We look at how to choose an online invoicing software service -- the questions to ask and the features to look for.
The ability to send clients an invoice electronically has never been easier or simpler. But how do you choose the right online billing service for your small business -- or determine if online invoicing is right for you?
While only you can ultimately determine whats right for your business, Small Business Computing is here to help make the decision process a bit easier, by letting you know what to look for. We also give you an overview of three of the most popular and reliable online billing services -- FreshBooks, Harvest and Zoho Invoice.
The Pros and Cons of Online Billing Software
While online invoicing is easy and inexpensive (even free in some cases), it isnt for everyone -- or every business. If you dont have reliable Internet access, are uncomfortable using the Internet or cloud-based software, or your clients dont have reliable Internet access or dont like doing business online, online invoicing may not be right for you (even though most online invoicing solutions will let you print and even mail invoices to clients).
However, if you have a computer -- or smartphone -- and a reliable Internet connection and send invoices to clients on a regular basis, using an online invoice service can save you both time and money.
Among the many benefits, an online billing service provides anywhere access, meaning you can access your data from anywhere you have an Internet-accessible device. You're not tied to your office computer and can generate and check the status of invoices anytime, anywhere -- a big plus for business owners or managers who are frequently on the road.
Another advantage to using an online billing service, "zero maintenance," stated Raju Vegesna, the evangelist for Zoho and an online invoice expert. When you subscribe to an online (or cloud-based) invoicing service, you dont have to worry about upgrades. "Your invoicing system is always up to date. If the vendor adds a new feature, all you have to do is refresh the browser."
Similarly, assuming the vendor uses the highest level of data protection (the leading online invoicing services do), your financial information is typically safer than if you stored it on a single laptop or desktop at the office.
Finally, theres the speed and transparency that online invoicing provides. A good online invoicing service lets you create, track and manage invoices easily -- even automatically alert customers when an invoice is overdue. You dont have to constantly follow up with customers to see if they received or paid your invoice. Not only does that save you time, it can get you paid faster.
Questions to Ask Before Choosing a Billing Service
Youve made the decision to try online invoicing. How do you choose the right solution for your small business?
"Choosing an invoicing solution purely depends on the users business requirements," explained Zohos Vegesna. "If you send out invoices in multiple currencies, it is important to pick a system that supports multiple currencies."
Similarly, if you regularly send invoices to the same client or clients, its important to choose a solution that supports recurring invoices. And if your customers prefer to make payments online (for example via PayPal or Google Checkout), or they prefer to receive printed invoices (via the mail), choose an online invoicing application that supports those options, he said.
Other questions to ask or think about when choosing an online invoicing solution include:
How long has the vendor been in business -- and has it received favorable reviews?
Before choosing an online invoicing service, read what others have to say (by doing a Google search or checking out online forums). Ask fellow small business owners which service they use and if they are happy with it.
Has the vendor had problems with security and/or data loss or service outage?
Dont be afraid to ask the vendor about security and outages -- and check with other users if they have experienced any outages or loss of data.
Does the service support online payments -- and which online gateways does it integrate with?
While most online invoicing solutions integrate with PayPal, if your clients use or prefer another payment gateway, make sure the online invoicing solution you choose can support it.
Does the service provide online time tracking?
This feature can really save you time -- and it makes generating an invoice simple.
Can you customize invoices, beyond just adding your logo?
If having a unique-looking invoice is important to your brand, make sure you choose an online billing solution that supports easy invoice customization.
Is the solution flexible and scalable?
Can it grow (or shrink) with your business -- that is, allow you to upgrade or downgrade -- without a hassle?
Does the service generate automatic reminders?
"Automatic reminders solve the etiquette problem and awkwardness of asking your client to pay an overdue bill, and it can save you time," noted Karen Schoellkopf, community manager at Harvest.
What level of customer support can you expect?
If you run into a problem is there a number you can call? Or can you only send an email, or submit a question via a form? Are customer service representatives available 24/7 or just during normal business hours (e.g., 9 a.m. to 6 p.m. Central Time), or does it depend on the level of service you purchased? These are important questions to ask up front.
Perhaps most important, find out -- by doing a free trial -- if the online billing service you're considering will actually save you time. "Evaluate it like any business decision," said John Coates, the marketing communications Lead for FreshBooks. "How does the new solution compare to your current solution for invoicing? If it saves you more hours in billable time than the monthly subscription, its worth it."
Evaluating Three of the Most Popular Online Invoicing Solutions
While there are dozens of free or low-cost online invoicing solutions currently available, three of the most popular and reliable choices among small business owners are FreshBooks, Harvest and Zoho Invoice. All three services were specifically designed for small business use and they all share the following features:
30-day free trials (and/or 30-day money back guarantees)
Create, track and manage invoices from a Web-connected computer or smartphone
SSL encryption and a high level of data security and backup
Some form of customer support
What are the main differences between the three services? Price, interface, some features -- and personal taste. Heres what three small business customers had to say about the three billing services. Also, be sure to ask business owners you know and trust what online invoicing service they use -- and do a 30-day free trial.
FreshBooks prides itself on being incredibly easy (and intuitive) to use and for providing "stellar customer support." Unlike some other free or low-cost invoicing services, "FreshBooks picks up the phone," boasted Coates.
Other noteworthy features:
- Easy time tracking
- Ability to see the entire invoice trail, including when a client has viewed and paid it
- PayPal integration
- Multi-currency invoicing
- Set-it-and-forget-it email late payment reminders
- Streamlined reporting (profit & loss, income taxes, sales taxes)
- Ability to collaborate with staff and contractors
- Dozens of helpful add-ons
For Larissa Schwartz, a digital strategy and user-experience consultant who works with small and mid-sized businesses, using FreshBooks has been a huge plus. "I initially chose FreshBooks because it was free for a limited number of clients/projects," she explained. "I stayed with it because it is easy to use, continues to add new features and is responsive to customers."
Schwartz found FreshBooks time-tracking feature efficient and easy, allowing her to create an invoice in seconds. Tracking revenue is also easy. "You can see where your total revenue is at a glance or drill down by client or project." And she likes that FreshBooks lets you accept payments online. "Clients love it," she said. "Even if they dont use it, their perception of my business has changed for the better because of it."
The only downside to FreshBooks, if you plan on having two or more employees using the software, you will need to purchase the "Mighty Oak" monthly subscription for $39.95 -- and that only includes one additional staff member (with additional members costing $10 each).
That said, if you are the only person who will be using FreshBooks and have just a few clients, you can get a free monthly account, which lets you manage up to three clients -- and send an unlimited number of invoices -- using the software. For businesses with between four and 25 clients, FreshBooks has a "Seedling" subscription for $19.95 a month. And theres the "Evergreen" subscription for businesses with more than 25 clients.
Like FreshBooks, Harvest prides itself on being incredibly easy to use -- and having excellent customer service.
"I love the simple, easy-to-use interface -- and the ease with which I can create and send invoices," said Zach McNair, a creative director and photographer who has been using Harvest for about six months. And "the service is top notch."
But, like a lot of small business owners, McNair was initially hesitant about using an online invoicing service, especially if he had to pay a monthly fee.
"The monthly fee [even though it was only $12/month] scared me," he confessed, which is why he initially stopped using the software when his free trial ended. But then he realized that if he spent more than 10 minutes a month on invoicing clients, Harvest was going to save him money. "It was a no brainer," he said. Indeed, since using Harvest, McNair has not only been able to spend more time on his business, but he's been getting paid a lot faster.
Noteworthy Harvest features include:
- Powerful un-invoiced time reports let you quickly scan and find all of your outstanding, unbilled amounts for each client and project. "You can view the amount by month, quarter or year; and each client has an "Invoice" button -- simply click it to immediately create an invoice for the selected timeframe," explained Schoellkopf.
- Automated late invoice email reminders
- Set project budgets, "so that you can stay on top of how much time youre spending on your projects, and you get automatic email alerts when projects reach budget thresholds."
- Estimate generation -- and the ability to get estimates approved online
- Work and bill on retainer
- Easy to upgrade or downgrade
As for pricing, Harvest offers Solo ($12/month with up to three users), Basic ($40/month for up to 10 users) and Business ($90/month for unlimited users) subscriptions, all of which include unlimited clients, projects and invoicing -- as well as time tracking, multi-currency invoicing, reports, data import and export, third-party add-ons, Google apps integration, monitoring and daily data backup and customer service.
Full-featured Zoho Invoice is another good online invoicing choice for small business owners, especially if they already use Zoho apps.
"I did some quick Web research to gauge others satisfaction before beginning to use Zohos invoice application, and I found that customers were very satisfied with it," reported Larry Hawes, principal, Dow Brook Advisory Services. And now he counts himself among that number.
"I really dont think you could ask for more features from a free service [for up to five invoices/estimates per month]," he said. Since he began using the software in February 2010, "it has been 100 percent reliable and has served the needs of my small business well."
Hawes likes Zoho Invoice's ease of use, the built-in time-and-expense tracking and the customizable templates (though with the free edition, you cannot remove the Zoho logo from outgoing emails).
The one thing he doesnt like: you cannot apply an absolute dollar amount discount from a list price. (You can only do a discount by percentage.)
Other noteworthy features of Zoho Invoice include:
- Generate PDFs -- and/or have Zoho mail them first class via the U.S. Postal Service using its zPost feature
- Integration with Zoho Business suite
- Create, maintain and track recurring invoices
- Automatic late payment reminders
- Integration with PayPal, Google Checkout and Authorize.net
- Support for multiple currencies and languages
As for pricing, you can use Zoho Invoice free if you plan on sending five or fewer invoices or estimates a month -- and have only one or two users. However, for $15/month (the Standard package), you can send out up to 150 invoices or estimates per month, have up to three users and unlimited projects.
For $25/month (the Premium package), the number of invoices/estimates goes up to 500, and the number of users goes up to four. And for $35/month you can send up to 1,500 invoices using the software and have up to five users.
Note: all monthly service plans allow you to have an unlimited number of customers and all but the free plan allow for an unlimited number of projects. Similarly, all plans include customer support, SSL encryption, and the same basic feature set.
Jennifer Lonoff Schiff is a regular contributor to Small Business Computing and runs a marketing communications firm focused on helping small and mid-sized businesses.
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