FreshBooks vs. Xero: Which accounting software is better?

Falling behind on your bills and need a better way to track them? Learn how an invoicing software can fix it in this FreshBooks vs. Xero comparison.

Trying to run your business confidently but keep falling behind on your payroll and expenses? Start using invoicing software. FreshBooks and Xero excel at it. 

FreshBooks focuses on invoicing and expense tracking. Xero delivers all-rounded accounting software. However, which software provides better invoicing?

Let’s find out in this FreshBooks vs. Xero comparison.

FreshBooks vs. Xero Invoice: At a Glance

Here is a table breaking down the factors we considered in this FreshBooks vs Xero comparison.

Criteria	FreshBooks	Xero	Winner
SMB Guide’s Rating	9/10	8/10	FreshBooks
Feature Set & Customization	Basic invoice customization options	Custom fields, including static info	Xero
Automated Invoicing	✅	✅	FreshBooks
Expense Tracking	✅	✅	Xero
Multi-Currency Support	✅	✅	Xero
Data Migration & Import/Export	✅	✅	Xero
CRM Functions	❌	✅	Xero
Invoice Delivery & Communication	✅	✅	Tie
Payment Processing Integration	✅	✅	Xero
Reporting Tools	✅	✅	Xero
User Experience and User Interface	Clean interface	Complex interface	FreshBooks
Integrations and Compatibility	100+ platforms	Lots of integrations	Xero
Customer Support	Email, live chat, and phone	Email and forum	FreshBooks
Pricing	$7.70/mo – $24/mo	$3.75/mo – $19.50/mo	Xero
Scalability	✅	✅	Tie

FreshBooks: Key Features, Pros, Cons, & Pricing

FreshBooks is a full-featured accounting platform for small businesses that offers customizable invoicing capabilities. The platform helps companies to run their books, billing, and payroll on the same platform.

It also allows companies to build invoices instantly to get paid quicker. FreshBooks helps SMBs stay organized and have better financial management.

Pros & Cons

Pricing

FreshBooks’ pricing model is straightforward. It offers four packages but without a free plan. The plans rise with tiers and include an ‘Enterprise’ package called Select for businesses with custom needs.

FreshBooks also offers a month-long free trial, and the billing cycle is monthly or yearly (10% off).

Here are the plans:

• Lite: $19 monthly or ($228 annually)
• Plus: $33 monthly or ($396 yearly)
• Premium: $60 monthly or ($720 annually)
• Select: Contact sales

Xero: Key Features, Pros, Cons, & Pricing

Xero is an online accounting platform for small and growing businesses that offer automated tools to organize, accelerate, and simplify invoicing. The software suits businesses that need multi-user access, 1099 support, and reporting. 

One of its standout features is its integration stack with 1,000+ applications. Whether you need payment processors, CRMs, or analytics, Xero has you covered.

Pros & Cons

Pricing

Xero’s simple pricing structure offers three scalable plans without a free package. The plans include a month-long free trial period and a monthly billing cycle.

Something to note is that Xero offers add-on features sold as standalone. These include project tracking, analytics plus, and expense claims.

Here are the plans:

• Starter: $29 monthly
• Standard: $46 monthly
• Premium: $62 monthly

Feature Set & Customization

FreshBooks and Xero offer decent general feature sets and customization options for invoices. On both softwares, users can upload the company logo, tweak the design, and personalize the message on the invoices.

It allows businesses to create invoices that match their business brand.

Users can customize invoice payment terms on FreshBooks, and businesses can offer discounts and calculate taxes. Users can also preview invoices before sending them to ensure they meet requirements.

Xero offers invoice templates that allow for advanced customizations on their layout and appearance. Users can also edit, delete, or add custom fields, including static info.

Unlike FreshBooks, Xero templates offer more flexibility in customizing documents to fit specific business needs.

✅ Winner: Xero

Automated Invoicing

FreshBooks and Xero offer the capability to automate recurring invoices and billing cycles. Both help businesses bill their clientele on time.

The difference is that FreshBooks allows enterprises to send unlimited, customizable invoices across its plans.

The invoice feature capability includes reminders, customization, time tracking, and payment acceptance.

On the other hand, Xero limits the entry plan to 20 invoices and 5 bills per month. Its features include reminders, payment acceptance, and customization.

Regarding setting schedules, FreshBooks and Xero allow businesses to set up automated schedules. Users can define the schedule as weekly, bi-weekly, monthly, or yearly.

Not only that, but businesses can also customize the invoices to include late fees.

✅ Winner: FreshBooks

Expense Tracking

Xero and FreshBooks allow businesses to capture expenses in different ways. These include receipt scanning and uploading through a mobile app, bank feed integration, and manual entry.

Xero has an edge on expense categorization, providing a wider range of built-in features. It provides advanced expense reporting and customization, offering granular insights into business spending patterns.

It also gives better visualization tools within its reports than FreshBooks, helping businesses simplify tax filing.

Integrating expenses with invoices is available on both softwares. Businesses can track their expenses into billable items on invoices.

However, FreshBooks simplifies the process with a few clicks. Xero requires more steps depending on the plan.

✅ Winner: Xero

Multi-Currency Support

FreshBooks and Xero support multi-currency invoice creation for global clients. Both platforms offer automatic currency conversion based on user exchange rates.

However, Xero has an edge in providing reliable currency conversion with real-time exchange rates.

It is an essential factor, especially when dealing with global transactions. Xero offers better conversion accuracy even for less common currencies than FreshBooks.

✅ Winner: Xero

Data Migration & Import/Export

Unlike Xero, FreshBooks’s migration tools are less capable. However, the software provides guides on manual data import from CSV files. The challenge comes when transferring entire accounting systems.

Xero excels at providing users with powerful migration tools through assisted services at an additional cost. The services help transfer data from spreadsheets, bank feeds, or multiple accounting software.

It enables a seamless migration even though it’s not entirely self-service.

On both platforms, users can also import or export product catalogs, client data, and invoice templates in bulk. 

Regarding emergency access control, FreshBooks allows account owners to edit or revoke access for security purposes only. Xero enables account owners to manage emergency access more effectively within the platform.

✅ Winner: Xero

CRM Functions

FreshBook’s built-in CRM integrations are fewer than on Xero. The good thing is that the platform stores basic contact info and clientele billing history. 

Unlike Xero, FreshBooks lacks customer segmentation and lead-tracking features on invoicing data. However, FreshBooks integrates with 3rd-party CRM systems, but the connections depend on the application.

Xero’s CRM integration is agile, extensive, and within its core functionality. It allows businesses to store in-depth client contact info, access logs, and billing history within the platform.

Like FreshBooks, it lacks lead-tracking capability.

However, it allows customer segmentation based on invoice data. It enables businesses to have enhanced targeted marketing approaches.

✅ Winner: Xero

Invoice Delivery & Communication

FreshBooks and Xero offer multiple delivery options, including postal mail, an online client portal, and email. Xero goes beyond these and provides a customizable client portal with a personalized view.

Regarding customization and communication features, both software offers email templates for invoices. FreshBooks includes payment reminders with automated alerts to update clients on invoice status.

Xero emphasizes adding delivery addresses on the invoice, which is handy for postal deliveries. The Xero online invoicing system is also fast and includes one-click actions for approving email invoices.

✅ Winner: Xero

Payment Processing Integration

FreshBooks offers payment integration with various processors like Stripe and PayPal. The platform also simplifies setting up payment processors, where businesses can accept ACH and credit cards.

Something to consider is that fees vary based on a chosen gateway.

Xero also offers various payment processor integrations, including Stripe, PayPal, Square, and GoCardless. Like FreshBooks, setting up the gateways is straightforward, allowing businesses to accept ACH and credit cards.

While both platforms offer automatic payment reconciliation, Xero’s options are more powerful. Xero also provides more options for niche payment methods than FreshBooks.

✅ Winner: Xero

Reporting Tools

FreshBooks’ financial reports are basic, offering sales tax, P&L statements, a balance sheet, and more. The customization options also lack granular analytics, especially for larger businesses.

However, companies can access real-time invoicing metrics, such as outstanding payments.

Xero offers a broader range of financial reports, such as customizable tax reports, cash flow statements, P&L, and more. The software also excels in report customization, where users can tweak or create reports depending on need.

Businesses also get real-time analytics dashboards to monitor invoicing metrics like cash flow trends and business KPIs.

✅ Winner: Xero

User Interface and User Experience

FreshBooks interface is clean, making creating, sending, and managing invoices easy. Navigating the platform is also easier than Xero, and it provides tutorials and resources within the platform. 

However, using advanced features requires exploring to get a hang of it. Regarding customization, FreshBooks lacks advanced options for shortcuts and dashboards.

Unlike FreshBooks, the Xero interface is complex and has a steeper learning curve. However, the well-organized layout makes finding tools to create, send, and manage invoices easy.

Regarding customization, Xero offers personalization options for dashboards, such as creating shortcuts to frequently used functions.

✅ Winner: FreshBooks

Integrations and Compatibility

FreshBooks offers some limited integration with QuickBooks Online. However, the platform integrates with other third-party apps for data exchange.

Xero doesn’t integrate directly with FreshBooks and QuickBooks, but can through Zapier. However, it offers a broader range of compatibility with tools like CRM, accounting, and more.

Both softwares integrate with popular payment gateways like PayPal, Stripe, GoCardless, and Square. The platforms make it easy to incorporate the processors, where businesses can accept ACH and credit cards.

Regarding APIs, FreshBooks offers a basic one, while Xero’s is more powerful and has extensive documentation.

Both platforms also offer a capable mobile app (Android and iOS) to create, scan, upload, send, and track expenses on the go.

✅ Winner: Xero

Customer Support

FreshBooks’s support channels are email, live chat, and phone. The response time on live chat is quick, with replies within 3-5 minutes.

However, email and phone can take up to 12 hours, which is a bummer. The good thing is that support agents are knowledgeable about issues and provide helpful feedback.

The Xero support channels are email and forum. Email response times are slower, taking up to 24 hours. The good thing about the forum and support agents is that they offer helpful feedback.

Both softwares also provide self-help resources. FreshBooks provides a blog, glossary, and resource hub, while Xero offers guides, a blog, and a vibrant community.

✅ Winner: FreshBooks

Pricing

FreshBooks is running a promo discount of 60% for the first 4 to 6 months across the plans. The entry plan has a 5-client limit, and the plus package at 50.

However, the Premium and Select support unlimited clients. Annual subscriptions get a 10% discount with add-ons priced separately.

Xero offers a 50% promo discount for the first 6 months across all plans. The company includes a 30-day free trial, and the plans cover accounting essentials for growing businesses.

Both software offers a value proposition to businesses of different sizes. FreshBooks focuses on expense tracking and invoicing. Xero provides an all-rounded accounting platform with advanced capabilities like granular reporting.

✅ Winner: Xero

Scalability

FreshBooks offers scalable plans and add-on options that suit business prospecting to grow.

Xero’s broad range of features and all-around plans suit businesses looking to scale their operations.

Standout Features of FreshBooks

Besides providing invoicing and accounting tools for SMBs, FreshBooks offers other unique features.

Here are three that make it stand out.

Payroll

FreshBooks partners with Gusto to offer payroll services to SMBs. It allows them to complete payroll on time and automate tax calculations and filings for compliance.

Time tracking

FreshBooks offers a time-tracking app to help SMBs track their time on client projects. The app provides analytics on the time log, making generating an invoice easy.

Mileage tracking

FreshBooks offers businesses a mileage tracking app every time their vehicle is on the move in the name of business. It allows companies to claim the expense since it logs each trip and saves travel history.

Standout Features of Xero

Xero offers one of the best all-rounded accounting and bookkeeping softwares today. Here are three features that make it stand out.

Pay runs

Businesses can use Xero for straightforward recurring pay runs for a few employees. Companies can also use it to pay employees manually or in batches via their bank accounts.

Inventory management

Through the inventory management feature, businesses can track their stock levels and record their value. The feature also reports how well items perform to keep up with demand.

Data capture

Xero provides a Hubdoc feature that makes it easy to take photos, scan, email, or upload documents. Users can also sync the transactions automatically for seamless reconciliation.

FreshBooks vs. Xero: SMB Guide’s Verdict

Our FreshBooks vs Xero invoice comparison shows that both offer capable invoicing and accounting software. FreshBooks focuses on freelancers looking for simple invoicing, while Xero targets SMBs looking for comprehensive accounting software.

However, after an in-depth comparison, Xero wins. Here is why:

Xero offers an all-inclusive accounting platform that caters to small, growing, and established businesses. Its selling point is extensive integrations, inventory management, payroll, invoicing, and more.

FreshBooks is an excellent alternative for smaller businesses and freelancers. Its selling point is invoicing, mileage, and expense tracking. However, its lack of scalability for larger firms and fewer integrations make it loose.

Choose Xero If

You are a growing business looking for an all-rounded invoicing and accounting software.

Choose FreshBooks If:

You are a freelancer looking for a basic invoicing platform with add-on capabilities like expense tracking.