Online Invoicing & Accounting: Freshbooks vs. Harvest vs. Billings vs. FreeAgent vs. Kashoo vs. Xero vs. Wave vs. LessAccounting
Ah, the magic of the internet. Finally, we can integrate our front-end (invoicing) with our back-end (accounting) and do it all from any computer anywhere in the world via a web-based interface. If you’re running a small business that is service based (i.e. Freelancer, Consultant, Web Designer, Developer, etc), the sooner you start using these incredibly cheap tools to streamline your bookkeeping and time/project management, the better. I resisted anything to do with numbers for many years, but finally learned (the hard way) that running a business without having some basic understanding of bookkeeping is like buying a boat without learning to swim: you don’t have to be an Olympian, but you should at least know how to dog paddle.
A well-integrated system––from estimate to production to invoicing to accounting–– is the key to freeing up time and keeping your accountant happy. I spent a week researching, testing and evaluating these top contenders: Freshbooks, Billings, Harvest, Kashoo, FreeAgent and Xero. They all handle global clients, multiple currencies, compound tax, online invoicing & payments. Some also include accounting software. And they’re all on Twitter. I wanted the simplest, best integrated, most robust system available.
Freshbooks: simple, clean, user-friendly, idiot-proof, extremely popular.
Based in Toronto. $20/month
Pros: Great name and marketing. Simple interface. Integrates with Basecamp, Kashoo and Xero. Allows you to see when a client has viewed, approved and paid an invoice. Also has a send-by-snail-mail feature. Great front-end for your services.
Cons: Expensive, considering there’s no accounting option.
Harvest: the lean little project management machine.
Based in NYC. $12 to $40/month.
Pros: Known for its A+ time tracking and project management, it also offers estimates and invoicing. Export in Excel/CSV. Integrates well with Basecamp, HighRise, GoogleDocs, Coop and Outright. Scalable. Popular with start-ups. Far more sophisticated and feature-rich than Freshbooks. I’ve used Harvest for years and love it.
Cons: Online payments via PayPal only avail for US$ invoices. No accounting software, but connects to Outright (for US customers).
Billings: popular with graphic designers and Mac users.
Based in Toronto. $7/month
Pros: gorgeous estimate, proposal and invoice templates. Fully customizable. Fantastic looking front-end for your services. Won an Apple Design Award 2009.
Cons: Invoice design is so dazzling it can take a minute to figure out where the $ totals are. Not connected to other add-ons. No accounting. You host the data yourself so you better be diligent about back-ups and securing your machines and gadgets. You must be running the latest MacOS.
Kashoo: The new kid on the block.
Based in Vancouver. $10/month for everything.
Pros: Phone support (!) plus email/forum support. Import your bank statement to cut down on data entry. Connected to an extensive network of accountants across Canada. Integrates with Freshbooks for time-tracking & invoicing and eSmart tax for easy tax filing .
Cons: Post-sign up interface is not nearly as pretty as the pre-sign up. No integration with Harvest or Basecamp.
FreeAgent: soup-to-nuts services.
Based in UK. $20/month for everything and everyone.
Pros: Perfect for entrepreneurs intending to grow. CSS customizable invoices. Interactive visual charts. Jargon-free. Clean, simple, sleek interface. No need for add-ons. Webinars and how-to videos. Import your bank statement to cut down on data entry.
Cons: Minimal integration of payments via PayPal, but they’re working on it. Phone, forum and email support on UK time-zone only.
Xero: the Ferrari
Based in New Zealand (yep, New Zealand). $10 – $40/month for multi-currency.
Pros: Gorgeous interface with groovy interactive graphs and charts. Most popular system with (the few) forward-thinking accountants online. Including mine (in Montreal). Best choice for multi-currencies. For service or product-based businesses (ecommerce with inventory, payroll, time tracking). Import your bank statement to cut down on data entry. Also has a Personal Checking option for $30 per year. Syncs with Freshbooks, PayPal, SalesForce.com, ShoeBoxed.com and many more.
Cons: Expensive if you need multi-currency option.
**Late additions**
Wave: the freebie (with ads)
Based in Toronto. Free, but with ads (same concept as GMail)
They received 5 million in venture cap October 11, 2011 and the President is quoted as saying “there are many online accounting services in the market, but none of them offers full-range services, free of charge. In 11 short months, we have signed in 75,000 small businesses in 198 countries to our services… When you’re logged into Wave you’ll see unobtrusive yet clearly marked Business Savings on pages like your Dashboard.”
Pros: Did I mention it’s free??
Cons: includes ads, tech support is email only, weekdays 9 – 5 EST
I’m not sure they offer They do not offer compound taxes (State and Federal compounded, not just 2 separate taxes) or true multi-currency (i.e. you have bank accounts in 2 currencies and customers in multiple countries). They sound promising, but they’re awfully new…I’d be inclined to wait another 6 months to see if they’re still around. Maybe Google will buy them 
Update Dec 2011: I spent 10 hours inputting data for a client before I learned via tech support that compound taxes are not yet supported and there’s no ETA on when we can expect them. This makes it utterly useless for companies in Quebec. Incidentally, tech support response time via email averaged a 5 day turnaround. Consensus amongst colleagues seems to be that they ‘need a bit more time on the vine.’
LessAccounting: the bootstrappers
Florida-based, $30/month, operating since 2007.
Run by 2 savvy developers, with a helpful compare page (https://lessaccounting.com/compare) where you can see (their version of) the differences between them and Xero, QuickBooks, Outright and Freshbooks. Also a list of apps they integrate with; note that they do not list Freshbooks, probably since they also offer a simlar adjunct service called LessTimeSpent.
Pros: Slick code, lotsa features, and they’ve had time to improve it.
Cons: Not sure if they offer true multi-currency support or compound taxes. Their About page shows that they have built other apps (LessProjects, LessTimeSpent) which makes me wonder if their main focus is accounting or general app development. The interface looks like it was designed by programmers, not designers: it needs a shot of pretty, stat.
Conclusion: If you’re in the US, Harvest Freshbooks + Outright is the way to go. If you’re in Canada, Freshbooks + Xero (or Kashoo) for medium-sized businesses, or the all-in-one FreeAgent for small businesses and freelancers. Billings is a great front-end for Mac users but does not integrate with any online accounting services. I ultimately went with Xero, as I have clients in Canada and the US, so I needed multi-currency support. Plus I just love the sleek, modern interface. Hey, when all else is equal, a gorgeous look and feel is the deciding factor (for me).
March 20, 2011 at 6:29 pm
Hello Belinda,
Many thanks for looking at FreeAgent and for writing us up here!
Just to set the record straight we do provide telephone support but it is on UK hours only unfortunately – 9am-5pm Mon-Fri UK time, on 0800 2888 691.
If you have any further queries please don’t hesitate to get in touch.
Kind regards,
Emily
June 28, 2011 at 7:34 pm
Thanks for letting me know. I’ve corrected it in the blog post.
June 28, 2011 at 6:58 pm
Very helpful. Thanks for sharing.
August 2, 2011 at 3:07 pm
Thanks for this great article, I think I’ll be switching to Harvest + Outright.
December 27, 2011 at 5:07 am
I tested harvest & outright but didn’t like it because harvest doesn’t export expense data to outright. Wave and kashoo have no mobile solutions which is important to small biz owners.
So I’m still stuck signing up for each service to test looking for the right one
December 31, 2011 at 4:55 am
Hi Thomas,
Kashoo has had an iPad app since August 2011: https://www.kashoo.com/blog/page/7/. Wave still has no compound tax option so is useless for Quebec businesses. I spent 10 hours inputting data before discovering this issue.
August 9, 2011 at 7:05 pm
Just wanted to say thanks for checking out (and using) Harvest, and for mentioning us in your post with the top invoicing app contenders. We’re happy to hear how much you like Harvest, and our support includes phones (with a real live person!), email, and forum as well! In terms of receiving international payments via Paypal, Business Payments are only available for USD, but PayPal Standard and Website Payments Pro are available internationally.
Please feel free to get in touch with us if you do have any questions – we’re constantly improving things here, and we love to hear from our users!
Karen, Harvest Community Manager
September 8, 2011 at 2:16 am
Thank you for the review, it helped me settle on FreeAgent.
I used FreshBooks for a month trial and loved it but I want to try something with some cloud accounting and bookkeeping goodness.
Two iPhone apps where released recently to manage your account on the go as well…
October 14, 2011 at 5:31 pm
What about LessAccounting?
October 14, 2011 at 5:34 pm
They also offer real bookkeepers at $70 or $270 per month depending how much time you need, as well as automatic daily synch with your bank. And the other one I have been looking at is Wave Accounting which is free and also has the daily synching. Too many choices!
October 14, 2011 at 6:29 pm
Hi hlodo,
I had not heard of LessAccounting or WaveAccounting. I’ve added my assessment above, after some quick research.
October 26, 2011 at 9:42 pm
Really helpful post. Thank you. We are trying the freshbooks/Wave accounting combo for our consulting business.
January 30, 2012 at 6:19 pm
Struggling to figure out which is best… Good post. Which offers the best recurring billing
January 31, 2012 at 1:01 am
Good question. I just started using recurring bill for a client with Freshbooks. There’s a How-to guide here http://community.freshbooks.com/support/does-freshbooks-support-subscription-based-billing/ Will keep you posted as to how it works out. So far the timing thing (e.g. automatic late fee emails) has worked fine.
February 17, 2012 at 5:55 pm
Hi there. Thank you for you article. I’m trying to make the same decisions you are … I was wondering when you decided on Freshbooks + Xero … Why are you including Freshbooks in the eqaution? Don’t the features overlap? ie. Can’t you invoice from Xero, and not use Freshbooks at all?
February 17, 2012 at 10:31 pm
You can, but Freshbooks offers 5 important features that I love: 1) easy interface where clients can instantly view their invoice, 2) it tracks when a client has viewed an invoice (no more “I didn’t get your invoice”), 3) they can pay instantly with a credit card or PayPal (I love getting paid quickly) 4) you can set up email reminders and late fees that automatically get sent to client if an invoice is overdue (I used to be very slack at followup), and 5) ability to send by email *and* a snailmail copy with a click of a button instead of having to print and go to the post office (hey it’s cold in Montreal).