Estimated reading time: 10 minutes, 13 seconds

As Intuit continues to try to move more comprehensively into the cloud with QuickBooks, sites automating a subset of financial management - online invoicing -- continue to launch and, in some cases, flourish. There are dozens of them. Who are they aiming at? Any company that already uses an accounting software desktop product or website already has full accounts receivable functionality. Sole proprietors, microbusinesses and/or companies that don't need to balance debits and credits but who need to bill customers seem the likeliest target audience. And there are millions of them.
Last year, we reviewed four online invoicing sites. FreshBooks continues to be the gold standard for such services, though it has serious competition from one site we looked at. Intuit's Billing Manager is gone. Sage Billing Boss remains free but hasn't taken on significant new features, and Invoices Made Easy is still a good, inexpensive choice.

This year, we looked at a different group - not necessarily the best of the bunch, but a good cross-section illustrating the kind of innovation that's going on with this slice of accounting functionality. They are Invoicera, Wave Accounting, Xero and Zoho Invoice. All offer:

• Customizable, recurring invoices
• Sales tax support
• Additional users
• Reports
• Anytime/anywhere access
• A free trial and multiple pricing tiers (except for Wave Accounting, which is totally free)
• Expense tracking
• Interactivity with financial institutions

We ran them through their paces looking for their strengths and weaknesses, and the characteristics that they don't share with each other. Here are our findings. Unique characteristics appear in bold, and we ranked them on a 0-5 scale in four categories.


Invoicera
New Delhi, India
(845) 445-8912
www.invoicecera.com
Price: Basic $9.95 per month. five clients; 15 recurring invoice profiles and three auto-bill recurring/month; unlimited products and services. Classic $19.95 per month. 50 clients; 40 recurring invoice profiles and five auto-bill recurring/month; two staff members. Business $39.95 per month. Unlimited clients; 100 recurring invoice profiles and 15 auto-bill recurring/month; five staff members. Infinite $79.95 per month. Unlimited everything.

Invoicera
Pros: Multiple language and currency support; set exchange rate by client. Can schedule and send invoices to multiple contacts. Auto-billing and invoice-scheduling. Can break out products and services. Import from Basecamp. Estimates. Can bill late fees and additional charges. Track time (with timer), tasks and projects; create invoice from timesheet. Custom fields on customizable invoices. Expense tracking. Staff member access with permissions. Sign in and add contacts and projects from Google Apps. 20 payment gateways. Tabbed dashboard effective; best user interface overall .
Cons: No free version. No mobile app. Unlimited version pricey; that kind of money could buy more functionality elsewhere.
Plusses for accountants: Can function as staff.

Rating:
Invoicing tools: 5
Usability: 5
Mobility: 0
Payment options: 5

Summary: Invoicera would be our favorite site in this group were it not for one serious deficit. It has the most effective dashboard, rounding up the details you need to see when you first log on, like invoice status and activity for previous two days; a calendar with alerts; to-do list and task management. Individual tasks and projects can be earmarked as billable. You navigate the site using drop-down lists organized by tabs.

It's also the most flexible, offering numerous options for invoice and estimate management (payment reminders, invoice scheduling, customizable modification of invoice/estimate status, auto-billing, etc.). Its time and billing features are more fleshed out than the competition's, and it's the only site to that lets you break out products and services separately. Extensibility is impressive; you can enter through Google Apps, bringing projects and contacts with you, and it supports 20 payment gateways.

One glaring omission: There are no smartphone apps. In today's mobile world, you must optimize for smartphone use. Pricing is a problem, too: A company that can afford $80/month for invoicing would likely be using a full-featured accounting solution.


Wave Accounting
Toronto, Ontario
(416) 521-9141
www.waveaccounting.com
This email address is being protected from spambots. You need JavaScript enabled to view it.
Price: Free.

Wave Accounting
Pros: Double-entry accounting. Can download financial account transactions. Automatically categorizes transactions. Money-saving deals for subscribers. Quick entry for non-invoiced income, non-billed expenses. Split transactions. Standard financial reports, but few. Can send payment reminders. Unlimited collaborators. 40 business profiles. Integrates with Freshbooks. Integration with Google Apps (beta).

Cons: Dashboard doesn't make good use of screen space. No discounts or late fees. Some accountants don't like having business and personal finances in the same place. No smartphone apps or payment gateways. Does not support foreign currencies or languages.

Plusses for accountants: Standard accounting framework. Easy collaboration. Can make custom journal entries.

Rating:
Invoicing tools: 3
Usability: 3
Mobility: 0
Payment options: 0

Summary: Wave Accounting is the Mint of small business bookkeeping. You can download transactions from financial institutions; Wave will automatically categorize the ones that it can. Manual entry of income and expenses is also offered, and you can upload an electronic bank statement. Its integration with Freshbooks could be considered a plus, but synchronization only goes one way. Freshbooks is the master copy, and changes only flow from it to Wave (with the exception of changed payments).

Downloading transactions and matching them to invoices is a rather clunky way to handle accounts receivable. Supporting a payment gateway would be a much better way to match payments to invoices. And a smartphone app would make Wave Accounting a much more useful mobile tool, one that could be used to manage finances and accept payments on the road. As it is, we can't recommend it for accounts receivable tasks, though its structure might appeal to some for general bookkeeping.


Xero
San Francisco, Calif. (U.S. office)
+64 4 819 4850
www.xero.com
Price: Small $19 per month. All Xero features minus multi-currency; five approved A/R and five approved A/P invoices per month; fewer reconciliation functions. Medium $29 per month. . Everything except multi-currency; unlimited invoicing and reconciliation. Large $39 per month. Everything.

Xero:
Pros: Double-entry bookkeeping; supports both cash and accrual reporting. Bank accounts, A/R and A/P tracking. Fixed assets and expense claims management. Statements and credit notes. Customizable standard financial reports and many others (exportable to Excel and Google Docs). Multiple-currency. Can create budgets and multiple companies. Lite payroll. Tracking categories. Add-ons - like inventory, job-tracking and full payroll -- stretch built-in functionality. iPhone/Adroid mobile apps. Unlimited users with/permissions. Excellent online help.

Cons: Price (Large version would more than pay for a copy of QuickBooks in a year; Small very limited for $19/month). No time-tracking. PayPal only. Dashboard could be more inclusive. Not multi-lingual. No late fees or discounts. Can't break out products and services.

Plusses for accountants: Complies with standard accounting rules. Can access site's data as an advisor.

Rating:
Invoicing tools: 3
Usability: 3
Mobility: 4
Payment options: 2

Summary: Xero is accounting-lite. It offers the components found in small business accounting software - including limited payroll functions -- and its depth in the core product is sufficient for a small business with basic needs. Add-ons increase its bookkeeping capabilities.

Xero keeps two sets of journals, one cash and one accrual. So while most of its reports are accrual-based and some cash, in some situations it creates both cash and accrual journal entries simultaneously; all can be exported to Excel and Google Docs. You can create budgets and do limited payroll runs, as well as manage fixed assets.

But considering the extras it adds beyond simple A/R functionality, it misses in some basic areas. You can't set up service items or add late fees and discounts. And its only payment gateway is Paypal. But we liked its customer and supplier management, its ability to filter reports by assigning categories and its support of an invoice approval process. A small business could start with the Small version for basic invoicing and move up as the company grows.


Zoho Invoice

Zoho
Pleasanton, Calif.
(888) 204 3539
www.zoho.com
Price: Standard $15 per month. 150 invoices per month; unlimited customers and two users; multi-currency and unlimited projects. Premium: $25 per month. . 500 invoices/month; three users. No ZOHO logo on outgoing emails. Elite: $35 per month. 1,500 invoices per monthh; four users.

Zoho Invoice
Pros: Integrates with Zoho CRM and Zoho Projects. Multi-lingual, multi-currency. Can manage multiple businesses from same account. Automated overdue reminders. Three online payment gateways: PayPal, Google Checkout and Authorize.net. Time-tracking with timer. Snail mail invoices and email templates. Branding. Expenses billable or non-billable. Import contacts. Create statements. Late fees. Process discounts. Zoho Invoice API available. Inclusive home page; overall user interface excellent. Can create budget for simple projects. Activity log. Good stable of reports and online help. iPhone and Android apps. Gmail contextual gadget.

Cons: Additional users $5/month. Overall monthly price high. No tracking categories for invoices; expenses only.

Plusses for accountants: Can be set up as user. Interactivity.

Rating:
Invoicing tools: 5
Usability: 5
Mobility: 4
Payment options: 4

Summary: We've always liked the Zoho family of online applications, and its invoicing site is no exception. It has a smart, understandable interface that allows for easy navigation. The invoice screen itself is the most inclusive of all of these sites. Open an invoice you've created, and you don't have to go anywhere else to work with it: All related tasks and history appear on the page. We'd like to have seen the application differentiate between products and services, but it does offer the ability to earmark expenses as billable and quickly convert them to invoices.

While it's not a comprehensive double-entry accounting system, it offers some features found in those applications, like an activity log and custom fields. It streamlines communication with customers through email templates and the option of snail mail invoices. And it "gets" the divergence of data that today's developers must support. For example, you can set up a Gmail gadget that lets you see customer details from within emails. It allows data migration from and to other services via CSV and XLS formats, through its API and through direct integration with Zoho CRM and Zoho Projects. And it offers a choice of payment gateways and smartphone apps.

While a slightly lower price would make Zoho Invoice more appealing, its combination of usability, extensibility and its comprehensive invoice management excellence make it a strong competitor for Freshbooks.


New challenges

Gone are the days when you could bring subscribers in by mastering the mechanics of building a site that could simply process invoices and record payments. These days, you have to forge virtual relationships that allow users to take advantage of the myriad connections that tie together all of the minutiae that today's companies must juggle. Mobility is crucial; you have to make information available on the devices that people use and support flexible interactivity among the financial institutions that businesspeople frequent.

Which is not to downplay the importance of application excellence. Each of these four online invoicing sites takes a slightly different approach to the task at hand. Because of that, each would have some appeal to the wildly varying needs of small businesses as they grapple with all of the technology coming their way these days.

But the overall winner here is Zoho Invoicing; it excels in all of the areas we considered and provides balance more competently than the others we reviewed.

Developers, though, can't rest on their laurels in this fast-moving evolution of accounting technology. The iPad has changed the lay of the land significantly; the race is on to see how accounting solution providers will optimize their offerings to take advantage of this new way of managing financial information.

Kathy Yakal
Kathy Yakal has been writing about personal and business technology since 1983, as an editor and writer at COMPUTE! Publications. She writes frequently for The Progressive Accountant on technology topics.She began freelancing and specializing in financial applications in 1988. Her columns, features, and reviews have appeared in publications including Barron’s, Kiplinger’s Personal Finance Magazine, and PC Magazine.
Last modified on Sunday, 02 June 2013
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