As a business owner, deciding that accounting applications to use for your business can be a massive job. Two of the more popular options are FreshBooks and Xero. In this guide, we compare pricing and features of FreshBooks vs. Xero to help you decide which applications will meet the requirements of your business.
When to Utilize FreshBooks
FreshBooks is a fantastic option if you’re a freelancer, consultant, or small business owner that creates income based on billable hours. FreshBooks includes a excellent time monitoring tool that allows you easily monitor the hours of yourself, workers, and/or contractors from project, allowing you move hours to an invoice with just a couple clicks.
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When to Use Xero
Xero is better than FreshBooks in many cases since it is more robust and has greater functionality, letting you run your whole company without limitations.This includes tracking income/expenses, accounts receivable, accounts receivable, payroll and stock. This is compared to FreshBooks, which will not allow you to monitor your outstanding invoices (accounts receivable ), monitor inventory or run payroll for employees.
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FreshBooks vs. Xero Features & Pricing Table
| Xero | FreshBooks | |
|---|---|---|
| Who It Is Best For | Small companies that expect to increase over time | Solopreneurs, freelancers, and small business owners who earn revenue based on billable hours |
| Monthly Pricing Strategies
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Starter: $9 Standard: $30 Premium: $70 |
Lite: $15 Plus: $25 Premium: $50 |
| Handle Accounts Payable
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✔ | ✕ |
| 1099 Reporting for Contractors | ✔ | ✕ |
| Inventory Tracking | ✔ | ✕ |
| Time Tracking | ✔ | ✔ |
| Multiple Firms Per Account | ✕ | ✔ |
| Number of Users Contained | Unlimited | 1 (added users cost $10/month/user) |
| Benefits of Setup/Use
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Moderate | Easy |
| Integrations with other Systems | Payroll: Xero, Gusto Credit card processing: Stripe, Paypal E-commerce: Shopify, Square Check out over 600 programs in the App Marketplace |
Payroll: Gusto Charge card processing: Stripe, Paypal E-commerce: Shopify, Square Check out the complete list of programs in the Apps Center |
| Mobile App
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iOS, Android | iOS, Android |
Why We Chose Xero Over FreshBooks
We picked Xero over FreshBooks since it features a great deal of features which are either not provided by FreshBooks or you need to pay an additional fee. Out of all the attributes available, we chose the top 4 features we believed are the most important to small companies.
The four reasons why people picked them as the very best comprise:
1. More Features at a Lower Cost
We chose Xero as the very best accounting software for small companies over FreshBooks because you receive a ton of features with Xero at a lower price. For example, Xero lets you set up an infinite number of customers whereas FreshBooks just allows you up to 50 customers.
2. Easily Pay Bills When Due
You may easily enter invoices into Xero and then pay them via debit card or credit card when they come . However, FreshBooks does not have the capacity to manage your bills. Alternatively, you can just monitor bills once they’ve been compensated by downloading the payments from the bank/credit card or by manually entering the expense into FreshBooks.
3. Payroll Processing to get up to 5 Workers
Our third reason which we picked Xero over FreshBooks is since Xero includes payroll processing for up to 5 workers. There is no need to update or add an app, just simply turn the attribute and begin paying your workers. We discuss this attribute in more detail in the future in the Features section of this report.
4. Grant Users Access to Data & Reports
Another reason why we chose Xero Standard over FreshBooks Plus is Xero makes it simple to give different users access to your data. Xero is among the only bookkeeping software programs which allows you to give an infinite number of users access to your data at no extra cost.
On the flip side, FreshBooks Plus comes with 1 user and to add extra users you will pay $10 each user/per month. As an instance, if you provide a bookkeeper, your CPA and an employee access that is an additional $30 per month!
At length, Xero comes with the 3 conventional financial statements which both financial institutions and investors are looking for: Profit/Loss (Income) Statement, Balance Sheet and Statement of Cash Flow. Unfortunately, FreshBooks only includes the Profit & Loss (Income) Statement.
What Xero is Missing
Xero only allows you to handle one business per account. However, FreshBooks permits you to manage multiple companies with a single sign on and you can just toggle between every business as needed. Please note that additional fees will apply.
Another disadvantage to Xero is that their time tracking tool is not as fantastic as FreshBooks. If you have to track billable hours and then invoice your customers, Xero might not be perfect for you.
When You Should Consider FreshBooks Instead Of Xero
If the majority of the income that you create is based on billable hours, then FreshBooks may be a good fit for you. FreshBooks has a robust time tracking tool which lets you easily deal with the time of big or small teams. Each group member can access FreshBooks to input their time, view reports or to observe the condition of the undertaking. Best of all, you can easily transfer that time to an invoice and bill your customers right away.
Another reason why you might want to consider using FreshBooks instead of Xero is for those who have more than 1 business. FreshBooks permits you to manage several businesses under one account. This means that you can just sign up for your FreshBooks account after and then toggle to every company as you want to. Please note that additional fees will apply.
In-Depth Replies: FreshBooks vs. Xero
To enable you to ascertain which accounting software will work best for you, we’ll have an in-depth look in pricing, ease of use, features, and other applications that integrates with FreshBooks and Xero. Please note that we looked at Xero Standard and FreshBooks Plus when comparing the attributes.
Features: FreshBooks vs. Xero
Both FreshBooks Plus and Xero Standard comprise the following features:
- Client invoicing
- Create estimates
- Send automatic payment reminders to customers
- Join bank/credit card balances
- Charge late fees for overdue bills
- Recurring invoices
Xero Features
In addition to the attributes mentioned previously, Xero Standard also has the following additional features:
Manage Accounts Payable (A/P)
Unlike FreshBooks, you can handle all of your invoices in Xero. As you input your bills, you can keep track of when they are due by conducting an Accounts Payable Aging Report each week to see what is coming due or what’s past due. This will allow you to remain on top of what you owe to your suppliers so that you are able to make your payments on time and maintain a good credit history.
Integrated Full Cycle Payroll
Among the qualities that sets Xero apart from competitors like FreshBooks is they operate under the premise that you will eventually hire workers (if you haven’t previously done so). With all the added fees and taxes involved in hiring new employees, you can be confident that your cost won’t go up since payroll is currently built in your subscription program.
Whenever you’re ready to utilize the payroll feature, just simply turn it on and start entering your worker information. Xero Payroll will calculate charge for you, allow you to submit your payroll taxes and file payroll tax returns all from inside your Xero account!
1099 Reporting for Contractors
If you do not have workers and employ contractors on occasion, you can keep track of payments made to contractors so that you can provide them with a 1099 form and complete the IRS 1099 reporting demands. Have a look at our 1099 reporting guide to find out more about how this works. This is just another feature that FreshBooks doesn’t currently offer.
Inventory Tracking
If you sell products, you are able to keep track of the cost, quantities and value of your stock with Xero. Regrettably this is something that you can’t do with FreshBooks. By keeping an eye on your stock, you will always have access to up-to-date reports on sales, inventory levels and your cost of goods sold.
FreshBooks Features
Along with the features listed above, FreshBooks Plus also includes the following added features:
Setup Multiple Businesses
With FreshBooks, you may set up more than 1 company under the same account. This will allow you to log into FreshBooks after and toggle between businesses as you want to. Every new business which you set up comes with a free 30 day trial; once the trial ends you’ll need to pay the current subscription fee.
Regrettably, with Xero you can just set up one business per account. Should you have to prepare a new business, you will have to prepare a new Xero accounts for that small business. Very similar to FreshBooks, you may register for a free 30-day trial every new business that you set up; in the close of the trial you’ll be subject to the present pricing.
Time Tracking
Among the qualities which makes FreshBooks stand out from rivals like Xero is their strong time tracking tool. It allows you to track time or use the built-in timer. You can invite other users such as workers, contractors and customers so they can observe the status of every task in the project, enter time for a customer or job or conduct reports. This info can be transferred to a statement to bill a customer in just a few clicks.
While Xero does have a time monitoring feature, it isn’t anywhere near as intuitive as the time tracker in FreshBooks. Find out how to get paid faster by using this time monitoring tool and implementing other best practices for tracking time.
Benefits of Setup/Use: FreshBooks vs. Xero
FreshBooks is very intuitive and simple to use. While Xero uses straightforward language like”bills you want to pay” and”bills owed to you”, it’s a bit more complex to set up than FreshBooks. That said, make the most of the great help resources that we talk in the Customer Service/Support section of this article.
Xero Ease of Use
Below is a snapshot of this Xero Dashboard together with a brief explanation of the advice which you could expect to find here.
- Menu Bar — In the menu bar located at the top of the Dashboard, you can navigate to various areas of Xero; such as Payroll Center, Contacts and Accounts.
- Bank/Credit Card Accounts — Any bank/credit card account you have connected to Xero will appear on the Dashboard. If you have connected a Paypal account it will also appear here too. To determine how to connect your bank account to Xero, have a look at our how to set up bank feeds video tutorial.
- Account watchlist — In this segment, Xero will record any accounts that you have indicated you need to keep an eye on. In this case, there are 3 revenue accounts recorded in our screenshot together with the earnings for this month and year so far.
- Invoices owed to you (accounts receivable) — Keep a watch out for outstanding customer statements so you can follow-up to ensure prompt payment. See our video tutorial to determine how easy it is to run an Accounts Receivable Aging report in Xero.
- Bills you want to pay (accounts payable) — keep along with outstanding supplier invoices so that you can maintain decent credit standing by paying your debts on time. Have a look at our video tutorial on the best way to conduct an Accounts Payable report from Xero.
FreshBooks Ease of Use
Here’s a snapshot of the FreshBooks Dashboard. Below you will see a brief explanation of the information that appears here.
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- Left Menu Bar — You can navigate to various areas of FreshBooks straight from the menu bar; create/send invoices, set up new clients and manage expenses are just a few of the tasks which you can perform.
- Produce New — Initiate a new transaction by clicking this button.
- Outstanding Revenue — Stay on top of your account receivable balances so that you may follow-up on open customer invoices. The status bar shown will indicate overdue invoices in crimson and current invoices (not yet past due) in yellowish; you will also find a grand total of the two current & past due invoices ($5,274 shown above).
- Complete Profit — Keep an eye your bottom line right from the dash. You may easily change the period of time that you would love to see your gain to monthly, quarterly or annual. The time frame shown in red indicates a reduction and the green indicates profit. Overall profit is also shown in dollars ($16,250 shown previously ).
Pricing: FreshBooks vs. Xero
Both FreshBooks and Xero have 3 pricing strategies. This makes either choice available to businesses of all sizes and shapes. Let’s take a peek at the way the 3 tiers stack up against each other.
Xero Pricing
Xero tiered pricing includes the following:
- Starter — $9 per month
- Standard — $35 per month
- Premium — $70 a month
The primary difference between the Starter strategy along with also the Standard plan is that there are not any limitations on the number of transactions it is possible to enter for the typical plan. But you’re restricted to 5 invoices/quotes and 20 bank trades with the Starter plan; for the extra $26/mo (Standard plan), you can process payroll for up to 5 employees.
If you are considering upgrading to premium, the question to ask yourself is whether or not you can conduct your business with no the two additional features which you get for the Premium price label: payroll processing for as many as ten employees and the capacity to create bills and receive payments in multiple currencies. If you can, then stick with the Standard plan. You can always upgrade to the Premium plan should you hire more employees or need to make multi currency transactions.
FreshBooks Pricing
FreshBooks tiered pricing includes the following:
- Lite — $15 per month
- Plus — $25 a month
- Premium — $50 per month
The difference between the Lite plan along with the conventional program is $10/mo. However, the amount of attributes contained in the Standard variant of the Lite version are enormous and worth the additional $10/mo.
As soon as we get to the typical strategy vs. the Premium plan we are talking about a 50% cost increase (Standard is 25/mo. Vs Premium is $50/mo.) . In case you decide to choose this Premium plan over the typical program, you’ll have around 500 clients as opposed to just 50; other features remain the same.
Integrations: FreshBooks vs. Xero
One of the many advantages of using cloud bookkeeping software such as FreshBooks and Xero is your ability to”personalize” the applications to meet your business needs with the addition of apps.
For example, if you opt to go with FreshBooks as your bookkeeping applications and you want to be able to pay employees, you may register for Gusto, a payroll software supplier that integrates seamlessly with FreshBooks. Even though Xero has built-in citizenship processing, even if you decided that Gusto was a better option for you additionally incorporates with Xero.
Xero Integrations
Similar to FreshBooks, there are hundreds of apps that integrate with Xero. Stripe, Paypal, Shopify and Square just barely scratch the surface. Check out the Xero App Marketplace which includes over 600 programs that integrate easily with Xero.
FreshBooks Integrations
FreshBooks integrates with a number of other software programs like Stripe and Paypal for credit card processing, Shopify and Square for e-commerce and as discussed, Gusto for citizenship. Be sure to check out the complete list of apps that integrate with FreshBooks.
Client Service/Support: FreshBooks vs. Xero
Good customer service and support options should play a significant role when determining which accounting software you ought to go with. Both FreshBooks and Xero provide a variety of customer service/support options for their clients.
Xero Client Service/Support
Contrary to FreshBooks, Xero does not offer the option to talk with a real, live person. This is one of the downsides to going with Xero. But they do have some fantastic self service choices that I found quite helpful. First, the Xero Business Help Center is a strong aid centre that includes video tutorials as well as step-by-step written directions that go beyond just the fundamentals.
Xero U (University) is also a fantastic instrument. Xero University has miniature video tutorial classes which you could watch to learn how to utilize Xero. It’s broken down involving accountants, bookkeepers and small business owners to ensure instruction is customized to satisfy your needs.
Another great way you can quickly get up to pace with Xero is to take our free Xero Course here at Fit Small Business. This course comprises over 30 video tutorials that show you how you can set up your business in Xero and how to record the basic trades like invoicing, paying bills and running financial statements.
If you would rather let a professional handle your books in Xero, give Bookkeeper360 a call. They’ve a lot of expertise in doing accounting, payroll and taxes for small businesses and they specialize in Xero.
FreshBooks Client Service/Support
FreshBooks understands the value of being able to talk with a real, live person. It is among those few accounting software firms that makes it simple to find their phone number on the website. If you’ve got a query out of normal business hours, you may simply send them an email and they will get back to you within two days. They also have an extensive FAQ Section that includes step-by-step directions about how to perform the basics.
You are able to reach a FreshBooks customer support rep Monday through Friday, 8am-8pm PST at 1-866-303-6061. Send your emails to: help@freshbooks.com.
Mobile App: FreshBooks vs. Xero
Another benefit of using cloud bookkeeping applications such as FreshBooks and Xero is that you’re no longer chained to a desktop computer. You can stay together with invoicing, paying bills and other daily tasks by downloading the cell program in your cell phone or tablet and log with your secure id and password to access your information 24/7/365.
Xero Mobile App
Comparable to this FreshBooks mobile program, your information will automatically sync across every device which you use throughout the day. It is possible to do any task which you can perform on a desktop computer in your cell phone or tablet computer with the Xero Mobile App. This includes but isn’t Limited to the following:
- Create/Send Invoices
- Approve Expenses
- Snap images of receipts
- Reconcile bank transactions
- Give other users access to Xero
FreshBooks Mobile App
The FreshBooks mobile program will sync with your desktop and any device with an internet connection. You can execute the following tasks using the FreshBooks mobile app:
- Create/Send Invoices
- Snap images of receipts to catch expenses
- Manage costs on the go (Coming shortly to Android)
- Chat with customers
- Stay on top of software upgrades
FreshBooks Reviews vs. Xero Reviews
Both FreshBooks and Xero have positive and negative reviews. Below, we’ve provided you with their ordinary rating along with what clients say that they do well and what they do not do so well.
Xero Reviews
Xero has received on average a 4- out of 5-star rating. Clients are happy with how easy it’s to utilize Xero and how they have been able to decrease the amount of time spent on bookkeeping by up to 30%.
When it comes to that which customers do not like about Xero there are just two common themes: no live customer support and the steep price. Since Xero does not have a customer support line, you have to find answers to your questions by using the aid resources that we have discussed in this report.
Additionally, if you register for the starter edition and later decide to upgrade to the Standard edition, it’s a whopping $21 per month cost increase; or if you decide to upgrade from the Standard edition to the Premium version, your cost more than doubles.
To be fair, payroll processing is contained in both the normal edition (up to 5 employees) and also the Premium edition (up to ten employees) that in a sense justifies the steep price. Make certain to check out our customer review page to learn more about what other small businesses are saying about Xero.
FreshBooks Reviews
FreshBooks has received on average a 5 out of 5 star rating. Overall, customers are delighted with the strong invoicing capacities of FreshBooks and how easy it’s to use the software.
The negative reviews about FreshBooks centered around a number of those missing features that you anticipate an accounting applications to have; such as the capability to manage accounts payable as well as the lack of basic financial statements like a balance sheet and cash flow statement.
Be sure to check out our customer review page to learn more about what other small companies are saying about FreshBooks.
Bottom Line
Now that we’ve completed our side by side comparison of FreshBooks vs. Xero, it is time to earn a determination. If you are a freelancer, consultant, or small business owner that generates income based on billable hours, try Freshbooks. For all other small business owners, Xero may be a better choice.
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