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FreeAgent vs Xero

FreeAgent vs Xero: Comparison for Business Owners [2023]

Choosing the right accounting software for your small or medium-sized business can be a challenging task, but it's essential to find a solution that meets your needs and helps you manage your finances effectively.

Two popular options in the market are FreeAgent and Xero, both offering cloud-based solutions designed specifically for businesses like yours.

FreeAgent, acquired by NatWest Group in 2018, is an online accounting software created for small businesses and freelancers.

It provides an extensive range of features allowing you to manage invoices, expenses, taxes, and more, as well as offering tools for bookkeepers and accountants to oversee multiple clients. Xero, on the other hand, has also gained a strong reputation among SMEs for its comprehensive set of features, user-friendly interface, and integration possibilities.

In this article, we will compare FreeAgent and Xero to help you determine which software suits your business needs best.

We will consider factors such as ease of use, pricing, features, and customer support to provide you with a well-rounded understanding of both software offerings. So, let's dive in and explore the differences and similarities between these popular accounting platforms.

Understanding FreeAgent and Xero

Both FreeAgent and Xero are cloud-based accounting software solutions designed to meet the needs of small and medium-sized businesses. They offer a range of features and tools that make managing your finances easier and more efficient. In this section, we'll provide a concise overview of these two accounting software solutions, to help you develop a better understanding of what each platform has to offer.

FreeAgent is a powerful accounting software built for freelancers, contractors, and small businesses. Acquired by NatWest Group in 2018, it allows you to efficiently manage various financial tasks such as invoicing, expenses, taxes, and more. With FreeAgent, you can keep your finances organised, making it easier for you or your accountant to have an at-a-glance view of your financial situation. One of its strengths is its ease of use and user-friendly interface, which makes it an ideal choice for those new to accounting software.

Some key features of FreeAgent include:

  • Customisable invoicing
  • Automated expense tracking
  • Bank transaction import
  • Time tracking
  • Payroll integration
  • VAT and tax calculations

Xero, on the other hand, is a comprehensive accounting software solution designed for a wider range of small and medium-sized businesses. It offers a robust set of features that cater to the varied requirements of different industries. Xero's intuitive interface and extensive range of integrations make it highly adaptable to suit the unique needs of your business.

Some notable features of Xero include:

  • Invoicing and quoting
  • Expense management
  • Inventory management
  • Bank reconciliation
  • Payroll functionality
  • Reporting and analytics

Both FreeAgent and Xero aim to streamline the financial processes of your business, helping you save time and effort. While they have several similarities, each platform has its own unique selling points and strengths. When choosing between the two, it's essential to consider your specific business needs and the features you value most.

Key Features Comparison


Both Xero and FreeAgent offer powerful invoicing features tailored for small businesses and freelancers. You can easily create, customise, and send professional invoices to your clients. In Xero, you can enjoy features like automatic invoice reminders and the ability to apply discounts in line with your business needs. FreeAgent allows you to create recurring invoices and set up payment reminders, streamlining your invoicing process.

Expense Tracking

Effective expense tracking is crucial for managing your business's cash flow. Xero enables you to snap and store receipts, categorise expenses, and even set up rules for automatic categorisation. FreeAgent also offers a solid expense tracking system, allowing you to attach receipts to expenses and categorise them accordingly.

Bank Reconciliation

Bank reconciliation is a core feature of both Xero and FreeAgent. Connecting your bank account with the accounting software enables you to import transactions automatically and match them to the corresponding invoices and expenses. Xero offers an intuitive bank reconciliation process, supporting multiple bank accounts and currencies. FreeAgent also provides robust bank reconciliation capabilities, but its user interface might be less intuitive compared to Xero.

Time Tracking

Both Xero and FreeAgent have time tracking features, allowing you to efficiently manage your work hours. FreeAgent offers a built-in time tracking tool, which enables you to monitor the hours spent on different tasks and projects. In Xero, you can track time using its integration with third-party apps like Harvest and TimeCamp.

Financial Reporting

Financial reporting is essential for gaining insights into your business's financial health. Both Xero and FreeAgent offer comprehensive financial reporting tools catering to the needs of small businesses and freelancers. Xero provides a wide range of pre-configured reports that can be customised to fit your preferences. FreeAgent offers various reports, including Profit & Loss, Balance Sheet, and Trial Balance. Both platforms allow you to generate reports in different formats, such as MS Excel, PDF, and Google Sheets.

With these essential features, Xero and FreeAgent empower you to confidently manage your business's financial aspects. Carefully considering the functionality of invoicing, expense tracking, bank reconciliation, time tracking, and financial reporting can help you decide which accounting software best fits your business's unique requirements.

Who Can Use Them?

For Small Businesses

Both Xero and FreeAgent are designed to cater to the needs of small businesses. These accounting software solutions provide a range of features specifically tailored for companies with up to 10 employees. As a small business owner, you can benefit from core accounting features, bank reconciliation, and real-time data monitoring offered by these platforms.

For Freelancers

If you are a freelancer, you'll find that both FreeAgent and Xero offer essential tools and functionalities to manage your finances. With user-friendly interfaces, these platforms support project-level accounting and tax management, making it easier for freelancers to keep track of income and expenses for various projects.

For Sole Traders

As a sole trader, you need an accounting software that simplifies financial management for your business. Both Xero and FreeAgent cater to the requirements of sole traders, offering features such as multiple currency support and integration with various apps. These platforms help you to maintain and monitor your financial records with ease, ensuring an efficient approach to your business accounting.

For Limited Companies

Limited companies can also benefit from using Xero or FreeAgent, as both accounting software platforms provide comprehensive features suited for such business structures. From handling complex financial transactions to managing payroll and tax filing, these platforms offer a range of services to help you maintain your limited company's finances in an organised and efficient manner.

Integration with Other Tools

When choosing between FreeAgent and Xero, it is essential to consider how well these accounting software platforms can integrate with other tools to streamline your workflow. Both of these accounting solutions offer a variety of integrations that can help you manage various aspects of your business.

With Xero, you will find an extensive app marketplace that includes reliable apps and third-party integrations. One standout feature is its integration with Hubdoc, which allows you to capture and store financial documents directly within Xero. Integrating Xero with other popular tools, such as Vend for retail management and Mentio for cash flow forecasting, makes it incredibly versatile and adaptable to your business needs.

Some useful Xero integrations include:

  • Hubdoc: Effortlessly capture and store financial documents
  • Vend: Manage your retail business seamlessly
  • Mentio: Improve cash flow forecasting and planning

FreeAgent, on the other hand, offers a more focused range of integrations targeted towards small businesses and freelancers. It allows for seamless connections with popular payment gateways such as GoCardless and PayPal, enabling you to process payments quickly and efficiently. FreeAgent also supports integrations with e-commerce platforms like Shopify, which can automatically explain your transactions as sales in FreeAgent.

Key integrations for FreeAgent include:

  • GoCardless: Enable clients to pay invoices online via secure bank transfers
  • PayPal: Import PayPal transactions automatically and accept online invoice payments
  • Shopify: Keep track of sales transactions with ease

Overall, both Xero and FreeAgent provide valuable integrations to help you manage your business more efficiently. The breadth of options available in the Xero app marketplace gives it a more comprehensive selection of tools, while FreeAgent focuses on a smaller collection of core integrations designed to meet the specific needs of freelancers and small businesses.

Pricing and Plans

In this section, we will explore the pricing and plans offered by both FreeAgent and Xero for small businesses and freelancers.

Free Trials

Both FreeAgent and Xero provide free trials to help you decide which accounting software is right for your business. FreeAgent offers a 30-day free trial without any credit card requirement, allowing you to explore all the features the software has to offer. Similarly, Xero offers a 30-day free trial for you to test its features and functionality.

Paid Plans

Paid plans differ between FreeAgent and Xero, with each offering various options to cater to the diverse needs of small businesses and freelancers.

FreeAgent:FreeAgent has a simple pricing model with a flat rate and offers the following pricing plan:

  • £14.5 per month (excluding VAT) for small businesses and freelancers.

Do note that the FreeAgent pricing listed above is as per the search result snippet and may be subject to change.

Xero:Xero, on the other hand, offers a tiered pricing structure so you can select a plan based on your business size and requirements. The plans are:

  • Starter: £12 per month (excluding VAT)
  • Standard: £26 per month (excluding VAT)
  • Premium: £30 per month (excluding VAT)

In conclusion, both FreeAgent and Xero offer free trials and various paid plans to accommodate the diverse needs of small businesses and freelancers. It's essential to consider the pricing, features and functionalities that best suit your business needs when choosing between the two accounting software options.

Accounting and Financial Management

Accounts Receivable

In managing your accounts receivable, both Xero and FreeAgent offer useful features. With Xero, you can easily create and send customisable invoices to your clients, track their payments, and set up automatic reminders to follow up on overdue invoices. FreeAgent also provides invoicing features, allowing you to create professional-looking invoices, track payments, and send reminders. Both platforms integrate with popular payment gateways, making it convenient for your clients to pay you.

Accounts Payable

When it comes to managing your accounts payable, Xero and FreeAgent have tools to help you keep track of your expenses. Xero enables you to record and categorise expenses, as well as upload receipts using the mobile app for easy tracking. FreeAgent offers similar functionality, allowing you to easily record expenses, attach receipts, and categorise transactions. Both platforms also support importing bank transactions, making it simpler to reconcile your accounts payable.

Cash Flow Management

Managing your cash flow is critical for any business, and having a clear understanding of your cash position can help you make informed decisions. Xero provides real-time cash flow insights, with reports on your income, expenses, and bank balances. FreeAgent also offers cash flow management tools, such as a real-time cash flow dashboard and forecasting capabilities. Both platforms allow you to run various financial reports to help you analyse your company's performance and identify potential cash flow issues.

Tax Compliance

Staying compliant with tax regulations is essential for your business, and both Xero and FreeAgent offer features to help you manage taxes effectively. Xero supports the calculation and submission of Value-Added Tax (VAT) returns, as well as providing tools to handle payroll taxes and corporation tax. FreeAgent is specifically designed with UK businesses in mind, offering robust support for VAT, self-assessment tax returns, and payroll taxes. Both platforms can also help you stay compliant with Making Tax Digital (MTD) regulations.

In summary, Xero and FreeAgent both offer a variety of features to help you manage your accounting and financial management tasks. From accounts receivable and payable to cash flow management and tax compliance, both platforms provide tools that are tailored to the needs of small and medium-sized businesses. Using either of these solutions will help you stay on top of your finances and remain compliant with UK tax regulations.

Usability and Support

Mobile Apps

Both Xero and FreeAgent offer mobile apps, enabling you to manage your business finances on-the-go. The Xero mobile app is available on Android and iOS platforms, providing core features such as invoicing, bank reconciliations, and expense tracking. The FreeAgent mobile app, also available for Android and iOS, offers similar functionalities, making it easy to manage your finances while away from your desk. The interface of both apps is user-friendly, allowing you to quickly navigate and complete tasks.

Customer Support

When it comes to customer support, both Xero and FreeAgent provide various channels to assist you. Xero offers 24/7 customer service through email, live chat, and a callback service. Their support team is known for being responsive and helpful. Additionally, Xero has an extensive online help centre which includes guides, FAQs, and video tutorials.

FreeAgent also offers a reliable customer support system, with assistance available via email and live chat during regular business hours. Although they don't provide 24/7 customer service like Xero, FreeAgent does have a user-friendly resource centre containing articles, guides, and video tutorials.

Training and Knowledge Base

To ensure you fully maximise the benefits of their software, both Xero and FreeAgent offer training resources and a comprehensive knowledge base. Xero provides 'Xero U', an e-learning platform offering recorded webinars, courses, and live sessions to familiarise you with their software's features and functionalities. They also organise events and workshops, where you can network with other users and receive helpful advice.

FreeAgent has a wealth of resources, such as step-by-step guides, webinars, and video tutorials, available on their website. These materials will help you get started with the software and navigate its features with confidence. Additionally, FreeAgent regularly updates their blog, providing informative articles and industry-related news to keep you informed on the latest trends and tips in business accounting.

User Satisfaction and Reviews

When considering FreeAgent and Xero for your business accounting needs, understanding user satisfaction and reviews can help you make an informed decision. Both platforms have garnered positive feedback from users, but there are some differences in their ratings.

FreeAgent boasts a 93% user satisfaction rate, reflecting its ability to cater to the needs of small businesses and freelancers. On the other hand, Xero has achieved a slightly higher user satisfaction rate at 97%¹. This could be due to its comprehensive features and real-time data visualisation capabilities that many small businesses find valuable.

In terms of Trustpilot ratings, Xero stands out with a strong 4.2 rating and over 5400 reviews¹. This demonstrates their dedication to customer satisfaction and the overall effectiveness of their software. While it's clear that Xero has won the hearts of many small and medium-sized enterprises (SMEs), it's important not to overlook FreeAgent's impressive user satisfaction figures.

In summary, both FreeAgent and Xero offer reliable accounting solutions for small businesses. User satisfaction and reviews indicate that Xero may have a slight edge in terms of customer satisfaction rates, but FreeAgent has also garnered excellent feedback. Ultimately, it's crucial for you to weigh the pros and cons of each platform before making a decision based on your unique business needs.

Comparing FreeAgent Vs Xero: The Final Verdict

When evaluating FreeAgent and Xero as accounting software options for your UK business, it's essential to consider their strengths and weaknesses. Both software packages provide cloud-based accounting solutions tailored to meet the needs of small and medium-sized enterprises (SMEs).

FreeAgent shines in its simplicity and user-friendliness, making it an ideal choice for entrepreneurs or business owners new to digital accounting. The software offers built-in HMRC integration, making tax submissions an effortless process. Additionally, FreeAgent supports multi-currency invoicing, integrates with a range of banks, and includes helpful project management features. On the other hand, FreeAgent lacks some of the advanced reporting and analytic tools that Xero offers, which may prove limiting for businesses requiring more in-depth data analysis.

Xero stands out with its extensive set of accounting features, third-party app integrations, and robust reporting capabilities. Its scalability makes it a popular choice for growing businesses, as Xero can adapt to your requirements as you expand. Offering advanced features such as inventory management, project tracking, and a flexible payroll system, Xero caters to businesses with more complex accounting needs. However, these features may also lead to a steeper learning curve compared to FreeAgent, as users may need more time to familiarise themselves with Xero's functionality.

In summary, comparing FreeAgent and Xero will come down to your business's specific needs, goals, and preferences. If you are looking for a simple, easy-to-navigate accounting software with essential features, FreeAgent may be the right choice. However, if you require a more comprehensive set of accounting tools to support your business's growth, Xero's extensive features and scalability could be the better option. Ultimately, consider taking advantage of free trials or demos offered by both companies to get a hands-on feel for each software platform before making your final decision.