FreshBooks vs. Xero – Which Fits Your Style Best?

obrBy Fergus O'Sullivan — Last Updated: 04 Jan'17 2016-12-16T04:53:53+00:00

Here at Cloudwards we’re doing a series of reviews for online accounting reviews to help people find the perfect program for them.

It’s a big world out there and there are a lot of bookkeeping solutions to be found, all of them in fierce competition with each other. For a general overview, check out our roundup of best accounting software.

Certain programs are popular than others and we’re doing a few article comparing those against each other, such as the veteran QuickBooks Online with Xero or FreshBooks. This article is about the pros and cons of FreshBooks and Xero and how they stack up against each other.

 

Read our in-depth analyses: FreshBooks Review 2017 and Xero Review 2017

 

The similarities between the two are striking: both dislike accounting jargon and both aim to easily introduce novices to the field with as little effort as possible. There are also some differences, of course, the main one being that Xero goes beyond the basics, while FreshBooks does not.

FreshBooks is guilty of a bit of false advertising: they claim to be a full accounting suite, but they quite simply aren’t. Though it does what it does quite well, it only covers the absolute essentials.

We’ve tried to judge it by its merits as much as we can, but if you need certain functions, Xero will be a better bet.

Table of Contents


Invoicing

Experience has shown that most people start looking around for an online accounting program when they have to send invoices. There’s a lot more to it than just asking someone for money, there’s a certain format that needs to be followed.

Both Xero and FreshBooks are strong contenders here, but we’re pulling toward FreshBooks a little. It was originally designed as an invoicing program and it has remained true to its roots, offering just that little bit extra smoothness when using it.

Quickbooks Online Invoicing
FreshBooks offers clear invoices.

That said, the difference between the two isn’t massive, either. Users pick one of their contacts they want to bill (setting up contacts is easy in either program, though again FreshBooks does a slightly better job of it), enter what the invoice is for and how much and you’re good to go. They also both have built-in timers, great for people who bill their hours.

Xero has some great invoicing options.

One feature Xero offers which is a little lacking in FreshBooks is the ability to set reminders: you can set a due date on an invoice and if Xero can see it hasn’t been paid yet by that time, you receive a notification. It’s really handy, and you can even have Xero do all the work by auto-sending the reminder, especially useful if you have a lot of clients that pay late.

Merchant services

One of the many wonderful advantages of cloud computing is integrating merchant services with your invoices: when you send a client a bill, you attach a payment link for either a credit card or a PayPal account.

Neither Xero nor FreshBooks has this functionality directly integrated outside of North America, but both offer the option of letting a third-party provider handle it. Any transactions made by your clients is then updated automatically in your ledger.

FreshBooks has this function for users in the U.S. and Canada, but since our readers could be anywhere it’s not practical to let it weigh in this review.

Not having it integrated for users world-wide is  a shame, especially considering a few competitors do offer this service. Going through a third party adds some hassle to the whole affair, meaning both lose some marks here.

Overview

Once invoices are sent, you need of course to be able to see what’s been paid and what hasn’t and hopefully get a grasp of how you’re doing. Both Xero and FreshBooks offer that, right there on the dashboard, but they go about it a little differently.

FreshBooks' overview is clear yet simple.

FreshBooks is very much a no-frills program, you get a total of money received in stark numbers at the top of your dashboard. It works and it’s not like you can say you didn’t see it, but it’s a bit spartan and people who want more than the bare bones will most likely find it lacking.

Xero, on the other hand, is a graph-aficionado’s dream: every single bit of data imaginable gets fed into a pie chart, giving you a wonderful optic overview of how your business is doing. It’s all about what you as a user prefer, but there’s something for everybody, here.

Xero has a lot of information to offer.

Winner, if just, in the invoicing category is FreshBooks, simply because the whole process glides along a little better.

Bills

With all the money coming into your new business, you’d almost forget there’s money going out, too. FreshBooks’ version of this can be found under expenses and it’s as no-frills as everything else; it’s also entirely done by hand, so expect some serious data entry if you have much outgoing money.

FreshBooks offers bare-bones expense management.

Xero isn’t without data entry, but the process is a bit more complete and the information is exported into your general ledger, making the whole process a bit more satisfying. Though not as smooth as its competitor, it’s a lot easier to compare your expenses and bills against your revenue.

No need to worry about expenses with Xero.

The winner here is Xero as this program will give you a better grasp of your finances while minimizing data entry.

Bank feeds

Though it seems a little scary at first, the ability to have your bank data feed directly into your online accounting program is a wonderful benefit. Expenses can be updates automatically and it’s much easier to compare your figures to the actual money coming in and going out.

After a recent update FreshBooks is on par here with Xero, with both offering a wide array of banks to choose from around the world. Xero, however, wins this round just because this data is exported to a much better ledger than FreshBooks’.

 

Price

Comparing price plans is a tricky endeavor: in both cases the cheapest plan is geared toward companies with very few clients. FreshBooks’ option to send an unlimited amount of invoices to a few clients (confusing phrasing, indeed) works out a tiny bit better, though, and at a better price, to boot.

Xero’s pricing plans

PlanStarterStandardPremium
Price Plan
$ 9 00monthly
$ 30 00monthly
$ 70 00monthly
Users Unlimited Unlimited Unlimited
Details

- Send 5 invoices and quotes;
- Enter 5 bills;
- Reconcile 20 bank transactions.

- Send invoices and quotes;
- Enter bills;
- Reconcile bank transactions.

- Send invoices and quotes;
- Enter bills;
- Reconcile bank transactions;
- Multi-currency support.

FreshBooks’ pricing plans

PlanLitePlusPremium
Price Plan
$ 15 00monthly
$ 180 00yearly
$ 25 00monthly
$ 300 00yearly
$ 50 00monthly
$ 600 00yearly
Users 1 1 1
Details

- Unlimited invoices;
- Unlimited expenses;
- Bill up to 5 clients.

- Unlimited invoices;
- Unlimited expenses;
- Bill up to 50 clients.

- Unlimited invoices;
- Unlimited expenses;
- Bill up to 500 clients.

For small businesses with a few, high-volume clients, FreshBooks is the winner.

This changes when you have more than a handful of clients, then Xero takes the lead again. Sure, it’s $5 more, but you also get a full accounting suite with all the bells and whistles, such as inventory. A good deal, indeed.

The problem is that in this day and age there’s a decent chance you’ll be dealing with more than one kind of currency in your daily dealings. Xero offers multi-currency support, but only if you sign up for the $40 plan. Yikes. FreshBooks has this standard, so is the winner for people who deal in more than one currency.

If you have many small clients, the table tilts again, though: even if 500 clients is more than you need, $50 puts FreshBooks in the top segment of the market and, dare we say it, is a little overpriced.

Entrepreneurs looking to go with either cloud-based accounting solution should take a hard look at their situation before deciding which of the two to go for. The pricing plans are a little erratic, so recommending the one over the other is dependent on how your business is run.

User-friendliness

Simplicity is a huge part of user-friendliness, so FreshBooks comes out strong, here. No matter which tab you’re looking for, it’s usually only a single click away. Xero, in contrast, is a little obscure sometimes and requires many, many clicks to get anywhere, plus a short wait as your click is processed.

Impatient types are badly off with Xero.

Simplicity has a downside, of course: Xero just gets a lot more done than FreshBooks. Sometimes you have to look around to figure something out in Xero, but you’ll find it eventually: if you can’t find it in FreshBooks, it just ain’t there.

FreshBooks has one of the most intuitive layouts in the industry.

If you’re priority is just getting the basics done and getting them done quickly, FreshBooks is where you need to be. If you need more than just invoicing and expenses, you’re going to have to buckle up and deal with Xero’s flaws best you can.

Interface

If buttons are your thing, Xero is great. The light annoyance that comes with using Xero is offset by the wealth of information that you can look up. Users will be able to get a tight grasp on their company’s finances, much more so than those who opt for FreshBooks.

Xero works well, but can be confusing at times.

For the more laid-back who want to get these necessary evils out of the way, FreshBooks is a much better fit thanks to the sleek interface. The lack of functions that can frustrate more advanced users will be a boon for more inexperienced ones, so if you feel that describes you, you know where to go.

Tutorials

When you use a program for the first time most users prefer a bit of handholding, even if it’s just a quick tour of some of the different functions. For a general beginner’s overview Xero is your best option, but both online accounting solutions offer pop-ups that will guide you through practical matters.

Keeping in with FreshBooks simple interface, the pop-ups are great: the language is plain and you’ll be using the program like a pro within a few hours. Xero is a bit more roundabout, but does a great job as well.

The biggest difference between the two is Xero’s lack of tooltips, which can be rather annoying at times. Icon-based navigation is a great thing, but many users do prefer the option of hovering over one to figure out what a pictogram can mean. FreshBooks has several great features in this regard and gets high marks for their trouble.

Customer service

Both companies offer wonderful customer support, so if you ever do get into a bind the cavalry can come riding in. Traditionalists will most likely prefer FreshBooks’ system, where you simply call in and a friendly rep will guide you through the steps to solve your issue.

Xero works a little differently than the competition: you email them the problem and they get back to you electronically or, if the problem is particularly bad, will call you. The initiative lies with them, but a quick look around reveals mostly positive reviews.

On the whole, we’re inclined toward FreshBooks as the winner when it comes to user-friendliness; Xero has a lot going for it, but it’s interface could use a bit more attention for it to become a winner.

Advanced functions

When talking about more than just the basics, Xero is the winner despite handling most of these through various third-party plug-ins. FreshBooks shares some of these, but Xero simply offers more.

There are varied ways in which online accounting programs can help you beside just keeping book and they may bear investigation if your business requires them. Inventory and client management are all things that are easily tied into accounting and will save you time and data entry.

Xero has a built-in inventory management system.

When it comes to advanced functions, Xero is the winner hands down. FreshBooks simply lacks the breadth of services needed to compete.

Conclusion

Simply declaring a winner is no easy task when comparing Xero to FreshBooks.

On the one hand, you have users that want a hassle-free, basic experience that lets them get on with what they actually want to do; these users should stick to FreshBooks.

If, however, you want even a little more than that, Xero is your go-to solution. Though it’s ease-of-use could use a little work, users will find a product that runs well, is very flexible and will allow you to easily expand the tasks you automate.

Of the two, Xero is our favorite, even if only by a nose-length.

Which is yours? Let us know in the comments below! Thank you for reading.

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