If you are running a business of any size, it is essential that you have a system in place that allows you to get paid. A system can range in sophistication from a handwritten receipt to a software generated invoice which is part of an entity wide CRM system. To meet this need there are countless invoicing solutions available and many billions of dollars are spent annually on setting up systems to meet each business’ unique needs.
Almost all accounting software geared to small business owners and freelancers have built-in invoicing modules that integrate with your accounting. This is very useful when doing your books as you don’t have to worry about entering your invoicing manually and it allows you to track your accounts receivable and deposits into your bank account. There are also invoicing solutions that are not full-fledged accounting systems; however they usually integrate with the more popular software.
Freshbooks is one of the more popular invoicing solutions for service based business and is much beloved by its over 4.5 million users. Freshbooks is not a full-fledged accounting system; rather it provides a comprehensive invoicing solution including time tracking, invoice customization plus simple expense tracking. The data can be uploaded to several accounting software mostly via add-ons including Quickbooks, Kashoo and Wave Accounting. Pricing ranges from free for up to 3 clients to $40 per month for unlimited clients, invoicing and team functionality.
Freshbooks is beautifully simple to use, customizing invoices are a breeze, you can track time, create categories and email your invoices directly (they will also snail mail your invoices for $1.79 in US/Canada) while also tracking payments. It is built for consultants and freelancers who bill based on time. Given its popularity there are a plethora of apps and add-ons built around it that integrate with a variety of other applications. There is a mobile app and it is cloud based allowing you to access your invoicing from anywhere. There is also an expense tracking function, which although quite basic, is often enough for consultants who don’t have many expenses.
The primary downside of Freshbooks is that it can be a little expensive particularly considering that you will most likely have to invest in additional accounting software. It is also not a great solution for businesses who primarily sell products as it does not have an extensive inventory tracking capability.
Quickbooks is accounting software that almost anyone with a small business has probably heard of. Invoicing is fairly simple and is integrated with the rest of your accounting so tracking invoicing and payments are quite straightforward. There are a number of reports to allow you to track your sales and trends. Quickbooks also allows you to track and invoice items in inventory. Pricing for Quickbooks Pro starts at about $200. There is also an online version, the pricing for which ranges from $9 monthly for their basic version to $29 monthly for their comprehensive solution. As opposed to Freshbooks, there is no need for additional accounting software. Finally while both Freshbooks and Quickbooks allows for sales tax tracking, Quickbooks sales tax reporting simplifies the process significantly.
The disadvantages of using Quickbooks are that invoice customization can be frustrating and non-intuitive. Time tracking is not as simple as Freshbooks, nor is the interface as intuitive. If you are using the desktop version of Quickbooks, then your data is not available in the cloud or as a mobile app. And while the software is not necessarily expensive, it is also not free (see Wave Accounting below).
Wave Accounting is free accounting software that also has an invoicing module built in. There is a basic level of invoice customization for those who needs are simple. There is no time tracking in Wave, although you can create categories. Wave does allow for integration with Freshbooks – data is imported automatically into Wave which can then be used as accounting software. It allows for sales tax tracking in much the same way as Freshbooks does and while the reports are not as user friendly as Quickbooks, they are sufficient. Wave is an online accounting software and as such available in the cloud, although there is no mobile app as of yet. Wave does not have an inventory tracking function and as such can mostly be used to invoice services. Finally the pricing can’t be beat in that it is free.
Related: Review of Wave Accounting
There are dozens of invoicing solutions for small businesses and as with so many decisions it can be difficult to choose. It is useful to have a checklist of must-haves and nice-to-haves prior to evaluating the best solution.
Ronika Khanna is a Montreal accountant who helps small business owners with their accounting and tax issues. To receive regular blog updates pertaining to small business, accounting, tax and other topics of interest to small business owners you can sign up here. You can also follow her on Facebook or Twitter.