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Battle of the Best: FreshBooks vs. Xero vs. Sage Accounting Software

Michael Pignatelli
Last Updated on September 28, 2023

Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

There are several accounting software options for every business size nowadays. Among the software solutions, three names always stand out—FreshBooks, Xero, and Sage Accounting. But which one should you invest in? Which comes out on top of the FreshBooks vs. Xero vs. Sage Accounting software battle? 

Let’s look at the different features of each accounting software program and find out which is the best small business accounting software. 

I. Features of FreshBooks Software 

FreshBooks accounting software was initially recommended for freelancers and independent contractors who wanted to track their incomes and expenses. Over time, the software has launched different versions with additional features that can cater to small businesses.

Below is a table outlining the accounting features of FreshBooks.

Lite$17/month or $204 annually
  • Covers up to five clients
  • Unlimited and customized invoices
  • Tax reports and sales tax tracking
  • Mobile mileage tracking
  • Plus$30 per month or $360 annually
  • Covers 50 billable clients
  • Recurring billing
  • Bank reconciliation tools
  • Automatic receipt scanning on mobile app
  • Premium$55 per month or $660 annually
  • Covers unlimited billable clients
  • Track project profitability
  • Track accounts payable
  • Invoicing

    FreshBooks’ invoicing feature is one of its strongest suits. All of its plans offer unlimited invoices perfect for your bookkeeping needs. You can choose from customizable designs, set up recurring digital invoices, and receive real-time notifications when invoices are viewed or paid online. FreshBooks’ invoicing features are also accessible on its mobile app.

    Time Tracking 

    Every worker expects to get paid for the time they invest in their job. But how frequently do workers neglect to record their time in and time out? This is a common problem with manual recording. Fortunately, FreshBooks exists. The software has a time tracking feature that can help you log in and out easily and record time automatically. 

    FreshBooks offers unlimited time tracking even on its lowest-tiered plan. You can also categorize the time you spent on each project if you’re working on several projects for a client.

    Project Management

    Certain projects involve different people. FreshBooks accommodates this through multi-user access. This feature lets everyone involved share and access essential documents needed in the project, such as:

    • Deposits into your business’s bank accounts
    • Checks
    • Payments made

    With the project management feature, you can easily store and access all the files and documents in a single location. Freshbooks also helps businesses track and interpret a project’s profitability through the following:

  • Profitability Widget: A glimpse into the breakdown of costs, incomes, unbilled hours, and project profitability.

  • Profitability Summary: A quick rundown of overall profitability across clients and projects.

  • Project Profitability Details: A comprehensive report on each project’s profitability.
  • Accounting Reports

    One reason business owners get accounting software is expense management. Reports, however, are the most effective approach to seeing insights. FreshBooks can generate accounting reports from the transactions that happen in your business. 

    The accounting software can generate reports such as:

    • Expense Reports
    • Profit and Loss Reports
    • Sales Tax Summary Reports
    • General Ledger
    • Trial Balance
    • Chart of Accounts

    You can customize these reports by exporting them to an Excel sheet or download them as PDF files.

    II. Features of Xero Software 

    Xero is the ideal cloud-based accounting software for small and expanding businesses. Its features include managing invoices, inventory, bank reconciliation, and many more. 

    Xero has different plans for different needs. The most basic plan only costs $13 and is limited to 20 monthly invoices, perfect for micro businesses. Other plans will give unlimited use of advanced features, better for medium to large companies.

    Let’s delve into more of its top attributes.

    Early$13 per month
  • Send up to 20 invoices
  • Automated bill and receipt capture
  • Reconcile bank transactions
  • Basic inventory management
  • Growing$37 per monthAll features in the Early plan plus:
  • Unlimited invoices
  • Bulk reconcile transactions
  • Established$70 per monthAll features in the Growing plan plus:
  • Multiple currencies
  • Project tracking tools
  • Advanced analytic tools
  • Invoicing Features 

    The traditional invoices are created through Excel sheets and manual data input. This can be a hassle when you have many clients and little time to create invoices. For small business owners, Xero accounting makes invoicing simpler

  • FreshBooks and Xero are almost similar. You can set up recurring invoices, so you don’t have to create a new invoice each time you need one.

  • You can send bulk invoices simultaneously.

  • You can send invoices through the mobile app.

  • Xero allows third-party apps payment channel integrations and multi-currency invoices.
  • Billing Features 

    Businesses have dues to pay their suppliers, especially for shipping and inventory. Xero helps you stay on top of dues and manage them. 

    Here are other amazing features of Xero’s billing for business. 

  • Bills paid through Xero are automatically turned into paperless records, uploaded to the cloud, and sent to your email. 

  • You can monitor your bills and send alerts when a payment is due soon.
  • You can schedule simultaneous payments ahead, so you are never late with your obligations.

    Customizable Reports and Dashboards

    Xero transforms the financial data you enter into actionable information. The reports made from accounting data can be customized. You can adjust formatting and add your formulas and groupings.

    Unsatisfied with the appearance of your dashboard? With Xero, you can simply rearrange panels and hide irrelevant sections.

    III. Features of Sage Accounting Software 

    Sage 50 is the leading accounting tool for businesses, and it’s also most popular for professional accounts because it can handle accounting tasks for small to big businesses. 

    Aside from being one of the best cloud-based accounting software in the market, here are some of the impressive features of Sage 50.

    Sage Accounting Start$10 per month
  • Send and create invoices
  • Automatic bank reconciliation
  • Generate and export financial report
  • Free Sage mobile app40+ app integrations
  • Sage Accounting$25 per monthAll features of the Sage Accounting Start plan plus: 
  • Unlimited users
  • Inventory tracking and management
  • Cashflow forecast
  • Foreign currency invoicing
  • Cash Flow Management 

    Understanding how much money is coming into and going out of your company is critical. Tracking your sales and expenses will let you know if you are generating profits or losing money. 

    Sage 50 can instantly automate reports. You can sort them from monthly, quarterly, and yearly reports to assess your financial performance. The software also has solid reporting features like Xero. It even goes beyond the basic financial statements such as profit and loss statements, general ledger, and more.

    On a budget? Don’t worry! With its lowest-tiered plan, you can create a chart of accounts, sales tax reports, and accounts receivable aging reports.

    Payroll Features 

    Accounting software with a payroll service benefits businesses with a large workforce. However, preparing your employee’s payroll is time-consuming. Accounting mistakes can also be costly. 

    Not all accounting software has built-in payroll features. Or even if they have, it’s only possible through integrated applications, which typically require an additional subscription fee.

    Sage 50 stands out in this area. It can report taxes, create pay slips, and send payments through the application. All payroll details are also uploaded to the cloud, where you can store and access them anytime. 

    Inventory Tracking

    Inventory management is one way to track sales for businesses that sell products. Stock shortage may give your competitor an edge while overstocking may severely affect your budget.

    The inventory management feature of Sage 50 has real-time stock data, helping you identify underperforming products that may need to be discontinued and profitable items that should be restocked. You can use this information to guide your decisions regarding the products to invest in.

    The Verdict on FreshBooks vs. Xero vs. Sage Accounting

    Now that we’ve seen the best features of each accounting software, which of these applications is best suited for your business? Here’s what we think:

    Accounting SoftwareSuitable For
    FreshBooksSmall businesses
    XeroFreelancers and independent contractors
    Sage 50Medium to large businesses

    Xero is the best choice for small businesses that are first-timers to accounting software. Among the three cloud based accounting solutions, it is the most budget-friendly. It has an intuitive user interface, so even beginners won’t struggle with navigation. You can upgrade your subscription when your company expands and requires more sophisticated accounting tools.

    FreshBooks is best for self-employed individuals that cater to multiple clients. Time tracking is its greatest feature, and it is especially useful when you need to be paid by the hour. It also helps you organize your projects because you can create different profiles for the projects you are working on. 

    Lastly, we recommend Sage 50 for medium to large businesses. This accounting software has more advanced features like inventory management and foreign currency invoicing. However, it can be overwhelming, so using it with the help of a qualified accountant is preferable. It also offers payroll services, so it’s perfect for businesses with many employees.

    Get Expert Help in Using Xero at Unloop!

    Accounting software solutions certainly take off the tedious workload of managing your finances. You won’t be bogged down with manual calculations, data entry, and bookkeeping anymore. 

    If you want this long-lasting impact on your business operations, choosing the right accounting tool is crucial. Lucky for you, many platforms now offer free trials. You can test each of them to determine what works best for you.

    But as we mentioned above, Xero is the best choice if you’re a small business with no experience in accounting software. By choosing Xero, you’re opting for a cloud-based accounting solution that can ease your financial processes.

    If you need help setting up or navigating this accounting software, Unloop can help you. We are adept at using Xero and can help small business owners like you.
    Book a call to learn more about what we can do for your business!

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    About unloop

    Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.