This is Day 7 in the 31 Days to Become a More Efficient Virtual Assistant Series
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I’m a bookkeeper and I’ve used QuickBooks for years. QB offers a time-tracking feature so I’ve never really looked into all that Freshbooks offers until several months ago. This is an example of one of those “I could kick myself” moments. I should have implemented it long, long ago. It’s well worth the $29.95/month I pay for it.
Once my son graduates from high school I hope to travel much more and I’d love to get all of my payments via wire transfer, Paypal or credit card. Freshbooks gets me much closer to that desired goal.
Don’t dismiss Freshbooks until you read the entire post because there are useful features for both the solo business owner as well as those who have team members working for them. You may just be thanking me afterwards. (PS: Not only do I love Freshbooks, but I love brownies too!)
How I started with Freshbooks
I have a number of clients who pay me through Paypal and while I love getting my money quickly I always choked a little bit at the end of the year when I looked at just how much of my money Paypal kept throughout the year. I would do the math and say, “Oh my, I worked XX hours for free this year!” After Paypal kept their ~3% of a $3600 payment I knew it was time to figure out an alternative. I’ve written before about Intuit Payment Network (a great way to get payments for only $.50) and I approached my client asking if she’d be interested in switching my payments from Paypal to IPN. She said she didn’t really want to sign up for something else and asked if I’d do some research as she thought she heard there was a way you could also get money from Paypal for just $.50.
It turns out there is a way to invoice and receive YOUR money through Freshbooks/Paypal for a mere $.50 deduction. And that’s how I ended up using Freshbooks, in a very limited capacity, for over a year.
Fast forward to mid-September 2013 when a client had a team member leave and more work landed in my lap. One of the new tasks included reviewing time sheets for all team members and each month determining how much time and money was spent on various items, by each team member, throughout her company. I knew there had to be a way that was much more efficient for all parties involved and that lead to me “playing” with Freshbooks for over four hours.
That is when I realized I should have moved to Freshbooks for time-tracking and invoicing years ago!
5 Five Advantages of Using Freshbooks as a One-Woman (or One-Man) Shop
- Time-Tracking: Keep to the minute records by task, project, or client. This works great if you have package pricing or charge by the hour (the set-up varies a bit depending on your scenario).
- Easy invoicing: quickly invoice clients for actual time worked or on a flat, per-project rate (you can email or snail mail invoices). Invoicing is also highly customizable – you can chose the level of detail you want to include on the invoices (super detailed or grouped).
- Save Money: If you don’t mind waiting a few days for an e-check to clear through Paypal you can receive your money for just $.50 by selecting the “Paypal Business Payments” option when you create your invoice (a bit later in this post I’ll explain exactly how this works in more detail).
- Accept Credit Cards: Freshbooks integrates with Stripe Merchant Services so you can also offer your clients the option to pay by credit card (including AMEX). Learn more about Stripe. Spoiler Alert: Stripe is incredibly easy to set-up and there are no monthly fees and no annual compliance fee.
- Automate AR follow-up: You have the option of setting up email reminders to automagically be sent to clients when their invoice is past due.
Let’s move into the scenario of using Freshbooks as a company when you have contractors working for you. All above items still apply in a “company” scenario.
This may very well be my favorite feature of Freshbooks and without a doubt it is the one change to my previous invoicing system that has saved me the most time and headache, both for my team as well as for the teams for my Online Business Manager (OBM) clients.
You can invite team members to your Freshbooks account as a “contractor” and this is where all kinds of awesomeness takes place.
Five Advantages of Using Freshbooks as a Company with Team Members
- Monitoring: Easily see where time is being spent, in real-time, by each member of the team or by project/client.
- No more waiting: Because your team members’ time is recorded to the appropriate project/client you don’t need to wait for your 1099 contractors to invoice you so you can invoice your clients.
- Configure various pricing structures: You can choose to pass through team member costs to your clients based on a flat fee (per project); hourly task rate, hourly team member rate or flat hourly rate.
- Export Data: One current disadvantage of Freshbooks is they do not currently have a way to create one invoice that has detailed sub-totals for each project. If you have multiple clients and multiple team members you likely want to keep track of how much money is being spent for each client (this can help identify and prevent scope creep). They do, however, allow you to export time by project, client, team member, etc. into CSV or Excel so you can easily sort, filter and calculate to extrapolate that information.
- Configure Access: For each team member you can customize which projects they have access to for time-keeping purposes. When you take on a new client it’s super easy to grant access to all team members who will be recording time for that client.
How You Can Save Money (and headache) With Freshbooks
In point three under the “solo” scenario I mentioned the Paypal Business Payments option and promised more detail about how it works.
When you chose this option on your invoices your customers can pay you through Paypal (but not with credit cards) and it’s treated as an e-check.
If the person paying has a balance of cash in their Paypal account (i.e. more than your invoice amount) you will receive your money instantly, less the $.50 fee.
If the person paying does not have a balance in their Paypal account (or has less than your invoice amount) then the payment will take approximately five business days before it clears and is available in your Paypal account. Why is that? Paypal is requesting funds to be transferred from the connected bank account to be transferred into Paypal. This is essentially the same as a check clearing and it takes a bit of time.
As an example: I have one client I’ve invoiced about $33K for 2013. Normal Paypal fees of approximately 3% would have cost me nearly $1,000. I’m on Freshbooks second tier plan at $29.95/month. Annual cost for Freshbooks only costs me $359.40. You can figure out the math from there and she’s not the only client paying me through Paypal so my savings are even greater.
As a related side note: If you have instances where you can’t avoid the ~3% Paypal fees be sure to watch your monthly sales amounts because you can apply to have your percentage reduced after you have at least $3,000 in monthly sales. More info on that here (Look for: Volume Discounts).
I fully integrated Freshbooks for myself and my team in October 2013 and I’ve saved an incredible amount of time because I no longer have to wait for my team members to invoice me (no more reminders to them either!). Interestingly enough my AR turnaround time has decreased as well because people who used to be slow in mailing me a check now pay by credit card and that’s 3% I’m happy to pay because it means I no longer have to continually follow-up to find out when payment will be mailed. And it’s so incredibly easy for my clients to chose the payment option they prefer. In my opinion Freshbooks is a win-win all around!
Note: I do not recommend Freshbooks as a bookkeeping solution. Bookkeeping is about checks and balances, and bank/credit card reconciliation is an important piece of “checks and balances”. In my case I still use Quickbooks for all bookkeeping needs.
Disclaimer: The Freshbooks link is an affiliate link. You won’t pay anything extra by using my link. While I won’t get rich from your use of them yet I do appreciate it if you chose to use them.