Xero vs Freshbooks Which Cloud Accounting Solution is Better?

Paying the bills that keep your business running is as important as bringing in revenue. If you don’t pay your electric fees, vendors, supplies or rent, your business will shut down. That said, bills aren’t a profit center, so you don’t want to waste a lot of time on them. You have to upload a template to customize an invoice in Xero, but the fields on it must correspond to the service’s standard invoice fields.

That said, Xero makes up for its user-friendliness shortcomings through tutorial videos and a demo company feature. 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. You can import expenses from our expense tracker by uploading a CSV file as well as having FreshBooks automatically track them by connecting your bank accounts or credit cards. ET from Monday to Friday; offers email support, but not live chat support with a human. FreshBooks doesn’t let you import a schedule of fixed assets, nor does it include a fixed assets module. You can sign up and pay for a separate app, but you can’t book a journal entry like you can with QuickBooks Online because FreshBooks isn’t a double-entry accounting system.

Expenses

They can also schedule payments and view bills that are in draft, waiting for approval or ready to be paid. Due to its limited accounting features when compared to Xero, FreshBooks doesn’t offer as many report options, and within its reports, customization is pretty sparse. It’s expected that accountants have recommendations when choosing your cloud accounting tool. Accountants feel comfortable with Xero because it’s built for them. Business owners, on the other hand, might not have the in-depth accounting knowledge needed to make Xero work for them. When choosing software vendors you need to prioritize the one that fits your business needs.

Neither blows us away, though, so we recommend that you check out our Sage Business Accounting review if expensing is a priority. To get the same feature in Xero, you’ll need a third-party app. If you need to collect a deposit before work begins, you can request a percentage or flat deposit amount. Project-based businesses will find that to be an invaluable feature. You receive an overview of the financial information and options for navigating your account. However, Xero does not support a straightforward guide or tips to explain various processes vividly.

Wave

With Xero, all plans include a bank reconciliation tool that suggests transaction matches for you, making it easy to reconcile bank accounts. If a bank statement line meets the set of criteria you specified, Xero will suggest creating a matching transaction for you. Additionally, Xero’s customizable dashboard and global search function make the software easy to navigate. Xero’s accounting software syncs with more third-party apps than any other accounting provider, including long-time industry giant QuickBooks Online. With more than 1,000 integrations, Xero all but ensures users can pair their accounting software with any of their preferred business apps.

The software can usually be accessed online with any device that has internet connection. The complexity of the accounting software, and what it is used for, will greatly affect the overall cost. The advantage of accounting software is not just that it saves time, but it also helps avoid human error that can be extremely costly to an organization. These processes are crucial to an organization, so finding good accounting software can make all the difference to a company’s success.

Pricing Model

It limits you to sending five invoices and quotes, entering five bills and reconciling 20 bank transactions. It’s hard to imagine that a business could continue at this level for long. In contrast, FreshBooks appears to have put little time or effort into its reports. There are only nine standard reports, and the sole financial statement it presents is the profit and loss. While you do get two of the most important reports for keeping a small business afloat, accounts aging and expense reports, they can’t be customized. It’s easier to setup time-saving functions, late payment reminders are individualized and it includes hourly billing.

• Xero isn’t simply more affordable than either FreshBooks or QuickBooks Online.
• As a company, FreshBooks is a little older — founded in 2003 — but doesn’t necessarily own a bigger share of the market.
• Accountants feel comfortable with Xero because it’s built for them.
• Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you.

Number of users aside, Xero is a better fit for small businesses with multiple employees, whereas FreshBooks is more ideal for freelancers and independent contractors. Integrates with more than 100 third-party apps; limited choices for direct payroll and point-of-sale integrations. Additionally, Xero also has an online knowledge base full of videos, webinars, and self-paced e-learning courses that help accountants succeed on the job and earn qualified CPE hours.

Xero vs FreshBooks pricing

Wave Accounting and Xero both offer cloud-based accounting services like bank reconciliation, income tracking, invoicing and more. However, they differ in terms of features, plans and integrations. FreshBooks features options for time and expense tracking, online payments, a variety of accounting reports, taxes, and automatic updates. Meanwhile, users who left Xero reviews said that the software is easy to set up and use, adding that it has a simple and clean user interface along with intuitive features. Some also praised its fixed assets manager and project accounting capabilities. However, its inability to reconcile transactions without bank feeds and its lack of live phone and chat support are its biggest drawbacks.

Xero has the majority of general accounting features we’d like to see, and this includes the features we’ve mentioned above that are missing on FreshBooks. However, there are minor features we didn’t see on Xero, and these missing features pertain to note payable amortization. Although it won’t affect the overall user experience, it would be helpful if Xero could generate an amortization schedule for long-term notes automatically. Find out how two of the top accounting software options, FreshBooks and Xero, compare in features, pricing and ease-of-use. We’ll break down the details to help you decide which is the best fit for you.

You get a centralized place for your files and you’ll be able to control team member access. Projects can be broken down in detail, with assigned deliverables and due dates. If there are financial reports and ratios for profitable landscaping companies a lot of fixed assets on your balance sheet, you might want to look closer at Xero. Its built-in fixed assets module calculates depreciation and books the journal entries for disposals.

Bills

When setting up a FreshBooks account, you can start fresh, or transfer over existing data from any previous accounting software solutions like Xero, QuickBooks Online, Zoho Books, or Invoice2Go. If you’re not a fan of manual entry, Clients, Expenses, and Items can be imported by you with the steps below. For Taxes, you can email our excellent customer support the details below and we’ll take care of it for you. Project tracking tools in higher-tier plans; lacks industry-specific reports and transaction tracking tags; users with multiple businesses must pay for separate subscriptions. FreshBooks’ add-on marketplace doesn’t disappoint, even if it’s less expansive. They offer a few options for marketing (HubSpot, ActiveCampaign, MailChimp, Wufoo) and project management (Basecamp, Citrix Podio, Proposify) that you won’t find with Xero.

For instance, Gusto offers optional international contractor payments, and both Deel and Oyster offer international payroll. Xero’s integrations make it possible for international business owners to track payments without re-entering financial data every time they run payroll. So, the next best option is to have that kind of luxury at my fingertips using full-service accounting software. In this article, I’ll compare Xero and FreshBooks, two of the most popular entry-level accounting software platforms for digital businesses today. My review is based on the experience of actual users, industry experts, and my experience with one of their major competitors.

The offers that appear on the website are from software companies from which CRM.org receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all software companies or all available software companies offers.

• Nothing has an odd or confusing name and the menu options are clearly labeled and intuitive.
• While both products can get the job done, each has its own technology concept, strengths and weaknesses.
• I started The Digital Merchant to test the tools, services, and products I use in my digital business.
• Both cloud accounting applications aim to facilitate you in their unique ways.

Users can sync their favorite small-business payroll software with Wave via Zapier, but doing so isn’t as simple or streamlined as relying on a built-in integration pathway. Skip to the end of our review for an at-a-glance summary of which product is right for which businesses. Xero has a help section, and step-by-step instructions with videos and tutorials, but there isn’t much help in the software, forcing you to exit and go to a different screen for help. FreshBooks integrates its payment processing, but you’ll have to pay transaction fees of 2.9 percent of the total amount plus 30 cents per transaction. Accepting payments online typically speeds up the collections process and cuts down on past due receivables. Growing, Xero’s mid-tier plan, removes restrictions on the number of transactions you can process, but doesn’t add new features.