Freshbooks sounds like it might be the latest social networking site but in fact it is something more useful: an online invoicing and time tracking service. Priced to suit individuals such as freelancers, it can be used by small- and medium-sized businesses as well.

In a visit to the company’s offices in Toronto I learned that they are extremely proud of their customer service, which they feel sets them apart from other companies offering services online. A toll-free number is available to get support directly from the developers between the hours of 9 a.m. and 6 p.m. EST. They are prepared to spend time with users to help them create their first invoice and to go the extra mile for other questions.

Freshbooks told me that their statistics show that between two-thirds and three-quarters of their new customers aren’t using any kind of invoicing system, let alone an online service. Word processors, spreadsheets, and databases are commonly used but so are programs such as Pagemaker and even more bizarre choices. These applications may produce a good looking invoice, but the time required can be considerable and the chance for errors is high.

To appreciate what Freshbooks does for invoices, it is best to try the demo at the Freshbooks site. However, in a nutshell, Freshbooks lets you create invoices from a variety of templates, customize them with your logo and information so that they look the way you want, record the time spent on projects and clients as you go, manage your clients, and then create, issue, and track invoices with less effort than you are accustomed to.

The invoices can be printed and sent by post or e-mail, or clients can be e-mailed to notify them of their account, giving them access to see their invoices, estimates, support tickets and documents online.

Arrangements can be made for clients to pay invoices online. Freshbooks works with several services, including PayPal and Authorize.Net. PayPal is most popular for low-volume accounts while Authorize.Net is better (that is, costs less) for accounts that bill in excess of $2,000/month. From the standpoint of the client, payment is very easy with a credit card while there are a few more steps with PayPal.

Freshbooks claims that its users report that invoicing takes a quarter of the time it used to and that they get paid two weeks faster. The latter is due in large part to online payments by clients. There is great flexibility in creating invoices, including recurring ones, and there are powerful tools for tracking them. Freshbooks can be configured to automatically send invoices and late payment notices.

In addition to tracking your time, you can also keep track of your expenses. You can bill back the expenses incurred on a client’s behalf when you generate an invoice. You can run reports to see who your most profitable clients are and who is most productive on staff. You always have an up to date picture of how you and your company are doing.

Next: Is it right for you?

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