Coming from someone who's not a numbers person, anyone who does accounting is a brave and admirable soul, and I'm glad that there are excellent tools out there to make your job easier.

FreshBooks and Xero are two of those tools: they combine several solutions to organize and manage a company's financial assets. I created accounts with both platforms and spent a bunch of time testing all their features to better understand each one's strengths and weaknesses—and how they stack up. Read on for my breakdown of FreshBooks vs. Xero to discover which is the best fit for your business.

FreshBooks vs. Xero at a glance

FreshBooks and Xero are both powerful accounting tools that can help businesses keep their financial information and assets organized and accessible. But the two apps are geared toward different audiences, which explains their functional differences.

• FreshBooks is mostly built for freelancers and other self-employed people. It combines accounting and project management features, such as unlimited invoicing and time tracking, that would make a freelancer's job easier. 

• Xero, on the other hand, is accounting software through and through, and is built for more established businesses with large accounting teams and inventory to manage.

There's a reason FreshBooks made it on Zapier's list of the best self-employed accounting software, while Xero made it on the list of the best accounting software for bigger businesses.

FreshBooks is more intuitive, especially for freelancers

FreshBooks brings some serious pizzazz and excitement to accounting, while Xero takes a more polished, business-like approach. Let me break it down for you.

Ease of use

When it comes to usability and design, FreshBooks does something I thought impossible: it makes accounting feel fun. Not only was the setup process easy and straightforward, just asking for a few basic details about my company, but the interface and beginner prompts also felt approachable and simple.

It creates this feel through bright colors, creative design, a straightforward layout, clear navigation, fun fonts, and a super casual tone. I never thought I'd hear the phrase "invoicing like a boss," yet here we are.

Xero's interface feels a bit more clean-cut and professional, which is more what I'd expect from accounting software. No colorful scribbles or fun fonts—straight to business. While I did appreciate the dashboard's clear and customizable widget feature, the interface felt a bit intimidating initially. There weren't tips guiding me through the process of adding clients and invoices or creating reports.

That said, Xero makes up for its user-friendliness shortcomings through tutorial videos and a demo company feature. In FreshBooks, no data appears until you add it yourself. In Xero, you can view the platform as a demo company with pre-recorded data, which makes it far easier to see how the platform will look and operate when you input your own business's data.

One final thing that just gives FreshBooks the upper hand: I felt like there were too many ways to access the same feature on Xero. For example, I found three sections I could use to create an invoice: the Business dropdown on the top navigation bar, the plus icon on the same bar, or the Invoices owed to you widget. While some people  may appreciate the ability to access frequently used features in many ways, from where I sit, it makes the interface unnecessarily cluttered and complex.

Invoicing 

FreshBooks may not be as comprehensive an accounting platform as Xero, but it's hard to deny that its invoicing features are top-tier. Even with FreshBooks Lite, I was able to create and send unlimited customized invoices, whereas Xero restricted me to 20 per month.

Time tracking and client management

Apart from FreshBooks' user-friendliness for those who aren't accounting experts, it also appeals to freelancers through its time tracking and client management tools. All plans offer unlimited time tracking and allow you to bill clients for the time you track.

Mobile-friendliness 

Another area where FreshBooks shines is its mobile experience. Compared to Xero's app, it's more user-friendly and offers a wider selection of features, including entering bills, live time tracking, and billing clients for time worked. In short, it's a freelancer's best friend.

Xero's app includes the basics, like sending invoices and assigning expenses, but its capabilities are a bit limited. Plus, Xero doesn't seem to care to consolidate its mobile experience into one app—there are different Xero apps for managing expenses, projects, and more. In fact, when signing up for an account, I had to download an entirely separate app just for two-factor authentication—a very unpopular requirement made clear by the app's below-1.5 star rating.

Xero has more (and better) accounting features for established businesses

FreshBooks is best equipped to serve freelancers without much accounting experience. The larger your business is, the better equipped Xero becomes to meet your needs. Here's why.

Reports

When comparing the reports generated by FreshBooks vs. Xero, I found Xero's to consistently provide more detail and offer more flexibility with data presentation than FreshBooks'.

For example, Xero allows you to view accounting reports and specific budgets for any time period. You can even monitor your company's performance by customizing and measuring specific KPIs.

Due to its limited accounting features compared to Xero, FreshBooks doesn't offer as many report options, and within its reports, customization is pretty sparse.

Bank reconciliation

In addition to its more robust reports, Xero proves itself to be the better fit for established and growing organizations with its bank reconciliation feature. While FreshBooks requires you to upgrade to its Plus plan to access this feature, even the most basic Xero plan offers bank reconciliation, including its new AI-powered predictions feature.

Inventory management

When it comes to inventory management, Xero is also the name to beat for larger companies with lots of products and customers. FreshBooks offers some helpful (but basic) features, like automatically reducing your stock based on invoicing, but Xero goes a step further with advanced features, like identifying which of your items are the most profitable via comprehensive inventory reports.

FreshBooks' reports may be more aesthetically pleasing and easier to navigate, but Xero's include the level of detail needed to stay organized as your company grows.

Ultimately, Xero is an accounting powerhouse. With its most basic plan options, it comes equipped with bank reconciliation, unlimited user access (for entire accounting teams to access company financials), and comprehensive accounts payable management. These features are either not as robust with FreshBooks or are only accessible by upgrading to a more expensive plan. 

FreshBooks vs. Xero: Which should you choose?

Xero is an accounting powerhouse that can handle anything from freelancers to big-shot enterprises. With features like invoicing, payroll, and inventory management, it's got all the bells and whistles. Meanwhile, FreshBooks is perfect for freelancers and small businesses that want simplicity without sacrificing functionality. It excels at invoicing, expense tracking, and time management.

So basically, if you need a robust suite that can do it all, go for Xero. But if you want something straightforward and user-friendly that gets the job done without fuss, FreshBooks is your go-to. At the end of the day, weigh your needs and your budget, and if all else fails, flip a coin.

FreshBooks vs. Xero FAQ

Still haven't made up your mind? Let me shed some light on the most FA'd of all Qs.

Is FreshBooks more expensive than QuickBooks?

Short answer: no. FreshBooks is generally less expensive than QuickBooks. FreshBooks' pricing begins at a more affordable $17 per month, whereas QuickBooks starts at $30 per month. And if you want all those fancy advanced features, QuickBooks can skyrocket to a whopping $200 per month. Meanwhile, FreshBooks' top tier is a reasonable $55 monthly.  

Do I need a bookkeeper if I use Xero? 

Xero does make accounting a breeze, but whether or not you can risk business without a bookkeeper depends on a few factors: the size and complexity of your business, your own accounting skills, and how much time you have to spare for bookkeeping tasks.

If you're running a small business with simple finances, you might be able to handle it all on your own with Xero. But if you have intricate transactions or can't tell a balance sheet from a grocery list, it's probably time to call in the bookkeeping cavalry. 

Automate FreshBooks and Xero

Whether you opt for Xero or FreshBooks, both seamlessly sync with Zapier, allowing you to set up automations and ditch the tedious bookkeeping. Dive into these ready-to-use workflows and give your business the boost it deserves.

Related reading:

• Save time and reduce errors with accounting automation

• 5 simple ways to automate bookkeeping

• The best self-employed accounting software

• The best invoicing software

• The best accounting software for small businesses

This article was originally published in October 2022. The most recent update was in October 2023 with contributions from Allisa Boulette.