2018 FreshBooks Review
FreshBooks is an online invoicing and accounting program that includes exceptional invoicing tools. In this FreshBooks Review you’ll see that it is clearly targeted at small businesses, freelancers and sole proprietors looking to create invoices and handle light bookkeeping tasks.
What FreshBooks is…and what it’s not
To kick off this FreshBooks Review, let’s get what some see as a shortcoming of FreshBooks out on the table right now: it is NOT a full-fledged accounting package, nor does it try to be. It doesn’t incorporate double-entry accounting principles that are common to more complex (and often more expensive) software. That said, FreshBooks does very well what it was designed to do.
For your small business, consider that double-entry accounting may simply not be necessary. It may not be complex enough to require debits and credits and all of the other factors required under Generally Accepted Accounting Principles (GAP).
For several years my wife tried to keep our household records organized under a well-known accounting package that begins with the letter “Q.” (Hey, I’m not here to beat up on any software!) She was often frustrated with trying to reconcile and balance accounts because the program, with it’s double-entry approach, was just too complex for the task at hand. Worse, nearly every time her Windows laptop decided to do an operating system update, something would get scrambled in the accounting program.
So look at FreshBooks on the merits of what it is, and the audience it is designed to serve. Now, some people complain that the product name includes “books,” which suggests that it’s a full-fledged accounting system. For my part, as someone who came from nearly two decades of managing a small not-for-profit (20 employees, $2-million-plus annual budget) complete with double-entry accounting, a full-time bookkeeper, and audited statement reviews by a local accounting firm, I focus on the “Fresh” part of FreshBooks. It’s like a breath of fresh air to anyone who has been mired in the complexity of double-entry accounting. ‘Nuff said. Let’s get on with this FreshBooks Review.
Accounting and the Gig Economy
There’s no doubt about it: more and more people are working outside of the traditional workplace. According to a McKinsey Global Institute survey in the U.S. and Europe found that 20 to 30 percent of the working age population was engaged in independent work. That’s roughly 162 million workers! And those numbers are only going up.
I myself worked as a remote worker for an organization between 2004 and 2009; in 2010 I became a sole proprietor and I’ve been working out of a home office ever since. FreshBooks offers the level of tools I need. I don’t have a lot of clients, and I don’t want to make the task of sending an invoice any more difficult than it needs to be. For years I created invoices manually on a cobbled-together Word template. I could never get the columns to line up correctly, and calculations were done with a calculator and then manually entered. Then I would export the invoice to a .pdf and send it as an attachment. It worked, but it wasn’t pretty.
The designers have done a good job of organizing the product’s features into a clean-looking user interface. It takes about 10-15 minutes to set up an account in the cloud-based software (nothing to download and install, and it works with PCs, Macs, tablets, and smart-phones). The developers claim a current user base of more than 500,000, so that’s a good sign that new features will continue to be added.
After set-up, the first chore is to enter one or more clients, and (if you so desire) connect FreshBooks to your bank account for tracking project expenses. Note that, if you’re going to use this part of the package, you would be well-served to set up a separate checking account for your business that will handle ONLY business expenses. Otherwise, the program will pull in a lot of useless information. For those who aren’t comfortable with linking to bank resources, expenses can be entered manually.
The Main Menu
FreshBooks opens to a dashboard that provides a quick overview of your business with three charts. Outstanding Revenue shows who owes you money and who is behind in payments. Total Profit indicates current profit (or loss), and Spending displays your expenses by category. Obviously, you’ll either need to link to a bank account or enter expenditures manually in order to track the expenses needed for the Profit/Loss and Spending screens.
The main menu choices are: Invoices, Estimates, Clients, Expenses, Projects, and Time Tracking. I’ll touch on each item briefly in this FreshBooks Review, but you really owe it to yourself to request a free 30-day trial run of FreshBooks. That’s the only way to discover if this package will serve your business needs.
Managing billing and invoicing is simple with FreshBooks. You can choose between two nicely designed invoice formats and a couple of color schemes; you can also add your own logo or image to the invoice form. Determine who the invoice is for, and the program will pull in the client data you request (which assumes you entered some client data…otherwise you can do it on-the-fly).
You can create an invoice directly on the screen, or generate one from an earlier estimate (see “Estimates” below). You can also enter Sales Tax information. Personally, I’ve used FreshBooks in two states that don’t have sales tax, so I can’t provide too much detail here. Another good reason to get the program and give it a 30-day spin after you finish this FreshBooks Review.
FreshBooks has some additional invoice features. You can click on Invoices Due, and see who’s late with a payment, and double-check that you actually sent the invoice. And here’s a nice wrinkle: you can track when your client opened your invoice e-mail. This should cut down on customers saying they never received your invoice! Those who elect to use Freshbook’s higher levels can set invoice due dates, send reminders, and charge late fees.
FreshBooks has two similar elements, Estimates and Proposals. An estimate is essentially a tentative invoice that can be sent to a client for approval before a project start, and can later be easily converted into an invoice. A proposal can be more detailed, can cover several pages and include tables and other data; it can also serve as a Statement of Work (SOW) which, when approved and signed, becomes a contract.
As mentioned above, bank statements can be imported via live bank feeds, or expenses can be entered manually. In either method, when you click the Expenses tab you’ll see a list of recent transactions. Each expense receipt can be marked as an expense to a client in the system. You can also attach files to expense listings, such as an image of a receipt taken with Freshbook’s smartphone app.
Keep in mind, however, that this is not a full-fledged accounting package. If you’re looking for monthly bank reconciliations, you’ll need to look elsewhere.
Within the program you can create projects, and assign tasks to others (perhaps an independent contractor you’re working with). You can set time budgets and due dates for a project. When the project is completed, an invoice can be generated using the project data.
Here’s something that’s not found in a lot of accounting packages. You can use a built-in timer, or make time entries manually. As a project goes along, you can review how much time has been spent. (Hint: it will always be more time than you expected!) You can even use an Android or iOS app to track your working time in the field if your task takes you away from the office. Pretty slick!
There aren’t a lot of reports, which I look at as a benefit, but others may see as a shortcoming. Reports include Accounts Aging, Profit and Loss, Expense Report, Time Entry Details, and Sales Tax Summary.
Accepting payments into FreshBooks
You can enter payments manually, which is what I do, or you can accept credit card payments by signing up for the optional FreshBooks Payments or Stripe. Please note that there will be additional charges for these services. The last time I checked, FreshBooks’ internal payment system, based on WePay, cost 2.9 cents plus 30 cents per transaction. That may have changed.
There are three tiers in Freshbook’s pricing structure: Lite, Plus, and Premium. All three offer the same services; the difference is in the number of clients you can have in the system. The Lite package is $15/month, and you can bill up to 5 active clients. The Plus package is $25/month, and you can bill up to 50 active clients. The Premium package is $50/month, and you can bill up to 500 active clients.
Would I like to see a $20/month package with maybe 30 clients? Heck yeah! I recently added a new client while creating an invoice and went over my client limit of 5, and automatically moved me to the next higher tier and a $10 charge. Not exactly a deal breaker, since I can drop a 10-spot servicing my daily coffee habit. But something to be aware of. At that point I decided to put on my big-boy pants and move to the Plus package full time. Just another item to list on the Schedule C at year’s end.
If you glance around the Internet you’ll find a lot of positive comments about Freshbook’s support. I’ve only needed to call a couple of times, because this program is pretty intuitive. But I’ve always spoken to a real person…and an informed, articulate person at that, within a couple of minutes. In addition to great phone support, you can use a Help Center with articles, a YouTube channel with videos, e-mail, a contact-us form, and social media pages. It’s unlikely you’ll get stumped in setting up this software, but if you do, there’s plenty of help waiting!
Is FreshBooks A Good Product?
Through this FreshBooks Review I hope you’ve gotten the idea that, for the small business or freelancer/sole-proprietor who is looking to handle invoicing and basic bookkeeping tasks, this is a great program! It’s cloud based, so you can reach it anywhere you have an Internet connection. It handles these tasks:
- Creating professional-looking invoices
- Invoice status tracking
- Tracking your time by project and/or client
- Accepting online payments (optional and fee-based)
- Straightforward reports and a summary dashboard
- Data automatically backed up and secured with 256 encryption
Not really “missing,” as such. As noted above, this is not a full-fledged accounting package with double entry bookkeeping and all the bells and whistles. Think of it as a time-saving device for tracking projects, estimates, expenses, and getting invoices out the door so you can get paid.
Try the 30-day trial period after you’ve finished this FreshBooks Review. I think that you’ll find many benefits to bringing a product like FreshBooks into your business.