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Which Cloud Accounting Software is Better – Xero or FreshBooks?


For any company, bookkeeping is very important even if it is headache-inducing and very stressful. Small businesses don’t often have the luxury to hire an expert to handle their finances because of budget constraints. So what can they do?

Fortunately, there are already several cloud-based accounting software options available to help simplify accounting duties. Two of these options popular with small business owners are Xero and FreshBooks. They both have similar features which begs the question: what is the better cloud-based accounting software for a small business entrepreneur?


What is a cloud-based accounting software?

Before delving into the comparison, let us define what cloud-based accounting software is. With it, any entrepreneur can access their financial files and records anytime and anywhere with a device that is connected to the Internet. Before the invention of this software, financial records could only be accessed via a desktop computer at the business’s location which was a waste of time and effort. But because of this new technology, everything can now be accessed just by using a smartphone. 

Cloud-based accounting software lessens the burden of accounting for a business owner. It simplifies the filing system of spreadsheets and organizes invoices, expenses, and bills. For anyone starting a business, this will definitely be helpful for them.


Xero or FreshBooks?

Now that you have an idea of what cloud-based accounting software is, it is time to determine the better option for your small business. 

Xero is a full accounting software package which primarily serves industries such as retail, e-commerce, and marketing industries. Xero has all the major accounting features and options needed such as inventory management tools and purchase ordering. It has three pricing plans based on the number of employees in payroll: Starter for $9/month, Standard for $30/month, and Premium $10

On the other hand, FreshBooks is more apt for small, start-up Internet-based businesses like independent contractors and creative agencies. It is very user-friendly due to its simple interface and straightforward walkthroughs. New users can easily understand how it works and the software even offers tips to make it easier. FreshBooks has three pricing plans based on the number of clients: Lite for $15, Plus for $25, and Premium for $50.

Between the two, FreshBooks has higher ratings mainly because of its easy-to-understand workflow and time-tracking features that allow professionals to bill clients for their time and expertise. It is also designed for small businesses that are only just starting to operate with its basic financial reporting and easy expense tracking features. 


The Verdict

If you are a small business owner who doesn’t want to have to deal with the burdens of accounting, use FreshBooks. It is easy to use with its friendly walkthroughs, simple invoicing system, and expense tracking. Compared with Xero, which can be complicated to use, FreshBooks is more hassle-free and supports small business and freelancers better.