Today I’m going to take a look at Freshbooks – an online program that can make small businesses look much more professional, and make sending/tracking invoices much easier.
I’ve been using the program for several years. During that time it has also grown to provide estimates, time-tracking, and the ability to track some expenses- to the point that it can now be used as a basic bookkeeping application for very small businesses.
Invoicing clients is still the core of Freshbooks. You can have Freshbooks send paper invoices, or have invoices go out via email. Either way, your clients receive access to a brandable client center where they can view their account and make online payments. It’s easy – I’ll take a quick walk-through of the process.
Adding A New Client
When using Freshbooks, you start by adding clients to the system (which can also be imported from some CRM programs). As you can see, there are enough options here you could use Freshbooks as a basic CRM system all by itself.
Creating An Invoice
Once you’ve added a client, you can create a new invoice.
You can manually add items to an invoice, or have it generated from a “project” you’ve been working on (generally meaning that you’ve been using the internal Freshbooks time-tracking). To make adding items easier, you can specify products or services that you frequently provide, and have them available to populate the form.
Once you’ve entered your information, Freshbooks calculates the total. It will take account of any discounts entered, and can also add taxes. At the bottom of the invoice, you have the option to add terms (which can also have a default) and any special notes to the client.
Once you’ve created your invoice, you can send via Email or Snail Mail. This is where we start to get into one of the best features of Freshbooks. They will mail paper invoices for you! And for clients that are happy to get invoices online, you get a very professional-looking website for them to manage their account.
Sending a paper invoice is as easy as clicking the button. There is a charge of ~$1-2 for each mailing, but this includes printing the invoice, stuffing it in an envelope, along with a return envelope, and the required postage. Your client receives a professional looking invoice, in a metered envelope, and can easily send payment or log on to the secure URL to check their account.
For emailed invoices, clients will receive an email with a link to a website (yourcompany.freshbooks.com), that automatically logs them in and displays an invoice, which looks like this:
I’ve removed the client information, but that would show – and you can also customize this with your company logo. Clients can view a PDF or print the invoice (it then has a pay stub attached for offline payment), or they can forward the page to their accounts payable. In addition to viewing the invoice, clients can follow links to view an account statement, unpaid invoices, payment history, and more.
The ability for clients to login and have a mini-account area, particularly one that is attractive and easy to use, has a real “wow” factor. I’ve had several people tell me how impressed they are – it works better than the payment systems for most large companies.
Once a client has seen the invoice, they can of course send you payment via a check in the mail. Upon receiving payment, you login to your Freshbooks invoice screen, and easily mark the invoice as paid – either in full or a specific amount.
If you accept credit card payments (through a variety of processors, including Paypal), you can also take payment online. This works through the above-mentioned account area, where there is a large “Pay Invoice” button. This will take clients to make their payment electronically, and it will be automatically marked as paid within your account.
One of the most useful features for me in Freshbooks is the ability to set invoices as “recurring.” Recurring invoices will automatically be sent to customers at a particular frequency.
This is just like creating a regular invoice, but you set both the frequency and number of occurrences (which can be infinite). There’s no need to remind yourself when that recurring invoice needs to be sent – it just automatically goes out, whether you’ve chosen email or paper, and arrives at the client on time.
In addition to recurring invoices, Freshbooks also supports Auto-pay. You must use a compatible payment gateway (which eliminates Paypal Standard), but will then be able to enter a client’s credit card info, mark auto-pay, and have it automatically charged at the chosen frequency. Clients receiving a recurring invoice will also be given the choice to set it on auto-pay when entering a credit card payment within their client center.
Creating Estimates & Tracking Time
Before invoicing a customer, many businesses will need to first provide an estimate. Freshbooks makes this easy, allowing you to create estimates in a manner very similar to building an invoice. This can be sent to clients, and they will receive the usual link to login.
Once logged in, clients can write comments, which are logged in Freshbooks for your viewing. You can manage a discussion within the program – and then once the estimate has been agreed upon, click to turn the estimate into a regular or recurring invoice.
For jobs that will be charged according to time, Freshbooks has a solution as well. Time tracking is built in.
You get a timesheet, where you can select a project and task to manually enter time. Click the “Start/Stop Timer,” and the timer seen to the right will pop up in a new window. Keeping track of your work doesn’t get much easier. When you’re ready to create an invoice, you select the project it is for, and Freshbooks automatically adds all the tasks you worked on to the invoice. If you charge different rates for different tasks, that will also be taken into account when the invoice total is calculated.
If you don’t like the built-in Freshbooks time-tracking, it also integrates with a number of outside time-tracking sites.
Accounting For Expenses, Staff, & Contractors
Freshbooks has gradually gone from being a basic online billing application to a much more complete business solution. For very small companies, it has reached the point where you can get by without a separate bookkeeping application, keeping track of expenses, managing staff, and paying contractors from the website. Once your company grows enough to need a more full-featured solution, Freshbooks exports to a variety of accounting programs.
To manage expenses, Freshbooks added an “Expenses” tab.
You can quickly add new expenses, assigning them to categories, vendors, and clients. Expenses can also be easily imported from several other programs, such as Shoeboxed, Expensify, and more (visit the site to see them all)
Once you are assigning expenses, you’ll be able to run a variety of reports, such as expenses by vendor, expenses per client, and taxes due (great for keeping up with quarterly tax payments).
People are a big expense for many companies, and Freshbooks provides a method for managing this area as well. There are two options:
- Staff – Staff members are given a login to your Freshbooks account. You determine what they have access to. This is useful if your company is large enough that you have a staff member managing invoices. It can also be beneficial for companies that bill by the hour. Each staff member can track their time separately in the Freshbooks account, and then all hours can be automatically added to the invoice.
- Contractors – Contractors receive their own Freshbooks account. They can track time or create invoices, and then send the invoices to you. You can manage payment right inside your own Freshbooks account. This is a great convenience for companies that work with a large number of contractors.
A big benefit of managing your invoices electronically is the ability to run detailed reports. I already mentioned the reports related to expenses that are available. You can also run a variety of invoice reports, looking at it by staff or client, or the value of recurring invoices. You can see how quickly each client pays on average. Traditional bookkeeping reports are also available, including profit & loss, tax summary and accounts aging.
Freshbooks has a limited free option, allowing just 3 clients. Beyond this, pricing is $20 per month, running up to $40 for the most full-featured account. You can visit their site to see all the details. To put it in rough terms, the $20/month account will work for some freelancers, $30 for even the most busy individuals, and the $40 program is setup for those managing staff within Freshbooks.
I’ve been as impressed with Freshbooks as any webapp I’ve used. It provides a host of features, providing you with great information, saving time, and really impressing customers. The only significant downside I’ve seen is the price, which is not tremendous – but I know most businesses would prefer not to have another recurring monthly fee.
There are some companies that Freshbooks won’t fit perfectly. It’s setup for companies that do work and then bill their clients – as opposed to those selling services online that are paid for in advance. If you already use some type of accounting software, it may be easier (and certainly more convenient) to use its built-in invoicing, although I’ve never seen as good a system built onto a Quickbooks-style bookkeeping program.
For the majority of people Freshbooks should be a tempting choice. To take a detailed look, signup for a free account and see just how it works.
Full Disclosure – Links to Freshbooks in this article are affiliate links. If you signup through one of them, I’ll be compensated. You can probably tell I really like the program and would recommend it either way. I’d ask that you help support the site by signing up through here. Thanks!