FreshBooks Vs. QuickBooks

FreshBooks: A Fresh LookIf you are in the accounting profession like me, then you have probably heard of FreshBooks. You think of invoicing and you think of FreshBooks. For someone with a simple, service-based business that does not have many expenses, this has proven to be a great solution. For an accountant like me, however, FreshBooks doesn’t solve all of my problems; maybe this is about to change.

In a recent newsletter, Mike McDerment put out a statement that has me wanting to take another look at FreshBooks for a number of reasons. First, what has always held me back from FreshBooks is that, as an accountant, I want a complete accounting solution. If I use FreshBooks for my invoicing, then I need another program to track my expenses and this makes it difficult to see my complete financial picture. In the end, I need to be able to look at a profit and loss statement as well as a balance sheet. The profit and loss statement includes both income (from my invoices) and expenses from checks I write, bills I pay, and credit card charges I make. So I have kept going back to QuickBooks for the simple reason that I can have it all there. Clients have asked me about “simplicity,” and my response has been something like “just don’t use all of the features QuickBooks offers and it can be as simple as you want it.”

So here are the reasons I am taking another look at FreshBooks now:

  • We (in the accounting industry) are screaming for better cloud accounting solutions.
  • Mike McDerment promises in his newsletter that, while he is keeping FreshBooks simple for the business owner and free of accounting jargon, the company will be bridging the gap between the FreshBooks user/small business owner and the accountant who needs more “complex” tools.
  • Mike also promises an account overview that has had a 99.3% adoption rate among existing users. This is a step closer to “accounting,” as he puts it. I am interested in seeing what this is about.
  • There is also a profit and loss statement, which means (I hope) a better emphasis on expense tracking.

The direction in which Mike says he’s going is to stay focused on service-based businesses and not to try and be all things to all businesses. I respect this, however, as someone who is both accountant and small business owner, I need the entire picture tracked in one place. This means income and expenses. I have to believe this can be accomplished without overly complicating things for the sake of the small business owner. In fact, the first two questions that most small business owners in my experience want answered are the following:

  • How much money did I make?
  • How much money do I have in the bank?

What I don’t see here is any mention of a balance sheet, and this concerns me. If there is no balance sheet, I cannot answer the second question. Many service-based businesses will invariably need to borrow money eventually if not right away. This requires a balance sheet for tracking loan balances. The balance sheet is also where your bank account lives. Every business needs to be able to track where the money goes after it is collected from customers and put in the bank. Maybe FreshBooks has another approach to tracking the bank account without offering a balance sheet? See what I found out in my screencast on Taking A Look At Freshbooks.