The core difference
Xero was built in New Zealand in 2006 and designed from the start for small businesses with accountants and bookkeepers involved. The multi-user model reflects that history. You can add your CPA, your bookkeeper, and your operations manager to a single Xero account without paying per seat. That is not a minor detail. Most competitors charge $10-15 per additional user per month. For a 4-person team that needs accounting access, that adds up to $120-180/year in savings on Xero alone.
FreshBooks was built in 2003 for freelancers who were tired of sending invoices as Word documents. The invoicing experience shows it. Clients get a clean payment portal. Time tracking feeds directly into invoices. Project profitability is visible without exporting anything. For a one or two-person service business, FreshBooks is probably faster to learn and easier to use every day.
The catch: FreshBooks charges $11/month per additional user. For a 3-person team that all needs accounting access, Xero becomes cheaper than FreshBooks Plus within the first month. The math only works in FreshBooks' favor if you are truly a solo operator or have very few active clients.
"Xero wins on multi-user access and bank reconciliation. FreshBooks wins on invoicing UX and time tracking. Which matters more to you tells you which to pick."
Quick comparison: Xero vs FreshBooks
| Feature | Xero | FreshBooks |
|---|---|---|
| Starting price | $15/month (Starter -- limited invoices) | $19/month (Lite -- 5 active clients) |
| Usable entry plan | Standard at $42/month (unlimited) | Plus at $33/month (50 clients) |
| Users included | Unlimited on all plans | 1 user -- additional users $11/month each |
| Free trial | 30 days | 30 days |
| Time tracking | Available via integrations | Native -- built into invoicing |
| Client portal | Basic | Strong -- clean client-facing experience |
| Inventory tracking | Yes -- on Standard and Premium | No |
| Multi-currency | Premium plan only ($54/month) | Plus and above |
| Payroll | Add-on (varies by country) | Via Gusto integration |
| Best for | Small businesses with teams and complex books | Freelancers and service businesses billing by hour |
Pricing: what you actually pay
Xero's Starter plan at $15/month sounds cheap until you hit the limits: 20 invoices and 5 bills per month. That is fine for a very early-stage business. It is not enough for anyone doing real volume. Most businesses land on Standard at $42/month, which removes those caps and includes bank reconciliation, expense claims, and unlimited contacts.
Premium at $54/month adds multi-currency support and payroll for 1 employee. Worth it if you bill international clients or have your first hire.
User cost reality check: A 4-person team on Xero Standard pays $42/month flat. The same 4-person team on FreshBooks Plus pays $33 + $33 (3 extra users) = $66/month. At 4 users, Xero is already cheaper despite the higher base price. Confirm current pricing at xero.com and freshbooks.com.
FreshBooks pricing is client-count based, not user-count based. Lite at $19/month caps you at 5 active clients. Plus at $33/month handles up to 50. Premium at $60/month is unlimited. If you are a freelancer with 3 ongoing clients, Lite is sufficient. If you run a small agency with 20+ clients, Premium is where you end up, and adding team members starts adding up fast.
Xero deep dive
Xero's bank reconciliation is the feature most accountants mention first. It pulls in bank transactions automatically, matches them against invoices and bills, and flags anything that does not reconcile cleanly. For businesses with moderate transaction volume, this saves hours per month. FreshBooks has bank reconciliation too, but it is a secondary feature rather than the core of the product.
The 1,000+ integrations are real and mostly useful. Xero connects to payroll tools, inventory systems, e-commerce platforms, and time-tracking apps. The connectors tend to be better maintained than what you find in newer tools, because Xero has been around long enough that developers have had time to build them properly.
Xero's reporting is more complete than FreshBooks at comparable price points. Profit and loss, balance sheet, aged receivables, budget variance -- the standard financial reports are all there and exportable. For businesses that hand clean financials to an accountant at tax time, Xero's structure matches what accountants expect to receive.
- The Starter plan's invoice and bill limits are a real constraint. Most businesses need Standard.
- The UI has improved but still has a learning curve for non-accountants. FreshBooks is easier on day one.
- Time tracking is not native. You need an integration (Harvest, TSheets) if hourly billing is central to your work.
- Payroll is an add-on rather than built-in on most plans.
FreshBooks deep dive
FreshBooks' invoicing is the fastest in the category for service businesses. You can create, customize, and send an invoice in under two minutes. Clients get a clean payment page where they can pay by credit card or ACH without logging in anywhere. Automatic payment reminders go out before and after the due date. Late fees apply automatically if you configure them. The client-facing experience looks professional without requiring a designer.
The time tracking inside FreshBooks works well. You can track time by project, client, or task, then pull those hours into an invoice with one click. The math is automatic. For anyone billing 15-20 hours per week across multiple clients, this alone justifies the subscription.
Project profitability reporting is native. You can see whether a client is profitable after accounting for hours spent, not just what you invoiced. That kind of visibility requires manual spreadsheet work in most other tools.
- The per-user pricing is the biggest limitation. It makes FreshBooks more expensive than Xero as soon as you add a second or third person.
- No native inventory tracking. FreshBooks is not a fit for product-based businesses with real inventory needs.
- Bank reconciliation exists but is less complete than Xero's. Accountants working in FreshBooks note it requires more manual review.
- The client cap on lower plans catches growing agencies off guard. You will hit the Lite limit of 5 active clients faster than you expect.
"FreshBooks makes invoicing fast enough that it actually changes your relationship with billing. Xero makes multi-user accounting affordable enough that it changes who can be in your books."
Who each platform is for
Choose Xero when you have a bookkeeper or accountant who needs regular access, or when multiple team members need to be in the system. It also makes sense if you sell physical products and need inventory tracking, or work with international clients and need multi-currency support.
Choose FreshBooks when invoicing and time tracking are your primary accounting activities -- freelancers, consultants, and small agencies fit this profile well. If you have one or two people in the books and want a client portal that looks professional without any setup, FreshBooks is the faster path.
The hard case is a small agency of 3-5 people doing hourly billing. FreshBooks is better for the billing workflow, but Xero is cheaper once you factor in multiple users. If your bookkeeper handles payroll and reconciliation separately, Xero wins on economics. If your team tracks time daily, FreshBooks may be worth the extra cost.
The automation gap neither platform closes
Both Xero and FreshBooks handle accounting inside their own walls well enough. Neither one automatically connects to the rest of your business stack.
A client signs a contract in your CRM -- that should create a FreshBooks project and send a deposit invoice automatically. It does not. A job gets marked complete in your field service software -- that should trigger a Xero invoice to go out immediately. Also does not happen on its own. A payment clears in Stripe -- that should reconcile against the open invoice in Xero without manual import. Closer, but still requires setup that neither platform does for you.
These handoffs happen dozens of times a month in any active service business. Each one is a few minutes of manual work. Across a month, it is hours. Building the integrations that connect CRM events, job completions, and payment confirmations to your accounting software is exactly what Aplos AI does, on top of whichever platform you already use.
Still manually creating invoices after every completed job or signed contract? We build the automations that connect your workflow tools to your accounting software so invoices go out without anyone touching them.
Get a Free Automation Audit →The verdict
If you are a solo freelancer or one-person consulting shop, FreshBooks is the better fit. The invoicing is faster, the time tracking is built in, and the user-count pricing issue never comes up.
If you have a team, Xero wins. Unlimited users on every plan, stronger bank reconciliation, and deeper integrations with the tools your CPA probably already uses. The math tips in Xero's favor the moment you add a second person who needs accounting access.
Neither platform connects your accounting to the rest of your business on its own. Invoices still need someone to trigger them. Reconciliation still needs someone to review it. The businesses that stop losing time to those steps are the ones that have built the connections between external events and accounting actions.