FreshBooks vs. QuickBooks Online — Find The Best Solution For Your Business
When you’re looking for cloud-based accounting software to help your business, two names come up a lot: QuickBooks Online and FreshBooks. As market leaders, they often compete for the same customers. Because of that, there is little differentiation in the features and options they offer.
Instead, they differ in ease of workflow and small details that will be a big deal to some businesses. While both made our best accounting software list, delving deeper into FreshBooks vs. QuickBooks Online will likely make it clear which is best for your needs.
If you want to read more in-depth reviews, check out our detailed FreshBooks review and QuickBooks Online review.
1. Invoicing
As the two top cloud-based accounting software programs on the market, FreshBooks and QuickBooks Online have many areas in which to compete.
| Services | QuickBooks Online: | FreshBooks; |
|---|---|---|
| Send recurring invoices | Yes | Yes |
| Automatically add late fees | No | Yes |
| Send payment reminders | Yes | Yes |
| Integrate with inventory | Yes (costs extra) | Yes (included) |
| Bill for hours worked | Yes (at highest plan) | Yes (at all plans) |
| Customize Invoices | Yes (in software) | Yes (but not many options) |
Though FreshBooks lets you customize your invoices, it’s limited. You can choose between two templates, add a logo and pick a color and font. In contrast, QuickBooks Online has five customizable templates or you can upload one of your own.
Businesses that charge recurring monthly fees for their services will want to automate those invoices to save time and ensure that one is sent each month month. FreshBooks puts the “make recurring” option at the top of every invoice you enter. It’s easy to set an invoice to recur and give customers the ability to keep a credit card on file, so they can pay each month automatically.
QuickBooks Online forces you to go to the banking register and click a past payment, which is a more complicated process that depends on payments that have already been received. In general, you’ll have to spend more time navigating QuickBooks Online to perform basic functions.
If you’re selling an item from your inventory, QuickBooks Online syncs with items on hand and updates quantities from your invoice. That’s an invaluable feature for an inventory-based business. It’s only available on the highest pricing plan, though, and isn’t as good as OneUp’s inventory tracking (read our OneUp review).
FreshBooks doesn’t have an inventory function. If you need inventory management that syncs with your accounting software, you’ll have to sign up and pay for a separate app.
Businesses that perform project-based work often bill at an hourly rate. You’ll find built-in time tracking and hourly billing on invoices in both services, but FreshBooks provides it from their cheapest tier on, while QuickBooks Online doesn’t unlock it until you’re paying for the Plus plan. FreshBooks also lets you send proposals and convert them to invoices once approved. Read our FreeAgent review to learn about another service with easy hourly billing.
Staying on top of past due receivables matters to your overall cashflow position, so you’ll want a program that makes it easy to track revenues. FreshBooks and QuickBooks Online send automatic payment reminders to customers and add late fees to invoices. On their reports and dashboards, they show past due receivables to give you a snapshot of who owes you what.
QuickBooks Online’s aged receivables reports present far more data than FreshBooks. It includes a collections report, customer balance summary, open invoices and a report that shows payments against outstanding invoices. Those could be handy if collections is an issue for your business.
FreshBooks has one report, an “accounts aging report,” that sorts past due receivables into buckets based on their time past due.
The overall experience of entering invoices and the ease of setting up recurring ones makes FreshBooks the winner in the invoicing category. If inventory and staying on top of past due receivables matters more to you, though, QuickBooks Online is the better choice.
2. Bills
Paying your bills is simpler than invoicing, so you won’t need as many options.
FreshBooks and QuickBooks Online have recurring bill functions for monthly bills, such as rent. That said, QuickBooks Online makes you go through more steps to set one up.
The main dashboard in QuickBooks Online shows your expenses but doesn’t break them out by past due. That’s in its reports under “what you owe.”
It’s easy to take pictures of receipts in the services’ respective apps, upload them and associate them a bank transaction or expense. While you can mark expenses as billable, QuickBooks Online only gives you that functionality at the Plus level and it has to be enabled through the “settings” menu. FreshBooks gives you a box to check on any expense.
The only compelling reason to select one of these accounting programs over the other when looking at billing is an easier to navigate and clearer interface.
3. Reports
To build a successful business, you need to do more than enter and reconcile transactions. Analyzing the data you’ve input helps your business become more efficient and identify growth opportunities.
There’s no ambiguity about which company has the best reports. It’s QuickBooks Online. In its reports, you can drag and drop columns, add accounts, change groupings and add formulas. FreshBooks’s nine reports have no customization options.
QuickBooks Online summarizes customer data in reports that show where you might be wasting time and quantify a customer’s value to your business. Comparing “sales by customer” to “estimates by customer” might reveal someone who’s taking a lot of your time by asking you to prepare estimates and not booking business.
Inventory reports in QuickBooks Online track sales, taxes and best selling items. Reports on bills outstanding and vendors identify bills you might have missed, your most important vendors and outstanding checks.
The nine simple reports in FreshBooks can’t compete with QuickBooks Online’s many offerings. It doesn’t calculate a balance sheet or cashflow statement, either, only giving you a profit and loss statement.
Given that FreshBooks and QuickBooks Online are close in every other area, the lack of reports in FreshBooks is embarrassing and puzzling. There’s no comparison in this area. QuickBooks Online wins.
4. Pricing
Tiered subscription plans, which rise in price based upon user access and features available, allow you to choose the option that your business needs. While that could provide you an opportunity to save money, it could also mean you’re paying more because you need access to just one of the features at a higher price point.
FreshBooks’s Lite plan costs $15 per month and allows five users to access the program. You can send unlimited invoices and estimates and accept credit card payments online. For a simple business just starting out, that could be enough.
QuickBooks Online’s comparable plan, Simple Start, gives you invoicing and payment processing, estimates, receipt capture via its app and basic reports. It costs $20 per month, but is limited to one employee and you can’t pay bills. The inclusion of basic reports makes it a better value than FreshBooks’s Lite plan, but only if your business doesn’t pay many expenses.
On FreshBooks’s middle tier, you’ll get all the features of Lite for 50 users, as well as important extras. Once you’re paying for Plus, you can send payment reminders and add late fees to invoices. You’ll also be able to schedule recurring expense payments and access reports. Each of those functions will help your growing business stay on track.
In contrast, QuickBooks Online’s mid-tier pricing plan, Essentials, costs $35 per month for three users. Managing bills and tracking time become available at that level, though FreshBooks gives users those features from the start. It’s odd that you can’t pay bills on QuickBooks Online’s lower pricing plan, as even the simplest business has expenses.
The top FreshBooks pricing plan, Premium, costs $50 per month and unlocks access for 500 users, but adds no other functions. QuickBooks Online’s Plus plan grows to five users for $60 per month. Projects, inventory tracking and paying 1099 contractors are provided at that level.
If you’ve already been using an external payroll processor, such as ADP, payroll processing in your accounting software might not be a selling point. There are advantages to having your payroll sync and update in your general ledger, though, and it could save you money to bring it in-house.
QuickBooks Online charges either $19 or $49 per month for payroll processing, depending on whether you need it to collect and pass on payroll taxes to your state. On top of that, it charges a $2 per employee fee. FreshBooks doesn’t have payroll processing, so you’ll have to go with a third-party app.
The easier you make it for customers to pay you, the faster you’ll get paid. Invoices in FreshBooks and QuickBooks Online have links through which customers can pay online, but they charge fees for the service. Merchant processing fees are a percentage of each transaction plus a per-transaction fee.
QuickBooks Online’s credit card processing fees are 2.9 percent of each transaction that’s paid through an invoice or 3.4 percent if you key in the credit card manually, plus a 25-cent per-transaction fee. With FreshBooks, you’ll pay the same percentage on each transaction, but the per-transaction fee is 30 cents. It doesn’t take Discover.
For the range of options offered in its pricing plans, we think that QuickBooks Online has a slight advantage over FreshBooks at the higher levels. That said, if cost is your main priority, check out two free services in our Wave review and Brightbook review.
5. User-Friendliness
Many businesses turn to cloud-based accounting software, in part, to save time. to save time. Having to spend hours, if not days, learning a new program defeats the purpose.
When you set up a new account on FreshBooks, it goes out of its way to introduce you to its features. It has arrows and hints scattered around that pop up the first time you visit a page. Help articles have embedded videos and screenshots with step-by-step instructions, plus it put its email address and phone number front and center in case you need more assistance.
With so much attention paid to familiarizing new users to its software, it’s no wonder that FreshBooks is easy to use, with a clear interface and straightforward navigation.
QuickBooks Online has improved over the years, but it has never been known for its user-friendliness. It occasionally forces users to go through multiple steps and screens to perform regular tasks and it doesn’t offer tips and help articles for first-time users.
With a steep learning curve and less intuitive workflow, QuickBooks Online falls short of FreshBooks in user-friendliness.
6. Advanced Functions
Not all businesses sell physical products to generate revenues. Service-based or design-based businesses, particularly those in creative industries, often do projects for their customers and bill hourly.
FreshBooks lets you invite employees and clients to contribute to projects, but you can restrict their access as needed. It also gives you time tracking, which can be pulled into invoices on every pricing plan. You can assign hourly rates and due dates, and the project overview tells you if you have outstanding hours to bill, your employees are meeting their due dates and more.
QuickBooks Online also tracks a project’s expenses, profitability and billed time, but its focus is on the accounting and expenses pieces. It doesn’t track due dates or project milestones or allow you to invite others to contribute to the project. In that respect, we think FreshBooks gives you more.
Both services require that you sign up for an app or manually enter journal entries to record fixed assets, monthly depreciation and retirements. If you’re looking for software that includes those, we suggest that you read our Xero review.
7. The Verdict
While there are strong pros and cons to both FreshBooks and QuickBooks Online, it makes sense to choose the latter if your business is on a growth trajectory. Once you’ve dealt with the steeper learning curve, it has more options.
You could add payroll processing at some point, even if you don’t need it now. Reports will serve your business well when you need to apply for loans or make more data-driven decisions. Pricing is comparable, you get more customization options, inventory functions are a necessity for product-based businesses and it will take a long time to outgrow its platform.
Winner: QuickBooks Online
That said, if you don’t plan on scaling up your business too much and don’t need inventory options, you may prefer FreshBooks’s user-friendliness and simpler workflow.
Which do you prefer, QuickBooks Online or FreshBooks? Let us know in the comments below and, as always, thank you for reading.
Dena Landon has an MBA from Capella University and has been working as an accountant for over fifteen years. As tallying numbers all day can numb the mind a little, she has taken to writing in her spare time to indulge in flights of fancy (well, not too fancy). Her work has appeared in Good Housekeeping, Salon, The Washington Post and several other publications even more illustrious, though she feels right at home at CommQueR.com.