Small businesses have way too many things to handle to take too much time tracking their billing, invoicing, and expenses. They need the best billing and invoicing software to do it all for them. This is especially true for freelancers and artists, who are great with creativity and less great with numbers. This FreshBooks review is a great way to introduce you to one of the software options for accounting, invoicing, and billing. In fact, this one was designed with freelancers and small businesses in mind.
A lot of FreshBooks reviews cover little bullet points of features. We wanted to offer a more comprehensive look at everything there is to know about it.
This is why our review contains the pros and cons and key features, but also breaks down various aspects and compares the new version with the older one. We will even cover the pricing structure!
Old FreshBooks Versus New
FreshBooks is constantly tweaking and updating their software to bring their users the best, streamlined product possible. Recently, it went through such a massive change that it became an entirely new product of sorts. Namely, it now follows double-entry accounting practices. This makes it far more useful to a lot more businesses because this double-entry method is the standard for the bookkeeping industry.
This change didn’t affect the way FreshBooks looks or runs, which is nice because you still get the same great user experience. It does give your records in the accounting ledger a very structured framework for the recordkeeping process and allows you to have a better understanding of your finances.
New features include a General Ledger and a Chart of Accounts. You also get new accounts, reconciliation features with your baking, COGS (Cost of Goods Sold) sheets, and additional financial reports. We are hopeful that the inventory management and voluminous reporting tools from FreshBooks Classic will find their way back into the updates with the new FreshBooks offering.
Let's take a look at some of the coolest features that FreshBooks has to offer.
FreshBooks Accounting Method – FreshBooks Accounting Software
FreshBooks uses double-entry accrual accounting. Accrual accounting tracks your performance through economic activity rather than cash transactions. For example, accrual accounting will match your revenues to your expenses when the transaction occurs rather than when a payment is made. This offers a more accurate picture of your company’s financial health because it combines current cash flow with future income. This is standard for most companies. It’s more accurate, and also more complex. This is why FreshBooks makes it easy and automatic.
Likewise, double-entry accounting is also standard procedure for bookkeeping. In this method, each transaction will affect 2 accounts. This is extremely accurate because it forces debits to equal credits.
Cloud Based or Locally Installed – FreshBooks Cloud Accounting
FreshBooks is a cloud based software. You will not be required to download bulky software. You will not need to install anything on your computer, either.
Creating Invoices is Easy – Billing Software
FreshBooks invoicing is also really simple! When you open the Invoices area of your toolbar, you will be taken to a screen that handles every aspect of your accounts receivable that you will need. There are a couple of tabs to choose from If you select the “to me” tab, it will display any invoices you have received. Choosing “from me” will show the outstanding invoices you have sent and how many of them are overdue, outstanding, or still being drafted.
This can also show you graphic representations of your most recent invoices based on updates. All of the invoices show up in a list at the bottom of our screen, and there are more tutorials at the top of the screen if you want a video to show you around the features.
FreshBooks auto billing is easy to set up for recurring invoices, too! One of the new features of the update is the ability to set up an ongoing business relationship. This allows you to create retainers and complex invoices.
They also support proposals and estimates from this location. These can both be automatically converted into invoices upon acceptance. Proposals are extremely detailed, outlining all the terms of an estimate. These are documents that you can have the client sign and accept. FreshBooks is one of the only companies on the market that allows electronic signatures for these documents.
Invoicing is very simple. Clicking New Invoice opens up a template that comes prepopulated with your business's name and logo. It will also automatically fill in the date and assign an invoice number. The rest is simple. Just fill in what's being sold and how many. If you've already assigned sales tax rates, these will be automatically calculated and assigned. If you want to add any discounts, you can do so easily.
Unique to FreshBooks is the ability to set up payment schedules or request deposits within your invoices. The caveat to be careful about is that the way their payment structure works is based on how many active clients you have. Make sure you are careful not to end up billed too high for inactive clients. That’s why FreshBooks is considered one of the best for small business invoicing software.
FreshBooks is extremely friendly for users. Their user interface is clean and simple but highly effective. Their set up tool will prompt users to enter in any data and information about their business that FreshBooks needs from them and walk them through the process of customizing their invoice (within provided templates) and sending a test.
The Dashboard will provide you with all of the quick facts you will need to review when you’re curious about how your company is performing financially. The menu includes 5 different charts. These let you know who owes you money, and whether they’re behind on payments, through the Outstanding Revenue column. The dashboard also shows your total profit, which lets you see your current profit and loss statements in real time.
On top of that, you can see your expenses by category when you look into spending. You can also see the various streams of revenue that your company has and any time that has not been billed.
The great thing about the dashboard is that the top of it actually trains you! The top of your screen should have tons of links right to technical support, and if you like to learn on your own they also have tutorials in video form. You can access new features and updates through a tool on the lower right side of the screen.
On the top right side of your dashboard, you have collaboration tools. You can invite your accountants and other team members to collaborate with you and assign varying degrees of permission for them to view and edit the records and create new transactions.
While it lacks a to do list and requires a lot of work to see the charts (no, they're not interactive, either), you do have a vertical pane on the left side of your dashboard that will take you to the different core areas of your software. From this panel, you can access your clients, invoices, expenses, projects, dashboard, accounting, reports, and team. You can also see your tracked time.
From here, you can open your tool settings. This allows you to contact technical support, create new records for services and items, integrate any third party apps you want to run through FreshBooks integrations, and add more businesses.
You can also set up connections and login credentials for your banking institutions, connecting these accounts right to their websites so you can import your transactions. If you want to accept payment portals, this is also where you can start taking credit card transactions by registering your business with Strip or Payments.
The bell on the upper left side of your screen will notify you of any client updates, team member action, or other important business issues that arise. This is an extremely simple and intuitive screen with a beautiful layout where you can access any tools you need to succeed. It’s easy to understand at a glance and once you’re oriented it’s very simple.
Context Sensitive Settings
One of the great things that FreshBooks possesses is an innate ability to understand the context of your work. They will automatically display links while you’re filling out invoices. These links send you to settings that are sensitive to the context. This is something FreshBooks offers that no other software manages.
Their closest competitors all have a single, giant section for defining every single setting of your section. The FreshBooks method saves you tons of time and highlights some features and settings you may be unaware of as you work, limiting the scope to the information relevant to your current project or invoice.
These settings include the ability to change the style of your invoice as you work, set automatic and recurring bills and specify what interval of time it will recur for, and determine whether it will be manually or automatically paid. You can also set them up for online bill pay!
This service also allows you to set reminders for yourself. You can send reminders to clients, as well, and even designate late fees. In fact, once you’ve sent an invoice out and saved it, you can even reopen it and make changes, like creating PDFs, applying payments to invoices, and emailing it.
Hardware and Software Requirements
They work very well on very little system demands. Thanks to being located in the cloud, FreshBooks is compatible with almost anything you want to use it with as long as that device can access the internet. They even have mobile apps.
FreshBooks Mobile App
FreshBooks offers some fantastic app support. Their app is available for Android and iOS systems and they are designed to be very similar. These apps are as attractive and intuitive as their browser counterparts. Opening the app reveals your dashboard. For the mobile app, the dashboard displays outstanding revenue, total spending, and total profit. The bottom of your screen houses a few other icons that take you to the tools you need to work from, changing invoices, data, and estimates.
Contacts and Expenses
One of the things that makes FreshBooks such a lovely layout is that your client contact information appears as business cards. This is a clean and professional way to see each person’s contact information. Each card also has a chart that breaks down the outstanding revenue the client owes and offers a draft of the invoices and unbilled time and expenses.
Underneath that, you will find a table. This table displays all the invoices, expenses, retainers, estimates, projects, reports, and time tracking for that client. Moving from one client to another is as easy as clicking tabs. This is an insanely simple way to handle records.
When you click over to expenses, you can see a list of all of your recent transactions between the bank accounts you’ve connected. The software automatically categorizes each expense into choices like supplies, entertainment, services, and so forth. Just be sure to check them because this service isn’t perfectly accurate. You need to teach it by fixing the mistakes, but once you do it learns and retains information. This means that tax reports will be much easier once you’ve trained the system.
You can always modify just about any detail, too. Whether you’re using manual or automatic editing, you can add and change everything as needed. The 5 most recent updates for expenses will show up at the top of your Expenses screen. These are designed to look like cash register receipts.
Individual records will show transaction dates, categories, descriptions, supplies, taxes, and prices. You can attach files and drag and drop these receipt images as needed, marking expenses as billable to the client specifically, changing the currency for global transactions, and even send it to the COGS report.
Specific Size of Business
FreshBooks is a great accounting option now that it includes double-entry accounting. The pricing structure makes it ideal for freelancers and very small businesses who just need something quick and simple to handle invoicing and expense tracking. It’s not the best option for in depth accounting needs or larger businesses with lots of clients and a need for accounts payable and budgeting options. It doesn’t offer payroll on its own, but it can integrate Gusto to take care of that for you.
It's also best for businesses that only need 1 user. While you can add additional users, it costs $10 per month per person, so that can add up quickly. Even if you do have the cash, it won't offer different user permission levels, so that may be less than ideal.
FreshBooks offers tiered pricing that will grow with your business. They offer 3 levels of pricing, although only 2 of them include the industry standardized double-entry accounting. They allow you to pay per month or purchase a subscription for the entire year, which nets you a 10% discount compared to monthly payments. Their service allows you to cancel at any time, and they do offer a free trial for 30 days.
The great thing about FreshBooks is that they offer incentives for referrals. You get $5 for every referral that downloads a free trial and a whopping $55 per referral that results in a paid subscription.
Their Lite plan only costs $15 per month. It allows you to make and send unlimited invoices and estimates. It can track your expenses and time and manage your contracts and projects. This will generate reports, too. The downside is that it only allows a single user, and only lets you bill 5 clients.
If you have more than 5 clients, you will need to move to the Plus plan. This plan is their most popular option and it costs $25 each month. With this plan, you still receive unlimited invoices and estimates. You still get contract and project management. You get the expense and time tracking, too. This service additionally allows up to 50 clients, offers live feeds from your banks, and can handle proposals and generate advanced reports.
Their Premium plan is $50 a month, which can get pretty expensive. That being said, it offers the same unlimited invoices and estimates, the same time and expense tracking, and the same contact and project management that the Lite plan offers. It continues to offer the advanced reports, live bank feeds, and proposals from the Plus plan, too. This plan will allow you to bill up to 500 clients at a time instead of 50, so the doubled price allows 10 times more clients.
For larger companies, FreshBooks Select may be the best option. This includes all of the features that the Premium level makes available but adds additional users and features. This program integrates with QuickBooks and Xero, allows for dedicated account managers, and offers advance payment options.
You can also purchase add-ons for their plans. If you want more than 1 user to have access to your system, you can add them at $10 per month per user. Contractors can be added for free, but if they send invoices to people outside of your business they will need their own copy of the software.
FreshBooks Payments lets you accept most major credit cards as payments. These will go directly to the invoices. They charge a 2.9% processing fee plus 30 cents per transaction. A lot of smaller businesses will let their customers know that this feature is available at that fee, and pass the 2.9% directly on to their clients as part of the invoices.