FreshBooks vs. Xero – 100% Unbiased Comparison [2022]

Freshbooks vs Xero

Deciding between two of the most popular cloud accounting software, FreshBooks vs. Xero, can be quite a dilemma, but my comprehensive comparison will help you with that.

Accounting is a vital part of every business; that’s why having reliable accounting software is essential. I will guide you throughout this article so that, in the end, you’ll be able to choose the cloud accounting software for you.

I’ll share the essential tools and features, pros and cons, pricing, and more information that will help you make the best decision.

Now, let’s get the ball rolling.

1. FreshBooks vs. Xero At A Glance

Let’s see how two of the most popular cloud accounting software, FreshBooks vs. Xero, fare against each other. If you’re in need of a quick summary, here’s a short run-down on both software suites.


Freshbooks

4.9

Xero (G)

4.7
Best Overall. Intuitive cloud accounting software for invoicing with full-on accounting tools. Starts at $15/month.Best for flexibility. Powerful cloud accounting software with pricing features for all business sizes. Starts at $20/month.
Try FreshbooksTry Xero


When choosing a cloud accounting software for your business or personal use, its features must meet your needs and expectations, but you should also consider how easy it would be to learn and use those features.

Burkhard Berger

2. Who Is FreshBooks Best For?

FreshBooks is excellent for those who only need basic accounting features such as invoicing and have no need for advanced accounting features and prefer easy-to-use cloud accounting software.

Individuals, freelancers, and small businesses like those who provide contracting, legal, consulting, and personal services and creative agencies will find FreshBooks features meeting their needs because of its time-tracking feature.

3. Who Is Xero Best For?

Xero is perfect for those looking for feature-rich accounting features and needs advanced accounting features like inventory and accounts payable.

Xero will also work best for small, medium, and large-sized businesses like those in the retail, e-commerce, tech, non-profit, hospitality, legal, coffee shops, advertising industries, and other businesses inventory-based and have many fixed assets and rely on reports.

4. A Close Look At The Features Of FreshBooks and Xero

Let’s have a look at the tools and features that FreshBooks vs. Xero have to offer. What features make each of them stand out?

FeaturesFreshbooksXero (G)
Customizable Invoices
Bank integration
Multi-currency Feature
Built-in Payroll
Inventory Management
Proposals
Accounts payable and bills
Mobile App
Third-party Integrations
Tracking Tools
Get StartedTry FreshbooksTry Xero

5. Key Features Of FreshBooks

FreshBooks is a cloud accounting software loved by millions. Let’s take a look at the features that made millions choose it.

#1 FreshBooks Invoice and Billing

FreshBooks Invoices

Sending invoices has never been easier; FreshBooks makes invoicing and billing so simple.

Like Quickbooks, FreshBooks helps you create professional-looking invoices quickly.

If you’re interested in taking a look at how Freshbooks handle against Quickbooks – take a look at this comparison article between the two.

FreshBooks Custom Invoice

With FreshBooks’s invoice generator, you can create a custom invoice easily. You can send your clients reminders, charge late fees, and request a deposit on your invoice. 

You can add invoice due dates, easily offer discounts, choose your preferred currency, automatically calculate discounts and customize invoice payment terms. Before sending your invoice, you can view it beforehand to review if everything’s good.

When your client views and pays your invoice, FreshBooks instantly updates. You can also send an invoice even on the go with the FreshBooks mobile app.

#2 Time Tracking with FreshBooks

FreshBooks Time Tracking

One of FreshBooks’s most remarkable features is its unlimited time tracking capability with all three paid plans. FreshBooks lets you track time for you and your entire team, record time against a specific client, add time entry notes, and automatically bill for tracked hours.

FreshBooks Time Tracker

FreshBooks lets you know at a glance how much time you spent on your tasks. It gives you an easy-to-read breakdown of your hours. 

You can also track your time with the mobile app, the browser via the FreshBooks Chrome Timer Chrome extension, and from apps like Asana, Basecamp, Teamwork, and Trello. 

FreshBooks also gives you weekly and monthly views of your tracked time, breakdowns of your tracked work hours daily, and lets you track and manage time for a specific project.

FreshBooks Time Tracking Month View

#3 FreshBooks Payments

FreshBooks Payments

FreshBooks Payments allows you to get paid faster by making it easier for your clients to pay online. Your clients and customers can pay directly through invoices, and FreshBooks automatically records the payments in your account.

Your customers can send their payments via FreshBooks Payments, Stripe, and Paypal. When you avail of the FreshBooks Select plan, you get preferred ACH and credit card transaction rates and a dedicated account manager. 

FreshBooks lets you create checkout links on your website, social, or anywhere else so your customers simply click and pay. The checkout link skips the process of creating and sending invoices, and lets you send receipts to your customers automatically.

You can also accept credit card payments online, in person, and over the phone with FreshBooks Advanced Payments. You can save credit card info (securely!) for easy billing when you need it later, set up recurring billing profiles for specific clients, and add automation and create subscription-based client profiles.

With FreshBooks payment, you can offer your clients flexibility with partial payments, payment schedules, or request deposits. You can also accept international currencies with Stripe and accept VISA, MasterCard, AMEX, and Apple Pay.

FreshBooks also creates auto-generated payments collected reports, and your processing fees are imported as expenses automatically.

#4 FreshBooks Estimates and Proposals

FreshBooks Estimates and Proposals

Freshbook lets you set clear expectations and removes the guesswork out of planning with estimates and proposals. FreshBooks enables you to create custom estimates and turn them into ready-to-pay invoices when you need them. 

FreshBooks Estimate

FreshBooks also lets you create custom proposals to help showcase your unique value. You can write the project’s overview and scope and outline the timeline and deliverables without leaving FreshBooks. 

FreshBooks Proposal

FreshBooks enables you to track the estimate’s status from viewed to accepted and turn an estimate into an invoice. You can also view your estimates and quotes before sending them to check if there are no mistakes.

You offer your clients the option to accept an estimate online. You can also view and respond to the client’s feedback about your estimate. 

With FreshBooks, you can easily add a discount and send estimates in your preferred currency. You can also create and email an estimate even when you’re on the go with the mobile app.

#5 Financial Reporting 

FreshBooks Reports

Find out how you and your business are performing with FreshBooks’s financial reporting. FreshBooks gives you a straightforward dashboard, so it’s easy to generate and review your reports.

FreshBooks’s financial reporting gives you a color-coded breakdown of spending, a summary of most recent activity, a profit and loss report, a sales tax summary report, payments collected to report, accounting reports, expense reports, and invoice details reports.

You can filter your reports by client, team member, or date and save, export, or print financial reports for your accountant.

6. Key Features Of Xero

Xero equips itself with powerful features; that’s why it’s one of the best cloud accounting software out there. Let’s find out what Xero has to offer.

#1 Xero Bank Feeds and Bank Reconciliation

Xero Bank Feeds

Xero lets you connect your bank and set up bank feeds to see your bank transactions flow securely into Xero. With the live bank feeds, you can keep track of the money coming in and going out.

With the automatic bank feeds, there will be no need for manual uploads. You can connect and get feeds from multiple banks and import up to 12 months of historical data when you connect them with Xero.

All data sent from the bank to Xero are encrypted, ensuring that the connection between your bank and Xero is secure so you can be at ease.

Xero Bank Reconciliation

With your daily bank feeds, you can keep your financials in Xero up to date because you can reconcile daily transactions with your bank statements.

Xero helps you reconcile transactions by using suggested matches that automatically match and categorize transactions. You can use the Xero app to reconcile transactions on your phone when you are on the go, and if your bank doesn’t connect to Xero, you can also manually import bank statements.

When there’s a pile of unreconciled transactions, you can sort and group bank transactions, then reconcile the code groups in bulk.

#2 Xero Inventory Management

Xero Inventory Management

One of Xero’s most robust features is its simple inventory management software that lets you keep track of what’s in stock and populate orders and invoices with items you buy and sell.

Xero’s inventory management software keeps a count of items you have in stock. Xero can track up to 4000 finished items, look up the number of items on hand and available for selling, and lets you see the total value of the stock on hand for any item.

Xero also lets you generate inventory reports to see how well your items are selling and use the data to make informed decisions. You’ll see the best and worst selling items and the most and least profitable lines.

With Xero, you can also add items to invoices. You can save the details like item description and prices of the items you buy and sell regularly and add them to an invoice, quote, or purchase order.

#3 Invoicing and Payments with Xero

Xero Invoicing

With Xero, you can work smarter with its intuitive invoicing software. You can send invoices from your desktop or phone when you finish your task.

With the invoicing software, your online invoices can be professional-looking by customizing them. You can add your logo, set your payment terms and a standard message, or insert more fields.

Xero Invoice

You can also remind your clients and customers with an automatic reminder. Set how often you want the reminders emailed, remind customers before or after the due date, and see when you sent the reminders.

Your customers can also pay you instantly from your online invoices using a third-party payment service. You can add a ‘Pay Now’ button to online invoices for a one-click payment.

Xero Payments

You can also add online payment options to your Xero invoices so customers can pay you with their preferred method. You can use Stripe so your customers can pay using debit or credit card and Apple Pay. 

Xero Payment Methods

There are also other available payment solutions, and Xero automatically reconciles the payments against the invoice.

Xero’s online invoices and payments give you better protection from fraudulent activities since online invoices are hard to tamper with. 

Xero also protects your data with multiple security layers, and all payment solutions connected to Xero have robust security protections and strong encryption.

#4 Xero Payroll

Xero Payroll

Xero lets you pay your employees and secure basic payroll records within your accounting software. 

With Xero, you can set the payment frequency, payment date, and period covered on the pay run, and if the payroll is the same every time, you can just copy a previous pay run. All payroll data syncs with your Xero account after each pay.

Xero also creates a payment file for each pay run so you can create and manage your employee records, choose which employees to include a pay run, and upload the batch payment file to your online banking. 

With Xero, you can generate electronic payslips that you can email or print for each employee. With the payslips, you can add a note to each payslip and show the employee’s earnings, deductions, and total pay.

#5 Xero Financial Reports

Xero Reports

Financial reports help you track your finances. Xero lets you generate and create up-to-date reports when you need them, so you can drill down into the details with interactive reports and measure specific KPIs.

Xero also lets you tailor the content and layout of your reports. You can add, remove, and reorder rows and columns, add tracking categories to find out how different business areas are performing, and add formulas, details, notes, and links.

Xero enables you to insert formulas so you can calculate variances and compare results. 

Xero’s reporting also helps you keep track of how your business is performing. You can view a range of graphs on the business performance dashboard, prepare a detailed budget quickly and share reports and metrics with your accountant or bookkeeper.


Xero’s advanced features make it a more powerful accounting software than FreshBooks; that’s why Xero is perfect for any size of business, especially medium to large-sized ones. But, FreshBooks’s intuitive and straightforward user interface makes it the go-to accounting software for basic accounting needs by freelancers and small businesses.

Burkhard Berger

7. FreshBooks vs. Xero – Pros And Cons

Both cloud accounting software has their pros and cons. Here are FreshBooks vs. Xero’s pros and cons.

Let’s have a look at FreshBooks’s pros and cons to see if it matches your needs. 

FreshBooks:

ProsCons
Simple and easy to useLimited users
Great customer supportA bit pricey
Detailed client recordsAdvanced features are lacking
Team collaboration and time tracking toolsAbsence of quarterly tax estimates
You can create proposalsLimited invoice customization

Here are Xero’s pros and cons to help you decide if it will work for you.

Xero:

ProsCons
Unlimited usersInventory has no reorder level
Great dashboardCan be pricey
It has a great number of integrationsNo phone support
Packed with advanced featuresHas a learning curve
Project tracking
Interactive quotes

8. Where Do I Get The Most For My Money?

Which Between FreshBooks vs. Xero gives you the most bang for your buck? Which one is worth the investment?

Let’s take a look at the pricing plans of FreshBooks and Xero.

FreshBooks Pricing Plan

Annual Pricing:

FreshBooks Annual Pricing

Monthly Pricing:

FreshBooks Monthly Pricing

FreshBooks currently offers monthly and annual pricing and four paid plans to choose from, including the custom pricing where you need to get in touch with their sales support for a quotation.

As of this writing, FreshBooks is offering a limited-time Tax TIme Sale that gives you 60% off for 6 Months when you avail of one of FreshBooks’s plans. The yearly plans also give you a 10% yearly discount.

FreshBooks’s pricing plans are as follows:

  • Lite (SALE: $6.00/month for monthly billing and $4.50/month and billed $108/year for annual billing; REGULAR: $15.00/month for monthly billing): FreshBooks’s lowest plan targets individuals and professionals with basic accounting needs. This plan lets you send unlimited invoices to up to 5 clients, send unlimited estimates, track unlimited expenses, accept credit card and bank transfer payments, track sales tax and see reports, iOS, and Android mobile app access, and have optional add-ons, and more.

You can have additional team members as an add-on at $10/person per month. For your payroll needs, FreshBooks has integration with Gusto Payroll with separate pricing. 

  • Plus (SALE: $10.00/month for monthly billing and $7.50/month and billed $180/year for annual billing; REGULAR: $25.00/month for monthly billing): FreshBooks’s most popular plan that’s perfect for business owners who have needs for more automation and insights. The Plus plan includes all of the Lite plan’s features, except you, can now send unlimited invoices to up to 50 clients, track expenses automatically, send unlimited estimates and proposals, set up recurring billing and client retainers, run business health reports, have optional add-ons and more.
  • Premium (SALE: $20.00/month for monthly billing and $15.00/month and billed $360/year for annual billing; REGULAR: $50.00/month for monthly billing): FreshBooks’s Premium plan is perfect for growing businesses. The plan includes all of the Plus plan’s features, plus you can now send unlimited invoices to an unlimited number of clients, track bills, bills payments, and vendors with accounts payable, track project profitability, customize email templates with dynamic fields and customize email signatures, have optional add-ons and more.
  • Select (Custom Pricing): FreshBooks’s Select plan includes all Premium plan features with the addition of having access to lower credit card transaction rates and starting with two team member accounts. You also get a dedicated account manager, receive help migrating from other software, set up your account with custom onboarding services, remove FreshBooks branding from client emails, and more.

Xero Pricing Plan

Xero Pricing Plan

Xero currently offers three paid plans.

  • Starter ($20/month): Included in the Starter plan are: you can send quotes and 20 invoices, enter five bills, reconcile bank transactions, capture bills and receipts with Hubdoc, inventory management, unlimited users, and more. You also have the optional add-ons of Claim expenses starting at $4 per month and Track projects starting at $7 per month.
  • Standard ($30/month): Xero’s most popular plan, the Standard plan includes all of the Start plans features, except you now have unlimited invoices and quotes, and you can now enter unlimited bills. You have the same optional add-ons with the Starter plan.
  • Premium ($40/month): The Premium plan is best for established businesses. The premium plan includes all of the Standard plan’s features with the addition of multi-currency accounting, and you also have the same optional add-ons with the Lite and Starter plans.

9. Conclusion – Which Is Better: FreshBooks Or Xero?

As I conclude this article, it is time to decide and choose the best cloud accounting software for you between FreshBooks vs. Xero.

If your accounting needs are mainly invoicing and other basic accounting activities and you’re an individual, freelancer, or running a small business, then go for FreshBooks. It’s affordable and has standard accounting features that will address your needs with ease since FreshBooks is super intuitive and straightforward to use. 

But, if you have heavy accounting needs and run an inventory-based business, I highly recommend Xero because its accounting features can do what FreshBooks can and even more with its advanced features. Its inventory feature and other advanced accounting features will perfectly handle medium to large-sized businesses accounting needs without a problem.

10. FreshBooks vs. Xero – FAQ

I’ll be answering four of the most frequently asked questions (FAQs) about FreshBooks and Xero.

Is FreshBooks good for accounting?

FreshBooks is a trusted accounting software by millions. It offers standard accounting features that you most often look for in accounting software, but FreshBooks does lack some advanced accounting features that you might need for your heavy accounting needs.

Does FreshBooks do payroll?

FreshBooks does not have a built-in payroll service, but they integrate with Gusto which offers payroll services.

Is Xero any good?

Xero offers great accounting features that are perfect for businesses of all sizes.

Is Xero accounting free?

No, Xero does not have a free plan, but you can get Xero’s 30-day free trial to try and see if its accounting features are what you’re looking for.

In This Article

Burkhard Berger

Burkhard Berger

Follow me on my journey from $0 to $100,000 per month. I'm sharing everything I've learned in my income reports here on Novum™ so you can pick up on my mistakes and wins.

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