Gusto
• Cin7 Core (formerly DEAR Inventory)
• Expensify
• Rippling
• Zapier
• HubSpot

FreshBooks vs. Xero Summary

FreshBooks is best for businesses that need robust invoicing functionality.

FreshBooks is an excellent option for businesses that need excellent, straightforward invoicing functionality. Service-based businesses and independent contractors will find this platform highly beneficial — particularly those who perform significant on-site work and regularly send invoices. This platform’s invoicing capabilities impressed us; they’re among the best of all the accounting software applications we’ve reviewed. You can easily convert billable hours or estimates into invoices, customize them to reflect your branding, and accept payments through its built-in payment system. However, keep in mind that FreshBooks limits the number of users on all plans unless you pay an additional fee. For this reason, it’s best suited for small businesses with a single person managing accounting and invoicing tasks.

Xero is best for growing businesses.

Xero is an excellent choice for growing businesses — whether online or brick-and-mortar. This honor is in thanks to its pricing plans that allow unlimited users without additional fees. As your company grows and your accounting requirements become more complex, Xero enables you to add team members seamlessly without increasing costs. We were particularly impressed by Xero’s mobile app, which lets you do more on the go. Plus, it boasts a wide array of integrations. So, no matter what business software solutions you might need in the future, you’ll most likely be able to use them with Xero.

Mike Berner contributed to this article.