Accounting and invoicing software performs a key role in tracking your business’s finances. It helps you keep an accurate record of your books, as well as get paid via invoices. Two popular small business accounting software programs are FreshBooks and Xero.
This article will help you decide between these two applications. We evaluated Xero and FreshBooks on several important criteria, namely price, invoicing capabilities, customer service and third-party integrations.
FreshBooks and Xero offer easy-to-use software to send invoices, maintain your business’s books, and perform other accounting functions. Both feature mobile apps and sync with a variety of third-party business applications. There are also some crucial differences, but the best choice depends on your business’s individual needs.
Five per month; email, payment acceptance, customization, recurring, reminders, time tracking
20 per month; email, payment acceptance, customization, recurring and reminders
Email, chat, phone, online FAQ
Email, chat, phone (partial) and online FAQ
Invoices, expense capture, mileage, time tracking
Accounting, invoices, contracts, reconciliation and document scanning
Over 100 third-party apps
Over 1,000 third-party apps
FreshBooks is an accounting software program geared toward small businesses and independent contractors. In addition to standard double-entry accounting and report functions, FreshBooks specializes in generating invoices. The ability to get paid on the go by converting an estimate and/or billable hours into an invoice makes FreshBooks a particularly appealing option for service-based businesses.
Xero is the second-most popular accounting software program in the U.S. after QuickBooks, and is the market leader in several countries, such as Australia. Like its competitors, Xero offers double-entry accounting and report features, but with a particular focus on making accounting concepts easy to understand for people unfamiliar with financial jargon. The different features included in Xero’s tiered pricing make it ideal for growing businesses.
Xero makes finance easy to understand by eliminating accounting jargon and using color-coded graphs. Source: Xero
In this section, we will go in-depth on the differences between FreshBooks and Xero, including how they compare pricing, invoicing capability, customer service, mobile app features and third-party integrations.
FreshBooks currently offers four paid plans based on a business’s number of clients.
You can save 10 percent on a FreshBooks subscription by making a single annual payment rather than monthly payments.
Each additional user costs $11 per month if you wish to grant access to more employees. Transactions made using FreshBooks Payments, which allows you to accept credit cards online, cost 2.9 percent plus 30 cents per transaction. FreshBooks also offers a product called Advanced Payments, which is used to accept credit card payments by phone and in person. This service costs $20 per month plus 3.5 percent and 30 cents per transaction.
Here is a breakdown of each service plan:
Five billable clients, time tracking, invoicing, unlimited estimates and invoices, and mobile app
50 billable clients, recurring invoices, payment reminders and late fees, reports and double-entry accounting
Unlimited clients, additional reporting capabilities and client tracking
Dedicated account manager, dedicated support and tailored onboarding
Xero offers three paid plans based on the various stages of a business’s growth.
Unlike FreshBooks, however, Xero does not charge for additional users to access the software. In fact, all of Xero’s plans support unlimited users. Through Xero, you can also integrate with HR software provider Gusto for $40 per month plus $6 per employee.
20 invoices and five bills per month; estimates, accounts payable, inventory management and access to Hubdoc scanning software
Unlimited invoices, bills and bank transactions.
Expense tracking, project management and multiple currencies
Comparing the pricing for FreshBooks and Xero isn’t black-and-white because a lot depends on what features you prioritize in your accounting software. Overall, we give Xero the edge on pricing because its base plan is less expensive and includes more features. With FreshBooks, you need to subscribe to the higher tiers if you want access to the best tools. Many key accounting software features are only included on FreshBooks’ Plus plan. Many of those same features are included in Xero’s Early plan at less than half the price.
Xero also includes unlimited users, whereas FreshBooks only provides access to multiple users for an additional monthly fee. This makes Xero a better choice for growing businesses that are constantly adding new employees.
However, Xero’s higher-tier plans are more expensive than FreshBooks’ premium offerings. FreshBooks also offers customized pricing for large enterprise customers, while Xero only offers three preset plans.
FreshBooks’s focus on invoicing helps it stands out from competitors.
FreshBooks’ invoices are fully customizable. Source: FreshBooks
We especially like that FreshBooks includes in-house payment software that removes the friction of getting paid from invoices. Customers can click a button on an email invoice that brings them directly to a webpage where they can enter their credit card information. Additional invoicing tools include recurring invoices, payment reminders, and the ability to charge interest and late fees on past-due invoices.
Like several competitors, Xero provides tools to customize the look and feel of your invoices.
Xero’s invoices are saved in the cloud, which allows you to make changes without resending. Source: Xero
FreshBooks beats Xero decisively when it comes to invoicing capabilities. The FreshBooks design suite allows for more customization and is easier to use compared to Xero. Xero also lacks the seamless integration with time tracking that FreshBooks offers. Additionally, FreshBooks provides the option for you to use its in-house payments system to accept credit cards directly from invoices, whereas Xero only provides the option to sync with third-party payments apps.
Importantly, FreshBooks allows you to send unlimited invoices to five clients on its entry-level plan, while Xero caps you at 20 monthly invoices.
You can sync time tracking with invoicing on FreshBooks, allowing you to instantly add billable hours to an invoice.
FreshBooks and Xero are similar when it comes to customer support options, and both have identical scores on Trustpilot. In this case, we give the edge to FreshBooks because it offers the option for immediate phone support, while Xero customers will need to go through other channels before they can speak to a specialist.
FreshBooks’ mobile app is ideal for creating invoices from a job site. Source: FreshBooks
Xero also offers two stand-alone apps — Xero Expenses and Xero Projects — for users on its Established plan. These apps allow you to capture photos for receipts, submit expense reports, track time, and attach billable expenses and time to individual projects.
Xero’s mobile app includes many more accounting-specific features compared to FreshBooks’ app, which makes it the overall winner if you want to run your business from a smartphone. However, the FreshBooks app clearly beats Xero when it comes to invoicing features. Mobile invoicing is included for all FreshBooks plans, while Xero users will need to subscribe to the premium Established plan to access these same features.
FreshBooks integrates with over 100 third-party business applications, including the following well-known apps:
Xero integrates with over 1,000 third-party business applications, including the following well-known apps:
Xero’s number of third-party integrations puts it far ahead of FreshBooks and other accounting software applications. While there is some overlap in third-party integrations, both FreshBooks and Xero include some syncing options that the other doesn’t. Make a list of the business productivity apps that you use most often and check for compatibility on the Xero and FreshBooks app stores.
Yes, but you need to subscribe to the Premium plan.
Hubdoc is included with all Xero plans, allowing you to capture, extract and store data from documents scanned using your smartphone.
Yes, both FreshBooks and Xero are cloud-based applications. The biggest benefit of cloud-based apps is that you don’t need to install a desktop version of the software.