Accounting software does more than track and organize your incoming and outgoing cash. The best accounting software platforms make it easier to pay vendors, receive customer payments, track expenses and much more. FreshBooks and Xero are excellent accounting software options whose features and focuses may make one or the other better for specific businesses.
We’ve gone through our FreshBooks review and Xero review to see how these two high-quality platforms perform against one another to help you choose the right accounting software for your organization’s needs.
Starts at $13.60 per month plus $11 per user per month
Starts at $15 per month; no additional fees per user
Over 100, including Squarespace, Gusto, Gmail and HubSpot
Over 100, including Stripe, Gusto, Shopify, HubSpot and Mailchimp
Advanced tools for batch-scheduling bill payments
Automatic expense categorization, importing and reporting (highest tier only)
Several built-in reports with customizable layouts
We recommend FreshBooks for all business customers that prioritize invoicing tools. Of all the accounting software platforms we reviewed, FreshBooks’ invoicing functionality impressed us the most. Creating invoices in FreshBooks is much easier than in other platforms ― automatic invoice generation and customization are a breeze. We especially like the fact that you can generate invoices from estimates and quotes in two clicks.
We also recommend FreshBooks for freelancers and very small teams. These user bases must carefully monitor expenses and FreshBooks provides high-quality tools at low prices. Plus, freelancers and very small service-based businesses live and die by invoices ― FreshBooks’ bread and butter.
Similarly, we recommend FreshBooks for small businesses in the early stages of growth. Given the platform’s pricing ― $13.60 per month plus $11 per user ― it remains relatively affordable in the early stages of building your team. Plus, FreshBooks offers over 100 integrations and a handful of reports you’ll likely find valuable as your business grows.
FreshBooks is notable because of the following factors:
We recommend Xero for businesses looking to streamline their vendor payments, especially when you deal with many vendors. We have yet to encounter bill-pay tools as user-friendly and broad as Xero’s in any other accounting software platform we reviewed. We like how easy Xero makes it to batch-schedule advance payments to one or many vendors, removing late payment fees from your expenses.
We also recommend Xero for businesses that prioritize financial reporting tools in their accounting software. While Xero’s reporting suite isn’t as advanced as QuickBooks, it’s still noteworthy. We were especially impressed by Xero’s profitability tools. When you log into your Xero dashboard, you’ll immediately see your team’s expenses and tracked time. This feature makes it incredibly easy to see which inputs you might need to adjust to cut business expenses.
Xero is also an excellent fit if you want accounting software that suits your business at all growth stages. You get unlimited users no matter which Xero tier you opt into, and your subscription price won’t vary based on user numbers. You can jump from one tier to another whenever your business is ready, not when you hit an arbitrary user cap. Plus, with prices starting at $15 per month, Xero is affordable. The quality you get for the amount you spend is the essence of bang for your buck.
We found Xero’s accounting solution notable for the following reasons:
All Xero users get 24/7 online customer support. Additionally, canceling your account incurs no fees if you do so at least 30 days in advance.
You can use Xero to pay all your vendor bills in just one click. Source: Xero
FreshBooks has four pricing packages, though the base prices only comprise part of your payments. You’ll also pay an additional $11 per user per month. The Advanced Payments add-on for storing your clients’ payment details and automating recurring payments costs $20 monthly. Each transaction you make through this add-on will cost you 3.5 percent plus 30 cents every time a client makes a payment.
FreshBooks’ pricing packages are as follows:
We like that FreshBooks’ base pricing is competitive. However, we found the add-on fee per user per month frustrating. This add-on cost needlessly inflated our costs when we tested the platform at larger team sizes. Nevertheless, for invoicing and automatic expense tracking, FreshBooks is a user-friendly option that still beats some other leading names on pricing.
Xero offers the following three pricing packages. Note that there are no per-user add-on fees:
We appreciate that Xero doesn’t charge extra fees per user. This kept our costs comparatively low as we tested the platform at different team sizes. We felt that each tier’s features justified its costs as did the automatically included (but optional) Gusto payroll integration. We’ve encountered few platforms that make it so easy and low-cost to automate your payroll accounting.
Although FreshBooks’ per-month subscription prices are lower, the per-user add-on fee only makes FreshBooks less expensive than Xero for very small teams. Plus, Xero offers a competitive feature set at every price point, making its value per dollar you spend better than with FreshBooks.
You can integrate over 100 third-party platforms with your FreshBooks account. These integrations include built-in connections with Squarespace, Gmail and HubSpot CRM, alongside third-party Dropbox and Expensify integrations. There’s also a Gusto integration, albeit via an add-on that incurs extra monthly fees. During our conversations with FreshBooks representatives, we were unable to obtain pricing for this add-on.
We were impressed with FreshBooks’ integrations. They were intuitive and connected our most vital platforms quite strongly.
Xero integrates with Stripe, HubSpot CRM, Mailchimp and Spotify. Additionally, as with FreshBooks, Xero includes a Gusto integration ― however, this integration doesn’t incur extra fees. Across the board, we found Xero’s built-in integrations ― and roughly 100 additional integrations ― to be approachable and powerful.
Xero barely beats FreshBooks when it comes to integrations. Both platforms offer approximately the same number of integrations and organize them neatly in their respective app stores. Additionally, we found both platforms’ integrations straightforward to use. However, we’ve chosen Xero as our winner since Xero’s Gusto payroll integration doesn’t incur additional fees.
When it comes to invoicing, there’s simply no better choice than FreshBooks:
In FreshBooks, charging late fees and sending payment reminders both happen from the same window. Source: FreshBooks
Overall, we were happy with Xero’s invoicing suite. However, we would’ve liked to see a bit more functionality:
FreshBooks is superior to more than Xero when it comes to invoicing ― it’s also superior to all other accounting software platforms. If invoicing is your most significant need within accounting software, choose FreshBooks over Xero.
FreshBooks Premium and Select users get access to the FreshBooks bill pay suite, which we found useful but limited:
Unlike FreshBooks, Xero gives all users bill-pay tools, making it ideal for a business’s daily accounting activities. However, users on the Early tier can only send five bills per month:
Xero automates bill payments in bulk and across vendors, whereas FreshBooks only allows manual bill recording, not payment. We found Xero’s bill pay tools to be the best of any accounting software we reviewed ― not just when compared to FreshBooks. Choose Xero over FreshBooks if you want to organize and expedite your vendor payments.
We like how neatly FreshBooks streamlined our fundamental expense management needs. The platform’s expense tools nearly rival those of QuickBooks, which offers one of the most powerful expense management suites around:
We were disappointed that all Xero expense tools are only available with the Established package, Xero’s priciest tier. These tools include the following:
FreshBooks’ expense management tools are easier to use than Xero’s. They’re also available for all users, not only those who opt into the most expensive pricing plan. Choose FreshBooks over Xero for low-cost expense management tools.
We were satisfied with, but not enthused about, FreshBooks’ accounting reports. We found them helpful for understanding finance basics, but we wanted more information after running them. FreshBooks’ reports aren’t particularly customizable, so we could only review our data on the platform’s terms, not our own:
Especially given its comparatively low prices, Xero impressed us when it came to all things reporting:
Xero offers more customizable reports than FreshBooks and makes accessing key financial data easier. We were impressed with Xero’s reporting suite compared to FreshBooks and when evaluated against many similarly priced competitors.
Choose FreshBooks if:
Choose Xero if:
Xero and QuickBooks offer similar features at mostly similar prices. However, QuickBooks offers slightly more tools and a more intuitive user experience. Read our QuickBooks vs. Xero comparison to explore these platforms’ similarities and differences further.
Xero lacks tax tools for business users but operates a powerful tax platform for accountants. This combination of factors makes it worth hiring a certified public accountant if your business uses Xero as its accounting software.
FreshBooks is an ideal platform for freelancers because it excels at invoicing. However, it lacks quarterly tax calculation and payment tools. The FreshBooks reporting suite is also comparatively narrow. QuickBooks is an example of a platform that includes and builds upon features FreshBooks lacks. Learn more via our QuickBooks vs. FreshBooks comparison.
Yes. FreshBooks charges different payment processing fees for different payment methods. ACH transfers incur a 1 percent fee, although FreshBooks Select users may pay less. Visa, MasterCard and Discover payments incur a fee of 2.9 percent plus 30 cents per transaction. For American Express transactions, the fee is 3.5 percent plus 30 cents per transaction. This rate is also the fee for all card payments made via the FreshBooks Advanced Payments add-on.