For businesses in Droitwich, Redditch, and across Worcester, the decision of picking the correct accounting software can make or break the future of the business’s finance. There are popular options of financial software platforms such as Sage, and Xero. However, the recent star is FreeAgent, used by sole traders and smaller accounts. Those three platforms offer slightly different features, all designed to streamline financial management. But is FreeAgent better than Xero and other popular software when it comes to bookkeeping?
Whilst a lot more bookkeeping packages are available such as Intuit QuickBooks, and Iris, we have compiled a list of potential features you may prefer over FreeAgent versus Xero. Focusing on key features, pricing models, user-friendliness and customer support, you should be able to determine which software best fits your small business.
FreeAgent and Xero both offer similar bookkeeping features, but they each focus on different sizes of a business.
As Xero is more established than FreeAgent, the software can connect to a variety of third-party applications such as Shopify, and Stripe, key apps for small business owners in the UK. This is essential for efficient bookkeeping if you sell physical products on Shopify, thus decreasing the time you pay your bookkeeper. FreeAgent has a smaller selection of integrations and basic pathways, which may be more suitable for simple bookkeeping for the tradespeople.
Despite being able to handle MTD (Making Tax Digital) compliant VAT Returns, Xero still requires a third-party software for Self-Assessment filing and Corporation Tax. FreeAgent competes better, as it allows you to file all these by yourself and send it directly to HMRC without the need for paying for third-party resources.
If you’re business is concerned with employee expenses, FreeAgent can offer expense tracking for free. However, Xero requires you to pay for an additional plan to gain access to a full expense claim. There are extra software platforms, like Hubdoc and Dext where it’s easier for the user to scan their receipt or invoice in, and the bookkeeper on the other side can confirm and upload it easily into Xero. No need to mess around with physical receipts that can go missing.
Some small businesses expect to scale up in the future, and many outgrow their bookkeeping packages. Fortunately, Xero can support small as well as large teams, offering multi-currency accounting, complex workflows, and heavy employee expenses. To avoid data transfer issues from software to software, FreeAgent is more suited for sole-traders and limited companies with under 10 employees. Otherwise, once you outgrow FreeAgent, you will need to switch platforms which can sometimes cost an additional amount from your accountant or bookkeeper. Many sole-traders in the UK stick with FreeAgent only if they know they will not grow their business and expand their services.
Xero has a previous reputation for its ease of use compared to other packages such as Sage. However, FreeAgent has just made things a lot easier for anyone who isn’t familiar with bookkeeping.
Xero uses traditional language and terms that a sole trader may not be familiar with, whilst FreeAgent uses simple language. FreeAgent does not need much training to develop skills for compared to Xero.
The dashboard setup is very customisable on Xero, but it has focuses on cash flow, bank health and metrics. Whilst FreeAgent’s dashboard focuses on tax timelines, and upcoming liabilities that may be more helpful to busy sole-traders.
Another bonus to sole-traders, FreeAgent has a better system to invoice quickly, and track miles on the mobile app. Xero does have a capacity for you to scan receipts on the go, however it does not have a mobile-friendly and on-the-go invoicing system.
Visually, FreeAgent is a lot less overwhelming and simplified for small business owners. It allows for data visualization that is less complex and presented clearly when asked for. The dashboard also provides a tax radar, which is useful to remind you how much money to set aside for your next VAT return, or other taxes.
FreeAgent is most popular right now, due to the package being completely free if you have a business account on NatWest, Mettle, Ulster, or RBS banks. FreeAgent also provides a payroll system which is free on all plans, compared to Xero which is an additional cost or higher paid plan. See their small business-friendly prices and plans on their website.
Xero does provide more subscription plans, which can easily be upgraded from starter to expert plans. As stated previously, Xero has a lot of add-ons and features you need to pay separately. Have a look at their current competitive pricing on the Xero Website.
If you’re more partial to a phone call than a chatbot, FreeAgent provides an inbound UK phone line and live chat with real and supportive accountants. Comparatively, Xero has recently eliminated their phone calls and instead uses a digital ticketing system you can use anytime and AI assistance for simple enquiries through the platform.
Depending on when you need support and how urgent it is, is where this truly matters. FreeAgent does not provide support during a bank feed break (Usually 11PM on a Sunday, in the UK) and will not respond to you until Monday morning. Xero is 24/7 and does not have this issue with their global hubs, providing support from their night-shift agent. Additionally, Xero has community forums where you can access comprehensive knowledge on most topics and troubleshoot issues.
If you’re not planning on touching the bookkeeping regardless of which software you use, consider hiring an experienced bookkeeper.
Xero is more suited for medium sized businesses, looking to upscale, and planning on using an accountant and bookkeeper. Their platform allows easy use for current bookkeepers and is customisable for the business’s needs.
FreeAgent is more suited for sole-traders, happy to do their own bookkeeping to be MTD compliant. Their platform is easy to use, and their customer support is their biggest advantage in helping you when you need. Some of our customers, take advantage of making a bank with NATWEST, and getting the package for free, provided they have some basic training from skilled accountants such as JR Management Accountancy.
In summary, Xero and FreeAgent are among the top accounting software platforms, and they are both suited to different types of businesses. It is up to the business owner or manager to decide which one is better suited for you.
At JR Management Accountancy, we mainly work with mainstream accounting and bookkeeping packages, including Sage, Xero, Intuit QuickBooks, and most recently FreeAgent. We can install your chosen software and set it up for you or your employees.
If you prefer to purchase your own accounting software, and outsource the bookkeeping element to us, we will handle all the invoicing and receipt processing for you.
We provide a free in-person consultation, where we sit down and discuss how JRMA can fit its services around your business needs. Each of our services is strictly tailored to the individual businesses, and we have a lot of experience with different business types including Sole-traders, Limited companies, and Publicly Listed Companies.
Don’t hesitate to find out more, and pick up the phone to give us a call on 01905 796512, or email us at info@jrma.co.uk, and we will get back to you as soon as possible.
