FreshBooks Review: Features, Pricing & Alternatives for 2023

Setting up FreshBooks is relatively easy but took a while. We gave it a below-average score because it lacks certain features that are essential in accounting software, like setting the entity type and modifying the chart of accounts. However, these missing features must not be seen as a complete miss for FreshBooks, which still proves to be a good fit for certain users, such as freelancers and solopreneurs.

Another limitation we see here is that accountant access is only available in the Plus and higher plans. Freelancers who don’t have knowledge of accounting are the primary clients of certified public accountants (CPAs) and bookkeepers. If they choose to get a Lite subscription, they won’t be able to invite their personal accountant unless they upgrade plans.

However, we still commend FreshBooks for its simplicity. As accounting and bookkeeping experts here at Fit Small Business, we saw that the platform is user-friendly for those wanting to get their business in order as accounting is made easy, but it sacrifices certain features.

Available for Premium and Select users, the A/P tool includes bill and vendor management features, which can be found under the Expenses tab. Transactions entered manually must be recorded to the Petty Cash account—and those transactions can be assigned to a bank account when the transaction is imported via the bank connection and during bank reconciliation. Therefore, there’s no way to assign expenses to the appropriate payment accounts without allowing FreshBooks access to your bank account.

Connecting your bank account is a great time-saving feature. However, if you’re uncomfortable allowing a connection, you’ll be better off with QuickBooks, which allows a connection but doesn’t require it.

On a tangent, you can create a new vendor on the fly and enter a bill from scratch or by uploading a receipt. To enter a new bill, click on the Expenses menu, select the Bills drop-down menu, and then tap on the New Bill button. Provide the required details in the New Bill screen and then click Save.

Add a New Bill Screen in FreshBooks

FreshBooks also allows you to record a payment and assign it as billable to a project or contractor. You can also set up nonstock and service items within a service order and add a default price for each item, but you can’t use the item to pay independent contractors. A/P is connected to your cash flow statement and profit and loss (P&L) reports, so you can view outstanding bills instantly.

There are many important invoicing features in FreshBooks, but its outstanding invoice customization features are the reason why it has a high score in this area. Its invoices look professional, and you can customize the style, add a logo, include a personal message, and add items, such as inventory, labor and expenses, and sales tax. You can also email and print your invoice.

Another nice feature is the ability to create recurring invoices, which comes in handy if you’re billing a customer for the same amount on a regular basis. You can also view a filtered list of your outstanding invoices so that you can send your customers a friendly reminder.

To add a new invoice, click on the Invoices section, hit the New Invoice button, add your details and customize your invoice, and then click Save.

Create a New Invoice Screen in FreshBooks

Despite its great features, its A/R has shortcomings. You can’t issue a receipt for a sale paid immediately, issue a refund check to settle a negative A/R, and include a sales tax adjustment on a credit memo.

FreshBooks doesn’t perform well in terms of banking and cash management. You can’t reconcile bank statements unless you connect your bank account. If you’re uncomfortable connecting your bank account, then this isn’t for you. At the very least, good accounting software should allow you to record a check in the register—but that’s not possible with FreshBooks.

All transactions are deposited or withdrawn from cash on hand automatically. From there, transactions can be assigned to bank accounts, but only by utilizing the connection to your bank account. This makes FreshBooks nearly unusable if you don’t establish a bank connection. Even if you connect your bank, there’s no way to assign outstanding checks to a particular account so that you can see an available balance.

Almost all software allows a bank connection, but FreshBooks is the only one among its major competitors that requires the connection. But we don’t look at this in a completely negative way. With FreshBooks, users don’t have to remember to assign expenses to a particular bank or credit card account. Record the expense, then FreshBooks will assign it to the proper account based on the transactions it receives from the bank feeds.

If you need project accounting, FreshBooks is an ideal choice—unless you need inventory accounting. It includes project management features that work directly with its invoicing tool to help you manage timelines and simplify project workflows. You can create an estimate and add items such as labor, inventory, and sales taxes.

Once approved, you can convert an estimate to a project and allocate actual labor cost details. You can also compare estimated costs against actual costs, which is important for budget planning. If you need specialized accounting software for project management, check out our list of the best construction accounting software.

FreshBooks lets you add sales tax items to bills, expenses, invoices, credit notes, and other income and vendor transactions. While you can track sales taxes, you have to set up the sales tax for each jurisdiction manually where you’ll be collecting tax. You can generate a tax summary report to see the amount of sales tax collected as well as view your sales tax liabilities. However, you can’t use FreshBooks to pay and file your tax returns.

We evaluated the sales and income tax features across the other categories, so there’s no separate video.

While you can set up inventory descriptions to be added to bills easily, there’s no way to track the number of items on hand, the value of stock available, and the cost of your inventory sold. Tracking your inventory costs by hand with a spreadsheet is very time-consuming and unnecessary with the right software.

So, if your business deals with inventories, then you need to look for an alternative to FreshBooks—and we recommend more powerful solutions like Xero, QuickBooks Online, or Zoho Books to avoid a spreadsheet nightmare.

FreshBooks’s inventory management is assessed across the other categories, so we have no separate video.

If you only need basic financial reporting, you should do fine with FreshBooks. It generates a wide range of reports, but they aren’t as detailed as QuickBooks Online’s. For instance, the balance sheets only show main categories, which means you can’t drill down in reports for more specific levels of detail, such as classes and location. Other reports available include A/R aging, A/P aging, income or loss by month or by customer, trial balance, and general ledgers (GLs).

FreshBooks has earned a reputation for its award-winning customer service. It offers nearly all types of customer support, including phone and email support. You can speak with a customer service representative over the phone, which is rare among accounting software providers.

You can also browse its vast self-help resources, which include how-to articles and answers to frequently asked questions. Amid FreshBooks’s limitations in scalability, we still praise the software for providing an easy accounting solution to users without accounting knowledge.

FreshBooks has a capable mobile app that you can use for sending invoices. It can execute almost all the functions of the desktop interface—you can enter bills, accept payments, attach receipts, and record time worked. If you often do your business on the go, FreshBooks’ mobile app won’t disappoint you.

What’s missing in the app is assigning expenses to projects. We praise FreshBooks for its project accounting features—and we’d like to see this in the mobile app. Moreover, there’s no way to enter bill payments and categorize bank feed transactions from within the app.