Freshbooks vs. Xero: Accounting Software Comparison Guide

Need accounting software advice for your small business? We’ll help you narrow down your options in just a moment.

Both Freshbooks and Xero come highly recommended by both big and small business owners. These accounting software solutions have each of their own unique features that’ll get you set up in no time.

Still confused on which one you should choose? We understand your dilemma.

In this Freshbooks vs. Xero review, we break down their standout features and prices to help you reach your final verdict.

Overview of Freshbooks

Freshbooks (not to be confused with Quickbooks Online) is arguably one of the most popular accounting software applications today. A quick Google search will usually lead you to it.

And its popularity is for a good reason. Freshbooks gives you tools for your whole business financial management process.

Its 24 million users (and counting!), can easily create invoices, record expenses, and track inventory on the accounting software dashboard.

Bookkeeping features like time-tracking, processing of multi-currency payments, and auto-computation of profits are available on Freshbooks. Users can even design customized invoices for their clients.

To top that all off, Freshbooks also has a mobile app so that you can access it through your tablets and smartphones.

(We reviewed Freshbooks alongside 17Hats in an earlier article that you can check out here.)

Standout Features of Freshbooks

User-Friendly Navigation

Upon getting set up with Freshbooks, you can easily access all the tools you’ll be needing for your transactions right on the dashboard.

This accounting software is a good choice for small businesses since the interface is very straightforward—no need to get lost finding what you need for your transactions.

Bookkeeping Features

Freshbooks lets you view your company’s accounting reports, bank transactions, and sales tax summary sheets.

You can even authorize your personal accountant to access your account through the mobile app.

Other things you can do are online invoicing, expense management, and credit card processing via third-party payment processors like Stripe and PayPal.

Freshbooks also creates a profit and loss report for your balance sheets at the end of every cutoff. You can even set automatic late payment reminders and notifications for your clients.

Transaction Automation and Personalization

Apart from the option to upload and view your financial records on Freshbooks, users can also easily create them on the app.

You can set automated transactions for your clients who prefer that. Payment processing can also happen at a scheduled date to lighten your project load.

Plus, you can issue your clients instant refunds through Freshbooks. That way, your customers can get their money back in real-time and without delay.

As for personalization, Freshbooks offers tools to customize your company branding. Software options include unique colors and logos to add to your invoices for a more legitimate feel.

Reliable Customer Support

On the off chance that you do end up needing help navigating the app, Freshbooks offers a competent customer support team.

For basic online support, you can head on over to its Support Page on the official website. From there, you can read through a glossary of FAQs that the Freshbooks team answers through various articles.

If you need something more specific, you can also call their official hotline at 1-866-303-6061. Customer service agents are available from Monday to Friday, beginning 8am until 8pm.

For less pressing concerns, Freshbooks also allows its users to send them an email at help@freshbooks.com.

Mobile Application

You can easily view your accounting data on Freshbooks, even on your mobile phone. The mobile application that Freshbooks has is compatible with smartphones and tablets.

But of course, you can also view it on your laptop or desktop, if you wish.

Project Management

The nice thing about Freshbooks is that you can manage multiple clients at the same time on the app. You can upload important documents for each of your clients under different categories.

The management tools on Freshbooks let you set schedules and deadlines for a specific client. You can also add customized notes and comments for each client that you have.

Time-tracking is also part of the client management features on Freshbooks. You can record your work hours for your billable clients right on the app.

Your clients will then be able to access the total work you rendered for them. That way, there’s transparency for the compensation you’ll be receiving.

Freshbooks Pricing Plans

One important detail we should note about Freshbooks is that it doesn’t have a free trial for its users. You’re required to pay a fee upon registering for the accounting software.

You’ll be glad to know, though, that all the essential features needed for accounting are present in any plan you avail of.

You can conduct bank transactions, accept credit cards, and access multiple currency support on the Freshbooks plans.

There are discounts that you can avail of, depending on the plan you choose. This means that you can save money and get up to a 10% discount,the higher the plan you subscribe to.

The different Freshbooks payments and pricing plans are:

Lite Plan

Because of an ongoing promo, this plan requires $6 per month instead of the usual $15. When paid annually, it’ll only cost $108.

Plus Plan

This plan requires $10 per month instead of the usual $25, again, because of the ongoing promo mentioned. When paid annually, it’ll only cost $180.

Premium Plan

This plan requires $20 per month instead of the usual $50. When paid annually, it’ll only cost $360.

(The Plus and Premium plans are the most commonly availed plans on Freshbooks.)

Select Plan

When you avail of the Select Plan, the price is customizable upon discussion with the Freshbooks team.

The total fee will depend on the specific features you want.

For a complete discussion of the pricing tiers, you can also read through our article on Freshbooks Pricing Plans.

Overview of Xero

If you’re still undecided about Freshbooks, then let us introduce you to Xero. It’s one of the most talked-about cloud-based platforms you can use for your small business.

Xero markets itself as the best solution for small to medium-sized businesses because, like Freshbooks, it has an easy-to-use interface.

Users of this cloud-based accounting software can do project management, invoice creation, and expense-tracking upon signing up.

When you’re registered to Xero, you can invite an unlimited number of users and clients to collaborate with you. There’s no limit to how many people you can transact with on the site.

A few options like inventory management, bank reconciliation, and time-tracking are also accessible for all Xero users.

Plus, the best part is that Xero encrypts all of your confidential information on the site.

Standout Features of Xero

Accounting Features

As already mentioned, Xero users can do inventory tracking, expense tracking, and purchase-ordering upon signing up for an account.

As an accounting solution, Xero lets small business owners accept online credit card payments (in multiple currencies), record journal entries, and file expense claims on the site.

There’s even an accounts payable option wherein you can make personalized bills for your clients. You can also set them to automatically recur every month.

Another thing you can customize on the site is your company’s invoice template. You can insert specific fonts and logos so that your clients know it’s from you when you send invoices for offline and online payments.

Users can also monitor the financial health of their company with the built-in report templates on Xero. There are up to 55 different templates that you can use for your processes.

Project and Client Management

Xero’s project and client management features include contact lists that you can categorize according to preference.

Your clients will be sorted according to their contact details, invoices, and financial information on Xero. That way, you can easily search for their profiles when you need them.

Other things you can add to your clients’ profiles are their sales tax summaries, billable hours, and bank accounts (which will be used for future recurring transactions).

And the contact list is not only limited to your clients. You can even store information on your suppliers on Xero. Small businesses that focus on retail particularly love this feature.

Like Freshbooks, you can also track time on Xero. The project management tools will automatically sum up your time rendered and then help you forward that to your client.

(Please note that time-tracking is only available when registered to the Established Plan, though.)

Inventory Tracking and Budgeting

Another one of the accounting solutions that Xero offers is its feature for tracking inventory and supply.

On Xero, you can tally how much of a certain product you still have. You can easily note the items that are about to run out so that you can prioritize them for restocks.

With the inventory management feature, users can indicate how much a product is so that Xero can automatically give you its total value for every cutoff.

As for budgeting features, Xero lets all users create a budget plan for up to 2 years. You can project and plan out how to manage your finances with it.

Data Encryption

Finally, Xero guarantees the safekeeping of confidential information taken from all its users.

Data taken from credit card processing, bank reconciliation, recurring invoices, and other personal services are kept private.

Since Xero is one of the top cloud-based accounting solutions, your data is securely encrypted in its system.

Xero Pricing Plans

There are three different pricing plans that you can avail of on Xero. Each of them entitles you to a number of features.

Before you avail of any of them, you are given a free trial for all of Xero’s basic features.

With all plans, you can design invoices, send bills, and then conduct bank account transactions with your clients every month.

The higher-tiered plans even offer a full-service payroll system that you can do for up 5 to 10 team members or employees.

When you subscribe to the Standard and Premium plans, you also get to create unlimited invoices, as opposed to the Starter plan that only lets you make 5.

Finally, the most expensive plan, the Premium, lets you do multi-currency transactions.

Early Plan

This plan requires $11 per month. 

Special add-ons for claiming expenses and project-tracking cost an extra $4 and $7, respectively.

You can also avail of Payroll with Gusto for an extra $39 on top of the total fee. Learn more about Payroll with Gusto here.

Please note that this is the sole Xero plan that doesn’t offer unlimited invoices to its subscribers.

Growing Plan

This plan requires $32 per month. 

Like the Early Plan, you can get Payroll with Gusto for an extra $39.

Special add-ons for claiming expenses and project-tracking cost an extra $4 and $7, respectively.

Established Plan

This plan requires $62 per month. 

Like the previously mentioned plans, you can also get Payroll with Gusto for an extra $39.

Special add-ons for claiming expenses and project-tracking cost an extra $4 and $7, respectively.

Freshbooks vs. Xero FAQs Cheat Sheet

#1 Which one between Xero vs. Freshbooks is good for small businesses?

Answer: Though both of them are good for a small business, Xero has slightly more helpful features.

Yes, Freshbooks has a user-friendly interface. But note that Xero was particularly created with small business owners in mind.

Xero has more advanced settings for inventory, supply, and expense-tracking. As an accounting software, it also allows for unlimited invoices and bank transactions with clients.

Though Freshbooks is also a competent accounting solution, its features are arguably more limited when compared to Xero.

#2 Do both accounting software applications offer a free trial for users?

Answer: No. 

Only Xero has a free trial. Freshbooks currently doesn’t have the option for a free trial of its software features.

When you compare Xero vs. Freshbooks, though, you’ll probably notice that Xero is drastically more expensive at first glance.

Xero’s cheapest plan is priced at $11, while Freshbooks’ is priced at $6 which is much cheaper.

But the silver lining with Xero is that it offers first-time users a free trial of all its software tools. And the features that come with it also have higher capacities.

The nice thing to note about Freshbooks is that it offers you a discount the higher you go with the pricing tiers. Users can even get up to a 10% discount if they pay their fees yearly instead of monthly.

#3 Is my data secure when I use both software applications?

Answer: Yes.

When comparing Xero vs. Freshbooks in terms of data encryption and safety, both software apps are good.

Neither Xero nor Freshbooks will purposely leak or sell your confidential information.

Since finances are a delicate matter, both software applications assure their users of the highest security for their payment and financial details.

We should also mention again that Xero is cloud-based, so it has its own encryption process for all of its databases.

#4 Do both accounting software programs have mobile apps?

Answer: No.

Only Freshbooks has a dedicated mobile application. The software can be used on smartphones and tablets.

Though Xero has almost all the same (if not more) tools that you need for doing accounting, it doesn’t have its own mobile app.

That might sound surprising since almost every business nowadays has mobile apps of its own. But no, Xero is not compatible with smartphones just yet.

The presence of a mobile application is what makes Freshbooks stand out in this Xero vs. Freshbooks criteria point.

It’s best to just stay tuned to any updates, though. Our best guess is that the Xero team is probably already working on an answer to Freshbooks’ mobile application.

Conclusion on Freshbooks vs. Xero

Our final verdict for this Freshbooks vs. Xero review is that: Xero wins.

As discussed, Xero was specially created for small businesses. Anyone with the drive to learn how to manage their finances can start using the software.

The software grants you all the advanced features needed to monitor your company’s accounting and finances.

Though it can be argued that Xero is much more expensive when compared to Freshbooks, the price is surely justified. The advanced features that come with the software are worth the extra few bucks per month.

But don’t worry, the Freshbooks software is also still a good choice, in case it’s what truly caught your eye in this review. It’s also much more affordable, even compared to other software, because of an ongoing promo.

The choice is now all up to you. Whether you choose Xero or Freshbooks, we can guarantee that you’re in for a competent accounting software experience.

For more accounting software reviews, you can check out our Remitly vs. Xoom Comparison Guide and Harvest vs. Freshbooks Comparison Guide articles.