FreshBooks stands out for its aesthetics and usability, but there's much more to the SMB accounting app than that. A fine choice for many service-based companies, it offers effective tools for managing expenses and tracking time and projects. The current version introduces AI-driven fraud detection and transaction categorization, as well as enhanced support for its Instant Payouts service, and includes major improvements to multiple reports. It earns our Editors' Choice award for small businesses that sell services, whereas Intuit QuickBooks Online is our top pick for organizations that also sell products. Wave, another Editors' Choice winner, is ideal for sole proprietors who don't need payroll capabilities.
FreshBooks offers four single-user plans, which have gone up in price since last year. The Lite plan ($21 per month) is designed for sole proprietors and gig workers, limiting you to just five clients. The Plus tier ($38 per month) adds client retainers and support for up to 50 clients, among other features. The Premium version ($65 per month), which I reviewed, lets you send an unlimited number of invoices to an unlimited number of clients. Finally, the Select level (custom pricing) provides dedicated phone support, two team members, and other services. A 30-day trial is available for the first three tiers (no credit card required), and you receive a 10% discount for paying annually. You can set up all the plans to work with Gusto for payroll.
Additional team members (Admin, Contractor, Employee, and Manager) cost $11 per month each; however, accountants can access the platform for free with all plans except the Lite plan. The additional per-person fees seem excessive, considering that competitors include multiple users in their subscriber fees.
FreshBooks' most serious competition is QuickBooks Online Plus ($115 per month for five users); it has more cutting-edge capabilities but is the most expensive app I reviewed. Xero’s top-tier Established plan is $80 per month for an unlimited number of users. On the low end are Wave Pro ($19 per month) and Zoho Books Standard ($20 per month). Of course, they lack many features and some flexibility compared with pricier alternatives.
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Like competitors, FreshBooks helps you get set up by asking numerous questions about your business and customizing your experience based on the information provided. The Settings menu offers additional setup options. The service doesn’t offer free setup help like QuickBooks Online, but you can get answers to your questions via chatbot, email, and phone.
The site’s dashboard is the first thing you see after you complete the setup. Here, FreshBooks provides suggestions on how to start populating the site, such as by adding your first client. The dashboard, which you can customize, displays six charts that provide a quick overview of key financial elements, including Outstanding Invoices, Revenue and Expenses, and Spending. It would be nice to see a list of account balances here, as well as some additional content, which some competitors, such as Zoho Books, offer. However, you can drill down into the text and graphics to see underlying forms and transactions. The site uses color, fonts, and lively graphics skillfully, and all its pages feature attractive layouts that enhance readability.
Transaction imports require at least one extra step in FreshBooks compared with other accounting apps. Bank account connections refresh automatically every day (if the bank allows it), but you can update your feed manually. One of my credit card accounts updated just fine, though I had to prove I wasn’t a robot. Additionally, the checking account required an extra security step each time I made an update. Competitors don’t require either of these steps.
Transaction details are a little light compared with those that some competitors provide. You can’t split transactions, for example. Categories are tied to the Chart of Accounts. To add accounts, you must turn on Advanced Accounting in FreshBooks. The company recommends doing this only if you have accounting experience or are consulting with an account, which I think is good advice, since modifications can impact your reports and income taxes.
All that aside, transaction management should be sufficient for service-based businesses.
Client records are not as thorough as those in even the less expensive Wave Pro. Once you enter data for client records or upload a simple CSV file, FreshBooks generates a dedicated page for your customers with links to all the transactions you created for them, as well as related content, such as projects and reports. Another chart shows outstanding revenue.
FreshBooks offers most standard sales forms, including billable time records, invoices, quotes, and statements, but lacks sales receipts. It does include some unusual ones, however, such as retainers and proposals (quotes that can be dressed up and formalized). The software can automatically convert completed forms into related ones—estimates into invoices, for example, or assign them to projects. Form customization options are much more limited than in QuickBooks Online. You can add a logo, change fonts and colors, and choose from three templates.
Invoices have always been the heart of FreshBooks. The forms lack some of the options available in QuickBooks Online, but most small businesses should be able to manage with what's provided here. You can automatically assess finance charges and set invoices to recur. It's also possible to save invoices as PDFs, as well as accept online payments through FreshBooks Payments (powered by Stripe) and set up automatic reminders. These options are available through a convenient vertical pane on the right that displays context-sensitive settings.
FreshBooks also now supports and recently enhanced its execution of Stripe’s Instant Payouts, which allows you to receive payments from paid invoices in as little as 30 minutes.
Like client records, vendor record templates are slim. And as with most competing sites, you can designate vendors as 1099 recipients, though you need an add-on like Yearli or one of FreshBooks' payroll partners to actually create and file 1099 forms. Most competitors, including Patriot Software Accounting Premium, build in these capabilities.
You can enter bills and expenses manually, assign them to clients, and set them up as recurring. The app provides multiple ways to import them into FreshBooks. For example, it identifies expenses that could be bill payments while importing transactions and helps you match them. You can also email or upload scanned copies of them or snap photos of receipts with your smartphone.
FreshBooks relies on optical character recognition (OCR) to extract all the details it can from bill and expense receipts, using the information to complete forms. This worked fine in testing. The mobile app even allows you to take photos of long receipts in multiple scans.
FreshBooks works better for service-based businesses than product-based ones because its item-tracking tools are very basic. Item records contain only the following fields: name, description, income account, rate, and sales taxes. FreshBooks does track inventory, though, and warns you if you try to add more items to an invoice than you have in stock. Service records have almost the same fields (minus inventory, of course), but you can mark them as billable to clients. QuickBooks Online excels in this area, offering comprehensive item and service records, as well as robust inventory management.
Time entries are also quite basic. You can name a project (time entries must be tied to projects) and add a service and description. You can enter hours manually or use a time, and also designate them as billable. These tools should be sufficient for simple businesses.
It's possible to assign transactions to projects you've created in FreshBooks. These appear on each project's page, which provides a thorough overview of your work so far. You can set a budget and check its status on the progress bar located on the page. This page displays lists of the time and services that have been invested in the project, as well as alerts you to your deadline and any unbilled time or expenses.
You can wait until you're finished to have FreshBooks create a final invoice, or you can bill in smaller increments. The service also calculates your project's profitability and lets you invite team members to participate. Both FreshBooks and QuickBooks Online do an excellent job here, though QuickBooks Online’s item tracking is much more thorough.
Apps like FreshBooks utilize double-entry accounting, a centuries-old system that remains the gold standard in bookkeeping methods. Like competitors, FreshBooks handles the required credits and debits in the background. If, for some reason, you want to work with the innards of its bookkeeping system, you can turn on Advanced Accounting, as mentioned earlier, which allows you to edit the Chart of Accounts and enter journal entries.
There are fewer reports in FreshBooks compared with Intuit QuickBooks Online, but FreshBooks has less data to track. Its reports are attractive and customizable, and it also supports exports to Excel. They cover invoices and expenses, payments, time tracking, and projects. An inventory report would be of great assistance here. FreshBooks expands its audit log, which tracks changes you make, to include expenses.
The service also includes the standard financial reports that are best left to accountants, such as the Balance Sheet and Cash Flow. These overhauled reports now provide the ability to drill down into greater detail, filters, and more customizable layouts. They’re more flexible in terms of downloads, too, with some supporting export as CSV and PDF files.
FreshBooks regularly scans its servers for vulnerabilities and utilizes industry-standard encryption protocols and practices to transmit sensitive information securely. Multi-factor authentication (MFA) is a requirement. 256-bit SSL encryption protects all the information that travels between your browser and FreshBooks.
The company also replicates your account across multiple database servers in two geographic locations to prevent a single failure from causing data loss. Since my last review, the company has announced that it has begun using AI for fraud detection.
Nothing has changed with FreshBooks' mobile apps (available for Android and iOS) since last year. They certainly don’t replicate everything on the desktop browser version. For example, the audit log, the Chart of Accounts, and reports are all missing. Patriot Software Accounting does a better job of translating its functionality to mobile because it uses a responsive browser site. Still, the FreshBooks apps have many of the tools and much of the data you will likely want while you are away from your desk. The apps provide an abbreviated dashboard, along with access to FreshBooks' automatic mileage tracker, which allows you to use your phone to record mileage as you drive. (QuickBooks Online's apps do this, too.)
You can create, edit, and view estimates, expenses, and invoices, as well as document hourly billable activities you perform outside of the office. Client records are available, too. The apps are easy to navigate, feel responsive, and have a professional appearance.
Final Thoughts
(Credit: FreshBooks)
FreshBooks
- 5.0 - Exemplary: Near perfection, ground-breaking
- 4.5 - Outstanding: Best in class, acts as a benchmark for measuring competitors
- 4.0 - Excellent: A performance, feature, or value leader in its class, with few shortfalls
- 3.5 - Good: Does what the product should do, and does so better than many competitors
- 3.0 - Average: Does what the product should do, and sits in the middle of the pack
- 2.5 - Fair: We have some reservations, buy with caution
- 2.0 - Subpar: We do not recommend, buy with extreme caution
- 1.5 - Poor: Do not buy this product
- 1.0 - Dismal: Don't even think about buying this product
Read Our Editorial Mission Statement and Testing Methodologies.
FreshBooks continues to skillfully target service-based sole proprietors and small businesses. It features an intuitive and visually appealing interface that’s suitable for both newcomers to accounting and companies that require advanced features, such as payroll and team collaboration. It can get expensive if you need to add multiple team members, but its usability and smart set of features make it well worthy of our Editors’ Choice award. QuickBooks Online and Wave are also Editors' Choice winners, respectively, for small businesses that sell both products and services, as well as one-person companies that want to minimize costs and can do without payroll.
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About Our Expert
I write about money. I’ve been reviewing tax software and services as a freelancer for PCMag since 1993. Along the way, I took on reviews of other types of business and personal finance technology. Prior to that, I had spent a few years writing about productivity and entertainment applications for 8-bit personal computers (my first one was a Commodore VIC-20) as a member of the editorial staff at Compute!Â
After working at Lawson Associates, now Lawson Software, I switched my focus to accounting but learned that personal computer applications were more progressive and interesting to cover than mainframe solutions. So I served as editor of a monthly newsletter that provided support for accountants who were just starting to use PCs. I still ghostwrite monthly how-to columns for accounting professionals. From there, I went on to write articles and reviews for numerous business and financial publications, including Barron’s and Kiplinger’s Personal Finance Magazine.
