Xero vs FreeAgent – which one is right for you, and which one can be free of charge?

Xero vs FreeAgent – 2 great online bookkeeping/accounting software packages

This article is in two sections. The first section is a general-purpose “compare and contrast” review of both packages.

The second section is written by Jackie P, our long-serving, dedicated, and excellent bookkeeper! She’s already an accomplished Xero wizard, and has only recently got stuck into FreeAgent (because we asked her to!). She grabbed the bull by the horns and wrestled it to the ground. We’re so pleased that FreeAgent proved worthy of her time and effort. Nice one Jackie!


Choosing the right accounting software is important – maybe even critical – for businesses looking to streamline their bookkeeping processes, save time, and ensure financial accuracy. With a plethora of options available on the market, it can be challenging to identify the best fit for your UK-based business. In this article, we will compare and contrast two popular bookkeeping software packages – Xero and FreeAgent – to help you make an informed decision.

Overview of Xero and FreeAgent

Xero, founded in 2006, is a globally renowned cloud-based accounting software that caters to businesses of all sizes. With a strong presence in the UK, Xero offers a wide range of features tailored to the British market, including compliance with UK tax regulations and integration with British banks.

FreeAgent, established in 2007, is also a cloud-based accounting software that primarily targets freelancers, small businesses, and accountants in the UK. The software’s key focus is on simplifying complex accounting tasks and providing a user-friendly interface for managing finances.


Xero offers three pricing plans: Starter (£14/month), Standard (£28/month), and Premium (£36/month), with a 50% discount for the first 6 months. Each plan varies in terms of features and the number of invoices, bills, and bank transactions allowed per month. As your business grows, you may need to upgrade to a higher plan to accommodate your needs.

FreeAgent provides a variety of pricing plans based on business type: Limited company, Partnerships & LLP, Sole trader and Landlord. They’re approximately similar to Xero pricing. However, if you’re a NatWest, Royal Bank of Scotland, or Ulster Bank NI business current account holder, you can access FreeAgent for free, which can be a very tidy saving, especially for small, cost-conscious businesses.

Key Features

Both Xero and FreeAgent offer a range of features designed to meet the needs of UK-based businesses. These include:

  • Invoicing and Quotation: Both software packages provide customisable invoice templates, automated reminders, and the ability to create quotes and estimates.
  • Expense Tracking: Xero and FreeAgent allow you to track expenses and upload receipts, making it easier to manage and categorise expenses.
  • Bank Integration: Both platforms connect to major UK banks, enabling automatic bank feeds and reconciliation.
  • Payroll: Xero and FreeAgent offer integrated payroll solutions, ensuring compliance with UK tax regulations and facilitating employee payments.
  • Tax Compliance: Both software solutions support submission of VAT returns and are compliant with Making Tax Digital (MTD) requirements.
  • Reporting: Xero and FreeAgent offer a variety of financial reports, including profit and loss statements, balance sheets, and cash flow forecasts.

User Interface and Ease of Use

FreeAgent is known for its user-friendly interface, designed specifically for individuals with limited accounting knowledge. The dashboard provides an overview of your business finances, making it easy to access key information quickly. The software also offers a built-in stopwatch to help freelancers track time spent on projects.

While Xero’s interface is also intuitive, it may take slightly longer to navigate due to the extensive features offered. The platform provides a customisable dashboard, allowing you to focus on the financial metrics that matter most to your business.


Xero boasts an extensive ecosystem of over 800 third-party apps, enabling seamless integration with popular tools such as Shopify, PayPal, and Stripe. This makes it highly adaptable and capable of accommodating various business needs.

FreeAgent offers fewer integrations compared to Xero, with around 100 third-party apps available. However, the software does integrate with essential tools like PayPal, GoCardless, and Zapier, catering to the needs of most small businesses and freelancers.


Both Xero and FreeAgent are robust accounting software options for UK-based businesses. While Xero offers more features and integrations, making it suitable for businesses of all sizes, FreeAgent’s focus on simplicity and user-friendliness makes it an attractive choice for freelancers and small businesses.

When deciding between the two, it’s essential to consider your business’s specific needs, growth plans, and accounting knowledge. If you require extensive features, scalability, and a vast ecosystem of integrations, Xero may be the better choice. On the other hand, if you’re a freelancer or small business owner looking for an easy-to-use software with a clear focus on UK market compliance, FreeAgent may be the more suitable option.

Ultimately, both platforms offer free trials, allowing you to test their features and determine which software best meets your business requirements before making a commitment. By taking the time to compare and contrast Xero and FreeAgent, you can ensure that you select the right accounting software for your UK-based business, promoting financial accuracy and streamlined bookkeeping processes.



BONUS: FreeAgent Review by Jackie McPhillimy, Broadstone Business Centre’s very own bookkeeper

As a book-keeeper I am constantly working with cloud based accounting software, the newest of which is FreeAgent. As business customers of Nat West bank we are able to use the FreeAgent software free of charge, which is always a plus in any book-keepers world.

It is very user friendly with helpful tips along the way for those using accounting software for the first time. I especially like the contacts tab with A-Z along the top providing quick access to any account that has been set up.

It has all the usual bank feeds, but it does seem a bit slow to update the actual bank transactions. Transactions are updated within a couple of days, whereas Xero can be almost immediate on occasions.

When reconciling the bank there are two default options, approve and explain. As like any other accounting package, these need checking carefully. Compared to Xero this is a bit long winded and takes a few screens to check it is correct before approval.

Recurring sales invoices in Freeagent are updated to draft form for checking before updating to customers’ accounts. The draft can be changed, but the actual recurring profile cannot, unlike Xero.

As we are running a Barclays bank account alongside the new NatWest one, the cashflow option seems reluctant to pick up the recurring outgoings from the Barclays account, even though the bank feeds are running through it. A few “dummy” purchase invoices (or bills as FA calls them!), and this problem is overcome.

The 90 day cashflow report can be set up to show accurate figures, but a little manipulation is needed.

Overall it is very much like all the other accounting software packages I use, but in our case it’s free!

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