FreeAgent Review - Accounting Software for Small Business
One of the most important aspects of running a successful small business is keeping track of all of your invoices, expenses and cash flow. Getting a good, effective accounting system in place is one of the best ways to reduce the hours you spend on administration and increase the time that you can bill to clients or use to develop your business products and services.
Small business accounting is a necessary evil that all small business owners and entrepreneurs need to deal with. There are a number of online accounting applications in the market, and one of the best of them is FreeAgent. This article reviews FreeAgent, providing an overview and understanding of how the application works and how it can save business owners time and money.
Are any of these situations familiar to you?
You need to raise an invoice for a client. You open up an Excel spreadsheet and add the details from their email or phone call; then, you open up Word, start an invoice template, manually enter their details again, together with the invoice amount and any other calculations and save it.
Next, you open up an email, attach the invoice, write a short message and send the invoice off. You go back to Excel, enter all the dates and terms on the invoice and then start over with the next client.
You need to work out how much all of the various business expenses are costing you. You go out and buy something for the business and put the receipt in a drawer when you get home, or you might make a couple of purchases using the business bank account.
Before you know it, your tax return is due, so you spend several sleepless nights trawling through a year's worth of receipts, bank statements and old bills with a slightly queasy feeling.
Cash flow and accounting
You need to understand the cash flow and profits in your business so your accountant can help you with your tax. You put together several spreadsheets showing income and outgoings and think back to last year and what you were able to claim for.
You show all of your incomes and outgoings but for some reason your calculations are slightly out and finding the problem could take hours. You've heard of terms like 'Profit and Loss' and 'Balance Sheets' but don't really know what they mean, so you send off reams of receipts and invoicing to your accountant who can complete all of this for you.
A few weeks later, your accounting bill arrives and you nearly fall off of your chair!
There is a better way, it's called FreeAgent
FreeAgent is an elegantly designed web application that will quietly revolutionize the way that you invoice, expense and account for everything moving into and out of your business. It's hard to overstate just how much time and pain FreeAgent can save you, but it could reduce the time you spend on invoicing, tracking, expensing and chasing payment by around three quarters.
So, what is it that makes FreeAgent a thing of simple beauty?
- Invoicing is quick, easy and painless
- Expenses and bank payments are a breeze
- Reconciling your bank account against your invoices and outgoings is fast
- You can track billable work easily
- Information is power
- It makes your accountant's job easier
Invoicing is quick, easy and painless
It's as straightforward as entering the client details once, clicking 'create new invoice', selecting from a list of predefined services and clicking 'send invoice'.
FreeAgent tracks all of the invoices, so that you can immediately see what's been paid and when and know how much money you can expect to come into your business over the next few weeks.
Expenses and bank payments are a breeze
FreeAgent makes it easy to track the money going out of your business, whether that's a bank payment to a supplier, an out-of-pocket expense you need to reclaim, payroll or drawings.
Because FreeAgent imposes some discipline on you, the twelve-month reconciliation binge will become a thing of the past, so instead you could spend those stressful days doing something a bit more relaxing, like white-water rafting.
Reconciling your bank account against your invoices and outgoings is fast
If you use online banking, you can have your bank transactions imported into FreeAgent. Alternatively, you can download your statements periodically, upload them into FreeAgent and it will reconcile them against your other information.
There's no more of that 'where did that 3.67 difference come from' that can result in significant hair loss! It takes about half an hour a month to reconcile your business finances.
You can track billable work easily
The 'Project' section allows you to setup any number of projects for clients, split into discrete, billable tasks that you can then book your time against.
That means you can account for every piece of work that you do and easily invoice for your time and track the profit and loss on every individual piece of work.
Information is power
You can instantly understand the financial position of your business. From moment to moment, you will know exactly how much money you have in the bank, what your main profit-making business lines are, where all of your money is being spent, how much tax you owe and what is due, to whom and when.
It makes your accountant's job easier (and hopefully reduces your bill)
FreeAgent calculates profit and loss, balance sheets, tax payments and everything in between.
If your accountant is familiar with the system and you give them permission, they can even go into the FreeAgent account and create your tax return quickly and easily.
Of course, reflecting their reduced effort in your bill will still be a conversation you need to have...
There are dozens of other little refinements
FreeAgent has a few other tricks as well: creating payslips, handling dividend payments, creating estimates, integration with PayPal and more.
It has a rapid development cycle, a dedicated support team and a very useful online knowledge base. It's also online, so you can access it from anywhere and your data is backed up and secure.
Is FreeAgent perfect?
That depends on how you use it, as getting the most out of it does require some initial setup and configuration but most importantly, reconciling on a monthly basis will preserve your sanity.
If you're not regularly reconciling against your bank, using it to invoice and entering your expenses monthly, you'll still hit that yearly roadblock of hastily scribbled notes, receipts spread across the floor and a nervous chuckle when talking to your accountant.
A guided tour of FreeAgent
What accounting area do you most need help with?
If you have the necessary discipline though, FreeAgent can save you significant amounts of time, give you the information you need to manage your business finances more effectively and free you up to focus on more important things.
Although FreeAgent might never make accounting 'fun', it comes pretty close.