The information in this article is based on our research, interviews with customers, professional bookkeepers, and certified public accountants, as well as dozens of hours hand-testing each platform. The details of our review process can be found in this description of our research methodology.
With 2 million customers, Xero is undoubtedly one of the top accounting software options for small businesses. However, it’s not quite as powerful as QuickBooks Online or Zoho Books. If you don’t need one of these top-tier accounting solutions, we do recommend Xero over popular alternatives like FreshBooks and Sage Business Cloud.
Xero is one of the best accounting software solutions for small businesses. You’ll be able to issue invoices, track expenses, capture images of receipts, and make use of more than 50 reports.
There are five accounting tools we believe are worth consideration before you purchase Xero. They differentiate based on the intended customer segment, and it’s important to understand who each solution was built for as that will dictate how well they’ll mesh with your business. For example, QuickBooks Online is expensive and unwieldy, so freelancers and small service-based businesses would do better with FreshBooks or Wave.
Here’s a breakdown of our review criteria. We rate each software tool based on their features, usability, pricing, and customer support availability. Here’s how Xero’s competitors rank in each category.
|Software Company||Analyst Rating||Features||Usability||Pricing||Customer Support|
|Sage Business Cloud||83||7.5||9||9||8.5|
In this article, we’ll describe Xero by giving an overview of the platform. After that, we’ll list Xero’s top competitors and compare and contrast each alternative. If you’d like a full description of Xero, you can read our in-depth Xero review.
Table of Contents
- Xero’s Top Features
- Xero Competitor Overview: Features
- Xero Competitor Overview: Pricing
- Top Xero Competitors
- Bottom Line
Xero’s Top Features
Xero offers all the standard accounting features except for bookkeeping services and in-house payroll. Otherwise, Xero has advanced reporting capabilities, a reliable expense tracker, and relatively advanced inventory management.
|Invoicing||Invoicing with Xero is quick and easy. A unique detail with Xero’s invoicing section is that you can see when your customers have viewed your invoices. This lets you know when you should follow up on payment.|
|Dashboard||The customizable dashboard shows your cash flow visibility, invoices owed, and an account “watchlist” that gives a quick overview of your standing accounts.|
|Receipt Capture||Xero integrates directly with Hubdoc, which will not just take an image of your business receipts, but pull information from the receipts and store them in the software. This is a more advanced receipt capture feature than most alternatives have.|
|Accounting Reports||With more than 50 reports, Xero offers the second-most accounting and financial reports of the software products we’ve reviewed. It’s much better than the reporting sections within Wave and FreshBooks, but not as advanced as QuickBooks Online.|
|Xero Marketplace||With more than 800 pre-built integrations, the Xero Marketplace is one of the best ways to ensure that your software tools will work together seamlessly.|
Xero Competitor Overview: Features
This chart shows you the main features found in accounting software, and breaks down which solution offers what. Pay close attention to whether or not you’ll need bookkeeping or accounting services, as most of the tools on this list don’t offer that.
Xero Competitor Overview: Pricing
For the functionality you get, Xero’s pricing is extremely competitive. While it’s not the cheapest tool on the market—Wave and FreshBooks are both slightly cheaper per month—it offers more features for just a bit more money. Xero’s pricing begins at $11 per month and the highest base price is $62 per month. Their most popular plan is the Growing Plan, which costs $32 each month.
|Sage Business Cloud|
Top Xero Competitors
Xero is most similar to QuickBooks Online and Zoho Books, which are both a bit more advanced than Xero. Xero is, however, a bit more advanced than FreshBooks and Sage Business Cloud, so it sits right in the middle of the pack. We’ve listed Xero’s top competitors and alternatives based on similarities in features, pricing, and usability.
The top Xero competitors are:
- QuickBooks Online
- Zoho Books
- Sage Business Cloud
1: QuickBooks Online
QuickBooks Online is the most advanced accounting system for small businesses. As you can see from the features chart, it offers a couple major features that Xero does not: payroll and bookkeeping services. However, Xero’s most expensive plan costs just $62 per month compared to QuickBooks Online’s $150 per month. Xero is more helpful for the average business owner, though, because it’s more user-friendly.
Read a direct comparison in our Xero vs. QuickBooks Online article.
- You’re looking to leverage your integrations with Xero’s Marketplace
- You’d like a more affordable software
- You want to capture bills and receipts with Hubdoc
- You want to add bookkeeping services to your software
- You’re interested in more than 70 built-in reports
- You’re not intimidated by a cumbersome tool
QuickBooks online is the most popular accounting tool for small businesses. It includes all features a small business needs to keep track of its financials, and most accountants are very familiar with using the tool. QuickBooks Online has over 70 financial reports, integrations with many third-party tools, and a powerful payroll add-on.
2: Zoho Books
Zoho Books received a slightly lower rating than Xero because, even though it’s got more features, it’s one of the least user-friendly software options. They’re very comparable in price, so cost should not factor into the decision. Zoho Books has an unparalleled ability to handle transactions in many different currencies and has built different versions for many different countries. Given these factors, Zoho Books is better for those outside of the United States and who conduct business with clients in different countries.
To read a full one-to-one comparison between the two, check out our Xero vs. Zoho Books article.
- You don’t need built-in payroll
- You want a tool that’s a bit easier to utilize
- You’d like a slightly more available customer service team
- You already use other Zoho software products
- You conduct business outside of the United States
- You need an advanced inventory management system
Zoho Books is an accounting software designed for small and medium businesses. Its standout features are its invoicing templates and vast number of financial reports. We recommend Zoho Books for those who need inventory management features.
Wave is a freemium software product that offers the best value on the market for freelancers and small, service-based businesses. Though it’s still best for smaller businesses, it’s scaled as the years have gone by and it could work for slightly more advanced businesses. However, if you have more nuanced needs or have to manage inventory, Xero is the better choice.
- Your business sells products or services, or both
- You want a more advanced reporting section
- You can pay a bit more each month for a software tool
- You want a flexible, freemium solution
- You only need basic reporting features
- You want to add some premium features onto a free option
Wave is an accounting tool for invoicing, expense tracking, and payroll functionality. Wave is the best freemium tool on the market, and we recommend it for those who want accounting features for free.
FreshBooks is a basic entry-level software application that should be used by freelancers or service-based organizations. While it’s certainly elementary, it’s the most user-friendly option on the market. Choose FreshBooks if you’re a freelancer. Otherwise, we recommend Xero because it’s much more advanced and powerful for a similar monthly price.
To read a full one-to-one comparison between Xero and FreshBooks, check out our Xero vs. FreshBooks article.
- You need to track and manage inventory
- You want 50 accounting reports as opposed to 20
- You have more advanced accounting and financial requirements
- You have a small, service-based company
- You’re not tech-savvy and need something basic
- You want to track time for your projects
FreshBooks is the most user-friendly accounting software for beginners and freelancers. With features like invoicing, receipt capture, and expense tracking, it's a great first accounting tool to use when you're starting your business.
5: Sage Business Cloud
Sage Business Cloud is considered an entry-level accounting software, with unlimited features for $25 per month. One of the best things about Sage Business Cloud is the cash flow forecast graph, a feature that provides a 30-day visibility into your expected cash balance. If you’d like more than basic functionality, Xero will be your better option.
- You’re looking for a moderately advanced software
- You want built-in receipt capture with Hubdoc
- You’re looking for more advanced inventory management
- You only need basic payment gateways like Stripe and PayPal
- You’re looking to pay $25 per month at most
- You’re okay with paying extra for a receipt capture feature
Sage Business Cloud is a mid-tier accounting software designed for small businesses. Its main features include invoicing, expense tracking, and accounting reports. Overall, Sage Business Cloud is a very user-friendly tool, but is not as nuanced or cost-effective as other accounting software products.
Xero is a mid-tier accounting software that provides one of the best values for the monthly price. It’s more user-friendly than its more advanced competitors, and more powerful than its cheaper alternatives. We recommend Xero for all small businesses that are looking to avoid the high price of QuickBooks Online, but are looking for a bit more than FreshBooks and Sage Business Cloud.
Here’s a quick recap of who we recommend each accounting software for:
- If you’re looking for the most advanced software solution, consider QuickBooks Online
- If you reside or conduct business outside of the United States, look into Zoho Books
- If you’re a freelancer or very small service-based business, consider Wave or FreshBooks
- If you’d like unlimited users for just $25 per month, look at Sage Business Cloud