FreshBooks suits freelancers and service businesses that live in invoices, proposals and time tracking, and its plans are limited by how many clients you invoice. Xero suits small businesses that want full accounting with bank reconciliation, bills and cash flow forecasts, and it doesn't count users. Neither has a free plan, so the trial is where you'll decide.
FreshBooks and Xero both send invoices and keep your books tidy, but they're built to solve different problems. FreshBooks is built around invoicing for people who sell their time. Xero is built as cloud accounting for small businesses and their accountants. I read both companies' plan pages, including Xero's US and UK versions, so the limits below come straight from them.
How FreshBooks and Xero plans are limited
| FreshBooks | Xero | |
|---|---|---|
| Free plan | Not listed; a 30-day free trial | Not listed; one month free to try |
| What the entry plan limits | Clients you can invoice: 5 on Lite | Invoices and bills: 20 invoices and 5 bills on Early (US) |
| Room to grow | 50 clients on Plus, unlimited on Premium and Select | Unlimited invoices from Growing (US) |
| Users | Team members added as an extra; Select includes 2 | No per-user licences, per Xero |
| Proposals and retainers | Proposals and client retainers from Plus | Quotes on every plan |
| Time tracking | Unlimited time tracking | Project time tracking on Established (US) |
| Getting set up | Easy Switch data import on Select | Free expert setup help |
| Accountant access | From Plus | Not listed on the plans pages |
| Cash flow forecast | Not listed | 30, 60 or 180 days depending on plan (US) |
| Payroll | FreshBooks Payroll as an add-on | Xero Payroll powered by Gusto in the US; built into Grow and up in the UK |
| Apps | Mobile mileage tracking; receipt scanning from Plus | 1,000+ connected apps |
FreshBooks: invoicing first
Everything in FreshBooks is built around the client. Every plan sends invoices and estimates, tracks expenses in real time and lets clients settle by card, bank transfer or digital wallet. Recurring invoices and automatic late reminders take the chasing off your plate.
- Lite covers 5 clients, with estimates and tax-time reports.
- Plus covers 50 clients and adds proposals, retainers, accounting reports, receipt scanning and accountant access.
- Premium removes the client limit and adds project profitability and custom email templates.
- Select removes FreshBooks branding, includes 2 team member accounts and adds dedicated phone support.
Xero: accounting first
Xero's plans read like an accountant's checklist: reconcile bank transactions, capture documents, track bills, see real-time reports and forecast cash flow. In the US, Early sends quotes and 20 invoices and enters 5 bills, Growing lifts the invoice limit and automates bill entry, and Established adds multiple currencies, project tracking and expense claims.
In the UK, Xero's plans are Ignite, Grow, Comprehensive and Ultimate. Every UK plan is MTD for Income Tax ready and submits VAT returns to HMRC, and payroll is included for 1 person on Grow, 5 on Comprehensive and 10 on Ultimate.
The limit that changes the answer
The two companies cap their entry plans in different ways, and it changes who each suits. FreshBooks limits the number of clients you can invoice, so a freelancer with a handful of regular clients can send them as many invoices as they like on Lite. Xero's US Early plan limits the number of invoices, 20, regardless of how many clients you have. A business with lots of small one-off customers will feel Xero's cap first; a consultant with a few big clients will feel FreshBooks' cap last.
Users run the other way. Xero states there are no per-user licences, so the whole team can log in. FreshBooks adds team members as an extra on most plans.
Which business suits which
FreshBooks suits freelancers, consultants, agencies and trades who bill for time and projects and want proposals, retainers and reminders in one place. If invoicing is the main job, my comparison of invoicing software for freelancers and small businesses is worth a look too.
Xero suits product businesses, growing teams and anyone working closely with an accountant who wants full bank reconciliation, bills and forecasts, and in the UK, VAT and payroll on the same system. For the bookkeeping side, see my guide to bookkeeping software for small businesses.
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My advice: count clients and invoices
Pull up your most recent month and count two numbers: how many clients you invoiced and how many invoices you sent. Few clients and lots of time-based work points to FreshBooks. Lots of invoices, bills and bank transactions to reconcile points to Xero. If you're in the UK and need VAT returns and payroll, Xero's UK plans cover that on one login, so start your trial there.
Do you make accounting or invoicing software? Tool makers can ask to be considered for a featured place in comparisons like this one.
Frequently asked questions
Does FreshBooks have a free plan?
FreshBooks doesn't list a free plan. It offers a 30-day free trial on its Lite, Plus and Premium plans.
Does Xero have a free plan?
Xero doesn't list a free plan. Its plans pages offer one month free to try.
Does Xero limit users?
Xero's plans pages say there are no per-user licences, so you can add your team and your accountant.
How many clients can I invoice on FreshBooks?
Lite covers 5 clients, Plus covers 50, and Premium and Select cover unlimited clients.
