The Bottom Line: Freshbooks is an invoicing, expense tracking, time tracking, credit card payment acceptance, financial reports including profit and loss statements, and a mobile app
FreshBooks has been helping small and micro business owners with accounting solutions since 2006. But it’s much more than another accounting software.
It was designed to solve the pain point of billing, invoicing, and receiving payments from clients.
FreshBooks offers a way to stay on top of time management, automate invoicing, initiate online payments, and perform project analysis within a mobile-friendly solution.
Read on to learn about the features available.
Features: Invoicing & accounting
Fee: Starts at $15 per month
Promotion: Try it Free for 30 Days
What is FreshBooks?
FreshBooks is an accounting solution with extra capabilities, like easy invoicing and time management.
It’s a robust, yet affordable solution for small business owners or those who are self-employed. While it is an accounting solution, the accounting piece of the platform isn’t the primary focus.
It delivers all the necessary accounting reports. But FreshBooks shines when it comes to billing and invoicing clients.
You won’t have to manually fill-in Excel workbooks and Word templates to send PDF invoices. Keep reading to learn how to manage your payment cycle.
Paperless and Cloud-Based Solution that stores all of your data electronically
Mobile Access for keeping up with your invoicing and payments on the go
Bank Reconciliation to keep you compliant and make sure your accounts are balanced
Simple and Intuitive Interface makes it easy for anyone to use
No Software to Download – keep everything on the cloud and off your computer
Collaborate on Projects across your entire team
Accept Payments Online for the convenience of your clients – no waiting on paper checks
Automate Invoicing and spend more time on your business
How Does FreshBooks Work?
FreshBooks has many parts to it from invoicing to projects to accounting. Each section below will detail the features of every component.
Proposals and Estimates
The first step to a business transaction is to create a proposal, including an estimated project cost, for a potential client.
FreshBooks has the capability to customize estimates, even add discounts, and then turn the estimates into invoices when the work is complete.
Clients can provide feedback or ask questions about the estimate directly in FreshBooks. The correspondences are saved for future reference.
The estimate will include project scope, timeline, and deliverables. Clients can approve the project online. That lets the business know that they can begin on the project.
Proposals and estimates can be created and sent on the mobile app.
Projects and Collaberation
Creating and managing projects within FreshBooks creates a space to collaborate with the entire project team.
FreshBooks lets you assign project due dates, rates, and hours to projects within the platform.
Contractors, employees, business partners, and clients can be given access to the project files based on the permissions you establish.
Once the project is underway, the client can provide feedback on the project in the FreshBooks.
Any project files can be stored within FreshBooks, eliminating the need to search through folders on a computer or in email.
The time tracking feature in FreshBooks is a timer that automatically logs how long you spend on a project. When you’ve finished, you’ll have a time log that can be easily added to an invoice.
While the time tracker is going, specific notes can be added to describe what work is being done. Manual time can be entered if the time tracker wasn’t used.
Tracked time can be reviewed weekly, monthly, or by project. It helps project leaders understand how the team is spending their time.
Plus, you can see what work is complete and what may need attention.
Invoices can be created and sent within FreshBooks. You’re able to add logos and personalize the emails being sent out to clients.
Reminder emails can be automatically sent out so you’re never chasing payments.
Each client is unique and FreshBooks accommodates that. You can customize the payment terms, due dates, discounts, and currency of the invoices.
Plus, tax will automatically be calculated. If you work on retainer or take recurring payments, FreshBooks lets you set that up.
You can request deposits upfront or take partial payments.
If an invoice has been viewed by the client, you’ll be notified. The client can make payments directly through the invoice.
Payments are simple with FreshBooks. Clients can pay online, directly through the invoice, using a credit card or Apple Pay.
For these transactions, you’ll pay a 2.9% fee + $0.30 per transaction. ACH transfers are available for U.S. customers for a 1% fee.
If you need to accept international currencies, there is another service called Stripe that works well with FreshBooks. It allows seamless card payments and can accept foreign currencies.
Payments are automatically recorded on your FreshBooks account. There are reports available to understand your payments collected for any given period of time.
Advanced Payments is an additional service you can purchase for Plus, Premium, and Select subscriptions with FreshBooks.
It’s $20 per month and allows you take credit card payments over the phone, online, or in person. You can then save the credit card information for future billing.
Or you can set up recurring billing profiles for certain clients. Advanced Payments is ideal for creating subscription-based billing.
FreshBooks allows you to connect bank accounts or credit cards for automatic updates, eliminating the need to manually enter expenses. You can also take pictures of receipts using the mobile app.
Then, just categorize them and store them in the cloud. When tax season approaches, your expenses will be organized with proper documentation and tax-appropriate categories.
If you have any business expenses that are billable to clients, you can classify them as “billable”. Then you can easily add them to an invoice.
The expense feature of FreshBooks also lets you track your projects against their respective budgets and understand your team’s spending.
With an insightful dashboard and easy-to-use reports, FreshBooks can help business owners understand their company’s performance.
Tax preparation is much easier because all of your numbers are kept in one place.
Here are some of the reports:
- Sales tax summaries
- Accounts aging
- Invoicing details
- Payments collected
- Expense report
Reports can be filtered by dates, team members, or clients. You can save, print, or export financial reports into Excel for your use or your accountant’s needs.
FreshBooks uses a double-entry accounting process. It identifies revenue items and related expenses, giving you an accurate profit and loss statement.
Additionally, it checks your work, making sure that credits and debits are equal. Come tax time, you won’t be worried about potential errors.
Even though FreshBooks focuses on invoicing and billing, it offers some robust accounting reports, such as:
- Balance Sheet
- Trial Balance
- Profit and Loss Statement
- Cost of Goods Sold
- Other Income (interest, rental income, etc.)
- Chart of Accounts
- Journal Entries
Mobile App Capability
You can download the FreshBooks app for free on the App Store and GooglePlay. Anything you process on the app will automatically be synced across all instances of FreshBooks within your business, whether it’s other apps or on a desktop.
Here are some ways you can interact within the FreshBooks app:
- Create and send invoices on the go
- Capture receipt images and categorize the expense
- Respond to client questions and feedback
- Know when a client has viewed their invoice
- Be alerted if an invoice becomes overdue
Third-Party Apps, Add-Ons, and Integrations
FreshBooks allows you to integrate a plethora of third-party apps within its software. This integration allows for a more seamless business solution that can accommodate the unique needs of every business.
The full list is on their website. But here are a few notable integrations that you can take advantage of.
Stripe is a payment solution that can process online, over-the-phone, and in-person transactions. The main benefit of Stripe is that it can handle multiple currencies and international payments.
You’ll be charged 2.9% plus $0.30 per transaction. Because it fully integrates with FreshBooks, your customers won’t be redirected to another site – they can still pay directly through the invoice.
Plenty of businesses use Google for their emails or contacts. With this integration, you can access your Google contacts when creating invoices on FreshBooks. Plus, you’ll be able to preview emails from your clients in the Client Profile Page, even if the email was received by a Google account.
The best perk may be its single sign on capability. You can log into FreshBooks directly from your G Suite Dashboard. This integration helps keep your business running smoothly.
This inbound marketing platform is used to attract visitors, convert leads, and close customers. The integration into FreshBooks relieves some of the associated housekeeping. When a lead becomes a customer, their contact details are automatically pushed into FreshBooks. From that point, you’ll be ready to start billing.
This also works the other way. Customers in FreshBooks are automatically added as contacts within HubSpot. The invoice and payment activity from FreshBooks is also recorded as a timeline event in HubSpot.
Shopify is an ecommerce app. When a product is created or updated in Shopify, it’s automatically created in FreshBooks.
Then, when orders are placed in Shopify, FreshBooks automatically creates the client, invoice, and records the payment.
Who FreshBooks is Right For?
FreshBooks appeals to those who are self-employed as well as agencies, firms, or consultancies.
Self-employed individuals can enjoy the streamlined invoicing and payment process. The simplified and automated invoicing feature allows people to save time and headaches associated with billing.
Then, clients can pay online directly through the invoice. It’s convenient for them and it makes payment times shorter.
Billable hours and expenses can be automatically added to invoices, making it much easier to create invoices. Expenses are easy to track, and photos of receipts can be taken using the mobile app.
If there are any questions about billable expenses, clients can view the receipts digitally.
Agency, Firm, or Consultancies
FreshBooks simplifies the way teams collaborate. Projects can be created in FreshBooks.
Then, a variety of individuals can be given access to the project files using rules and permissions. Clients can even be invited to provide feedback during the project.
It’s easy to track billable hours by each person on the team using the Time Tracker. Those hours can automatically be put into an invoice and sent on to the client.
If invoices go unpaid, FreshBooks can automatically follow-up. Plus, FreshBooks allows for recurring invoices, like the ones used in subscription services.
The double-entry accounting tools make tax time much easier. It also makes sure the business is staying compliant.
FreshBooks is a monthly subscription service. You can also pay on an annual basis at a discounted rate.
In addition to the subscription costs, there are also costs for taking credit card and ACH payments. But we’ll cover that in a later section.
Here’s what you can expect to pay for the different levels of subscription through FreshBooks.
Lite - 5 Clients
The Lite subscription costs $15 per month, or $13.50 per month when billed annually.
Here are some features of Lite:
- 5 billable clients
- Unlimited customizable invoices
- Unlimited expense entries
- Accept credit card payments online (fees apply to credit card payments)
- Accept ACH transfers online (fees apply to ACH transfers)
- Bank imports
- Unlimited time tracking
- Unlimited Estimates
- Team Members can be added at $10 per person
Plus - 50 Clients (Most Popular)
The Plus subscription is a monthly charge of $25, or $22.50 per month if you pay annually.
In addition to all the features of Lite, here’s what you can get with Plus:
- Unlimited proposals
- Automated recurring invoices
- Double-entry accounting reports
- Scheduled late fees
- Automatic late payment reminders
- Client retainers
- Team Members can be added at $10 per person
- Advanced Payments can be added for $20/ month
Premium - 500 Clients
With Premium, you get everything that you get with a Plus subscription. The difference is that you’ll have up to 500 billable clients.
The cost is $50 per month, or $45 per month if you pay annually.
Select - 500+ Clients
The Select subscription is meant for businesses with extra needs. The pricing is customized based on the unique requirements.
In addition to everything you’d get with the other subscriptions, you’ll get:
- Personal Account Managers
- Customized training for you and your team
- Super low credit card transaction rates
- QuickBooks and Xero integration
Pros and Cons
- Cloud based – no software
- Time tracking capabilities
- Easy invoicing
- Integration with other services
- Price point may be high for some small businesses
- Limited number of billable clients
- Advanced Payments come at an additional cost
- Extra cost for adding team members
- Can’t accept international payment without an additional service, such as Stripe
The best cloud based small business accounting software. Send invoices, track time, manage receipts, expenses, and accept credit cards.
FreshBooks is a great option for small and upcoming businesses looking for accounting software.
While FreshBooks handles the accounting pieces of your business with ease, its primary focus is addressing payment and billing concerns that many small businesses face.
Their invoicing is simplistic and allows for customers to pay directly within the invoice, instead of having to send checks or visit outside websites.
Plus, you can easily see when customers have viewed their invoices or which invoices have become past due.
Integrations with other applications make FreshBooks a great option. If you’re already using apps that can be easily integrated with FreshBooks, you may find that this solution is even more seamless than you could have imagined.
All that said, there are limitations to FreshBooks. The price point can quickly become high for some small businesses, depending on the number of billable clients you need.
Plus, there are services, like Advanced Payments and additional team members, that come at an additional cost.
Either way, FreshBooks is worth considering when choosing the accounting software for your small business.
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Kim Shackleton is a former accountant, bridging the GAAP between numbers and words. She takes the complexity of the financial world and breaks it down into digestible pieces to guide people down a path toward financial freedom.