FreshBooks Will be the FreshBooks of Accounting

[The following is a lengthy post that outlines directions FreshBooks will be taking in the next few months and why. This post was inspired by a post by Canadian venture capitalist Paul Kedrosky who posed the question, “Where is the FreshBooks of accounting?” because FreshBooks appears to be just focused on invoicing. The answer is FreshBooks will be the FreshBooks of accounting.]

Perspective is everything in business – it influences strategy. You don’t always need a great new idea to be a success; often it’s better to take an old idea, tweak it slightly and make a success with that. So it is with FreshBooks.

When we were running our web design and development consultancy before FreshBooks, we struggled to find the best way to invoice our clients. What we wanted was a solution that saved us time and made collecting money easy. We had to choose between Microsoft Word and Excel or more complex traditional accounting solutions like Intuit’s QuickBooks or Sage’s Simple Accounting and I said, “Forget it, there must be another way”. Since neither Word/Excel nor QuickBooks were the right tools for the job we built our own system and traveled a third path.

Most businesses start using Word and Excel to manage their invoices because one day they need to bill a client and they have not prepared for it. The need almost comes out of the blue since it’s the nature of entrepreneurs to be more focused on doing interesting work and serving clients; billing is an afterthought. I once read that 3.5 million US businesses are using QuickBooks, and 6.5 million use Word/ Excel. So entrepreneurs use Word or Excel because those tools are there when the time comes to send that first invoice and they rarely look back…until the pain sets in.

What kind of pain do Word and Excel create in your billing process? First, invoice formatting is a pain and your documents don’t look great. Then there is the management of your files. Have you ever tried to track which of your invoices have been paid in Windows folders, or tried to tell how much an invoice was for by looking at files in a folder? Total nightmare.

In the other ring we have QuickBooks. There is no doubt that QuickBooks is a great tool and Intuit is a fabulous company. I met Scott Cook (the founder of Intuit) at the Web 2.0 Summit and basked in his creativity and ideation. But you know what? When I repeatedly get emails that say “FreshBooks does 10% of what QuickBooks does – the 10% I need”, I know the QuickBooks pain of having to go through five steps to get one thing done is too much, and I know FreshBooks is on to something.

In the months to come you can expect to see FreshBooks tackle more fundamental accounting functions things like expenses and estimates. I won’t say anything else now except that you can expect us to deliver these services the “third way”. They will be UnAccounting services that are fast to use, save you time and make your business look more professional. We’re excited to be forging the path, we hope you come along for the journey. To see the benefits of FreshBooks’ UnAccounting services, read our 2006 customer survey results.

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  • dave

    I would be keen to see the estimating functionality first. This is the start of the invoice process, and it is the number one reason why I haven’t switched to freshbooks yet for our business from quickbooks(though I recommended it to my wife, who loves it).

    I have seen Mike’s posts about payroll and expenses, and my recommendation is finish the revenue/customers cycle before doing payroll or other expenses. Or what about a quick poll?

  • Mike McDerment

    We share your point of view Dave…doing things the way we do and making additions it fit in with everything else we have going on between our ears, we have many considerations with respect to the order of the roll out. So I won’t give a definite answer to you on the order of things, but then again…we share your point of view…

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  • Wayne

    Hi Mike — followed the discussion from Paul’s blog.

    My 2C: just make sure it’s “easy” to export/import data. As manufacturers with an in-house web-based workflow/accounting “hub” fed externally by our online payroll and banking, etc, we are very interested with what you come up with: The less work we have to do on our “hub” the better. Currently, invoicing is part of our hub, but I’ve recommended freshbooks to friends in service businesses.

    This may seem like an obvious request, but tools like
    quickbooks online were clunky on the data import/export issue. We had to dump them (one of many reasons).

    Tools like netsuite make import/export too complex — using a needlessly-complex api, etc, and bringing along alot of other baggage we didn’t need (or implementing it in such a generic way as to be useless to us).

    This stuff isn’t rocket science, and for the life of me I can’t figure out why accounting packages are so complex. But you already know that :)

    If you want to chat via email, I’d be happy to. Between you and blinksale, there’s some light at the end of the tunnel for small-business accounting :)


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  • David

    We’re using MYOB and I’ve used many other acounting apps in the past. All of them have problems with lack of flexibility and forcing us to do things their way.

    WE are just now looking at how we move to a simpler for flexible approach to the business accounts. Part of that, is to move to a Payment Basis for accounting. That is accounting for sales when funds are received (not when invoiced). This means that we can move away from onerous double entry ledger type systems (like MYOB) and have our accountant generate financials from banking records that they get automatically through online connectors to our bank accounts.

    With this in place – we no longer need MYOB but a simple invoicing and Accounts Receivable manager (to make sure we get paid). Freshbooks should do the job.

    Please make sure though that you have a simple usable API so that we can start to integrate ours and other applications.

    Basecamp is a great start. Make sure you integrate with Highrise too. I’d love to see for example outstanding accounts balances or unpaid invoices associated with Highrise contacts.

    Integration is the killer feature for these business management apps. While simple is great – integration saves use time and time is money.

    p.s any chance of providing postal services outside the U.S? (NZ for example)

  • David Terrar

    I run the UK territory for Dutch company Twinfield. We aim to be the best back office accounting solution for SME/SMBs to do the mandatory accounts preparation stuff as efficiently as possible and make it easy for companies to collaborate with their accountant/business advisor. I completely identify with your unaccounting approach to getting the operational things that the business really needs done as quickly as possible. Whether it’s QB, Twinfield or anyone else, it should then be our job as accounting solution providers to take those transactions in to the books without any re-keying so we can produce the accounts as painlessly as possible, and provide some useful reporting. The accounts part needs to be done, but we should be hiding us much of the double entry, debit and credit stuff as possible – the more automated data entry from the invoicing application or the bank statement the better.

    Twinfield has 22,000 subscribers, rising at 10-15% per month. Customers range fro sole trader businesses to 1000 users. I’d love to hook up with your team to explore how we could have a standard link from FreshBooks to Twinfield.

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  • Stacelynn

    As a Mac user who LOVES Freshbooks and detests the options (or lack thereof) available to me for my other accounting needs, I am truly excited about Freshbooks heading in this direction. Bring it on!

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  • Chris

    I am a solo web developer, starting to grow my business, and getting frustrated with my Freshbooks/Bootstrap solution. I was absolutely enamored with Freshbook’s ease, the ability to accept payment and track time all in one place, the ecosystem of 3rd parties, and the snail mail service. Wow. What an amazing thing for a small time operator like me who has 20 hats to wear and am too cheap/small to hire a bookkeeper. When I started actually using bootstrap and freshbooks together I got frustrated with the need to have two systems in the first place, and then had even more challenges getting the right reporting out of Bootstrap for my overhead. I started to look at other options for GL and AP, and found that a Freshbooks and IAC-EZ combo would work very nicely for my needs. At a cost of $34.98/month. I can get Quickbooks Pro for $79.99 at Costco (with a sweet coupon) so the economics of the SaaS solution is not very strong for me. Normally, the cost of buying boxed software vs hosted should balance out at least after a year, 2.5 months just ain’t right. I understand there are more conveniences and benefits that Freshbooks and IAC-EZ can offer me, and as a Mac user it irks me I have to open a VMware session to run my accounting software, but the pricing/performance formula just doesn’t make sense for FB+IAC-EZ.

    I say all that to say this: If I could have one system that did everything, I WOULD pay that much, knowing that my time is worth more than what it would take to fight with quickbooks. But having to learn two systems, getting them to talk to eachother, and paying a premium to do so doesn’t pencil out for me.

    So, please, even though I’m sure there has been many hours of strategy meetings and the consensus keeps coming back to “We need to be really the best in the invoicing arena and leave the rest to our partners” I for one am wishing that you would move to being “The Whole Enchilada”. Please, let me know if/when you do.