Thursday, March 26, 2009

If you don't send bills, you don't get paid

Getting laid off wasn't a total shock - I knew my position was precarious and I'd been looking around for a while and thinking about what my next step might be. I had wanted to own my own consulting business for some time, and had a lot of contacts that I could reach out to. So I was lucky - when I left my job, I started consulting within days and a month later I was taking on as much work as I could possibly handle.

Which, of course, meant I had no time to think about things like setting up a business, accounting systems, invoices and so forth. My first invoices were rather crude documents created in Google Docs. Google Docs is a wonderful tool and I'll write about it later, but it's not the best way to create and track invoices and payments. (Nonetheless, I did get paid! :)

I've been using Quicken for my personal finances for almost 20 years, so of course I know about QuickBooks, but it didn't appeal for me for a few reasons. First of all, I know how Quicken works so I felt I had some idea of how QuickBooks would work, and I was not looking forward to the experience. Second, I had bought a MacBook a couple of years back to use for consulting, and I wanted to be able to keep my records using the Mac - which rules out QuickBooks. (Yeah, I know you can run Windows software on a Mac, but it has major drawbacks.) And I didn't really like the idea that I'd have all my records on my consulting laptop, and if I lost or broke it I would have to go to backups. So for a while, I made do with my Google Docs.

Then, someone told me about FreshBooks. FreshBooks is a Software as a Service (SaaS) program that runs online and lets you create and track invoices. With FreshBooks, you set up your client information and then generate invoices that can be emailed or, if you like, FreshBooks will mail them in a professional-quality envelope for you for a very reasonable price ($1.39, or less in higher volumes). The invoices look clean and professional, you can customize with your logo, and the email service is particularly nice - your client gets an email that points to a customized page that shows their outstanding invoices.

I find the Time Tracking function particularly useful. Some days, I work for as many as three different clients at different times of the day, and FreshBooks has a timecard-like function that lets you enter your work time as well as notes. One of my clients wants the invoices to contain details about what I did each day I work for them, so I enter these notes as I enter my time. As a bonus, there's a free iPhone client so you can enter your hours without even going to the site.

You can always see exactly the dollar amount of your outstanding invoices, and as they get paid you enter this in the program and it tracks them for you. The interface is quite slick, extremely sophisticated and clean. FreshBooks is a model for online software that doesn't try to do everything - it has what a small business, or even a medium size business, needs to do fairly straightforward billing, quickly and simply.

There's a lot more to the program than I'm describing, so I suggest you take a look for yourself. The price is right too - a single consultant with up to three clients can use it for free. Right now, that's me, although I'm going to be sending a bill to a fourth client next month, at which point I'll be paying $14/month for the service.

Some people might have a problem with keeping their financial information on the web site of a software vendor. Certainly there's an element of trust here, and I do make local copies of the information on a regular basis. Some other time, I'll write about my thoughts on using online services such as FreshBooks. I believe that most people are going to come to accept this as a common practice, just as many were wary at one time of entering credit cards for online vendors. And it's great that if I'm out at a client site, and some asks me for a copy of an invoice, I can produce it right then and there whether I have my own laptop or not.

There are a few things about the program that don't work for what I'm trying to do - later on, after some of you have had a chance to try it, I'll post a few tips and tricks I've figured out.

If you do try FreshBooks, I'd be glad if you would use my referral page, since I'll get discounts down the road if you do.

So, how do you bill your clients? What do you like or dislike about your approach? Please write me or post a comment, I'd like to hear about your experience.

If you are generating income, you probably also have expenses, and keeping track of expenses and the receipts that go with them can be a real pain. In my next posting, I'll tell you about a tool that does an amazing job of helping you save time with your expenses and receipts. No, it's NOT a scanner...


  1. See, accounting is not that easy, is it??
    Best of luck with the consulting business - I know you will be a great success..

  2. Hey Michael, thanks for the review! Word of mouth is the cornerstone of our business so recommendations like this are hugely important to us.

    We're always working and improving FreshBooks, so stay tuned for further updates. If you do have any specific recommendations, just drop us a line and we'll see what we can do!

    Thanks again!

  3. I am definitely going to check this out. I wish I'd known when I was freelancing more heavily. My system is so inefficient. I would create the invoice as a word file and then email it to the client, printing out a copy for me that I would put in an "outstanding invoices" folder. Then when I got paid, I would file the invoice with the check stub in my tax accounting folder.

    Definitely will check this out. Thx!

  4. Oh, and your title made me wince. I have 3 months of invoices to send out!

  5. I just ran across zoho invoice. Haven't had a chance to check it out though, but some of the zoho products are nice.