Freshbooks, fantastic billing system; Accounting system not so much.

Freshbooks, fantastic billing system; Accounting system not so much.

I love Freshbooks. I use it in my own business. It’s a fantastic billing system. It has been responsible for reducing my accounts overdue by as much as 30%.

But I was a little disturbed when I received an email from the head of Freshbooks announcing that from this day forward Freshbooks would be known as “Cloud Accounting”. What? I kept reading, quite puzzled. Yes I agree that the product has grown in functionality and is not simply a billing system anymore, but seriously an accounting system?

An accounting system compromises core modules such as accounts receivable, accounts payable, payroll (optional), inventory (optional) feeding into a general ledger (the backbone of the accounting system) and other non core modules such as billing, timesheets etc.

Freshbooks has accounts receivable but has cash basis for expenses and does not have that feeding into a complete general ledger.

In my opinion the key to an accounting system is the ability to reconcile. Ie make sure you’ve accounted for all possible transactions. Can you reconcile in Freshbooks? No.

I can imagine clients giving their tax accountant access to their Freshbooks accounts to complete their “books”. Basing on that information solely you cannot guarantee its accuracy. A tax accountant would probably request subsequent information, which may in fact cost more for the client as they “verify” the information.

If you buy assets or have loan repayments or draw funds from your business you cannot “account” for those in Freshbooks. It does not have a complete general ledger system allowing you to print a balance sheet and see the worth of your business.

So, why oh why would Freshbooks now market themselves as an accounting cloud system? Has all their favourable feedback gone to their heads? I think it might have. They have a strong customer base and have now positioned themselves in a market for which they do not belong. I foresee problems ahead. Perhaps I’m wrong perhaps I’m too pendantic about what a true accounting cloud system like Saasu or Xero is. Maybe I am, but I’m sticking to my guns,

Freshbooks is not could accounting.

Freshbooks is however a fantastic billing system.

3 comments

  1. Hi Alycia,

    Thanks for the post! I’m Kasey, and I work at FreshBooks :) I’m the Accounting Ambassador, which is a snazzy way of saying I work with accountants and bookkeepers, helping their clients (and them!) work with FreshBooks.

    You make a lot of good points here, it’s a good article! We don’t handle loan repayments or asset management – that’s correct for sure. The move to Cloud Accounting was based on what our customers, the small business owner, needs to run their business day to day, while still looking to their accountant to help them with the tough stuff. We want to make it as easy as possible for a small business owner to keep themselves organized (no more word doc invoices!), and we’re working to give them even more of what they need to do that, while still keeping things easy to use.

    We’re definitely not your traditional accounting system for accountants, and I don’t think that’s where we’re headed, but to our customers, we’re what they use for their day to day books, hence the change. I definitely do understand your comments though – and thanks for them! Always good to hear from pros like yourself feedback on what we do. And thanks for the compliments too! Billing is our core, and we’re working to make that experience the best it can be (with some additions that tie to it) :)  

    If there’s anything at all I can do to help, or give more insights, I’d be happy to! 

    Kasey
    kasey@freshbooks.com

  2. Obviously an important distinction between cloud accounting and a cloud billing system. Of course moving to an existing product to an online format can improve it’s functionality significantly, but still won’t allow it to do something it’s not designed to do. There are many great online accounting tools these days and we’re really spoilt for choice.

Leave a Reply

Your email address will not be published. Required fields are marked *

*


− 1 = five

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>