Wednesday, January 19, 2011

Online Invoicing In The Cloud

I recently started moving more of my business into the cloud. The business cloud application examples I’ve written about so far are more related to office productivity - word-processing, spreadsheets, and presentations. I took my small business and put its invoicing into the cloud by using the software as a service model (SAAS). Although I used ZOHO Invoice to do this, I’ll quickly discuss ZOHO along with others in it's class, like FreshBooks.

By utilizing this model, I’m saving money on software, can work from anywhere (they even have an app for the iPhone), and I look more professional. In addition, I can have multiple users, and I don’t have to deal with software licenses, upgrades or hassle that comes with installing off-the-shelf applications like this. The solution integrates with Google apps and has cool PayPal integration making you look good and boost productivity. While I was finalizing this post, ZOHO released a full accounting module that would of course include invoicing.  (Updated 6/20/11)

Entrusting the cloud to operationalize your business is a big step. If you do though, you won’t be alone. Take a look at customer examples and you will see some big ones from 24 Hour Fitness, to Zimmer. Even HP was rumored in the press to be looking at for CRM as a replacement for its behemoth Seibel CRM implementation. This would be a huge win in multiple ways for not to mention heat up the politics with Oracle.

I used ZOHO Invoice for invoicing customers of my very small photography business. Although I’m not sure who the top solution is between ZOHO and FreshBooks, the pricing model for free probably fits me the best as it allows users to create 5 invoices per month and have unlimited estimates and customers. Other offerings have free plans, but the constraint on number of invoices/month vs. total number of customers was the best model for me. ZOHO has several other products that integrate, like CRM, Support, Recruiting, Projects, and more. I’ll focus my attention on the invoicing product from ZOHO, but you can see the full list of SAAS apps available at

Within minutes (about 90) I had a professional customized invoicing solution up and running complete with PayPal integration. My clients receive a custom estimate or invoice via e-mail and can use PayPal to pay their invoices. Payments made by PayPal update the ZOHO invoice system showing the payment therefore reducing my workload of having to hand enter these payment (not that I have that many).


Although I didn’t have time to fully test all of the following features on all the vendor solutions, they are very similar in description and I’ll assume for the most part that they work the same. The objective here is to give you a sense of what is out there and available, not a complete detailed review of each of the mentioned vendors solutions since there are better sources for that detailed review that this BLOG. (See the reference section at the bottom for some pointers to review sites).

Access from anywhere

This is a core benefit of using SAAS as you and your coworkers can access your app from anywhere you have network connectivity and from almost any device. Many of the on-line solutions have iPhone apps if the one you are looking at doesn’t, give them a few months, they probably will. I’ve got to believe that there will be custom apps for the Android phones as well. If you meet with customers in the field like I do, imagine being able to whip up a quote directly using your mobile device and then e-mail it to your client while you’re there. You can also look at your client’s open orders or invoices before you arrive all on your iPhone.

Integration with other web apps

One of the key integrations that ZOHO has (outside of payment processing) is Google Apps. You can use your Google credentials to access ZOHO, the navigation is integrated into Google Apps, E-mails to customers are also inserted into CRM records for that customer. You can know who your customer is, what is the payment history, send reminder mails to your customers for unpaid invoices without logging in to Zoho Invoice, thus eliminating unnecessary steps.

ZOHO also integrates with their own CRM module and a projects module for time tracking. As I mentioned, ZOHO released a full accounting module on January 19th, 2011. This answers a lot of complaints from SMB that were using invoicing apps like ZOHO and FreshBooks. As competition in this space increases, we are sure to see better interoperability with other SAAS solutions as well as a consolidation, with companies purchasing solutions to fill their portfolio gaps. did this last year by purchasing a SAAS accounting solution for integration to their CRM app. If you do choose ZOHO, create an account with your e-mail/username the same as your Google Apps mail address. This will make it easy to integrate with Google. If you didn’t do that, just use one of your extra accounts that come with ZOHO and set it up to match.

Integration with PayPal and other payment processors - This is worth calling out on its own. It’s easy to use PayPal to setup some buttons for on-line purchases but more difficult to truly integrate it into accounting application. ZOHO Invoice integrates with, PayPal and Google Checkout. FreshBooks integrates with ten different payment gateways including PayPal,, 2CO, Google Checkout, Itransact, Amazon and more. When I send an invoice to a customer it includes a link to pay the invoice right in the e-mail, with a full invoice attached as a PDF. Clicking on the link brings up the amount quickly allowing the customer to use a one-time credit card or log into their PayPal account and pay. The payment goes into my account and it creates a payment record and applies it to the invoice in ZOHO Invoice. I actually received a notification that a payment was received from ZOHO before the notice from PayPal. This total integration really makes life easy, freeing me to focus on other things rather than accounting.

Customization. ZOHO along with a few others in the list allows you to add your logo as well as modify invoices and use templates to give your invoices and estimates a professional look that is tailored to your business, not slapped onto company like a cheap suit. Click here to see an example invoice.

Time tracking - (Update 6/20/11)  ZOHO has integrated time tracking making it easy to create a project for a client, create tasks with associated rate and then book time against those tasks with further details.  Invoices can be generated directly from the time tracking tab.  In addition you can get a listing of who worked on the project.  There are multiple ways to create projects.

Other Common Features

Other common features of the SAAS applications that I looked at included:

  • Time tracking

  • Estimates (with the ability to convert those into an invoice)

  • Expenses tracking (billable and non-billable)

  • Customer Mgt.

  • Reporting

  • Recurring billing

  • PDF invoices

  • Calculate Tax and multiple tax scenarios

  • Multi-currencies

  • Calculate Finance Charges

  • Service or item model of invoicing

  • Custom Units

  • Support for attachment

  • Collections automation

  • Tracking a Retainer / Deposit (ZOHO) has a pretty good but dated review of the, well, top ten located here. PC MAG also has a review located here.

Because of the number of additional tools and new accounting package, I ranked ZOHO #1 for the budget minded. As you grow, you’ll most likely want a full accounting package and it’s there today although it is new. Being able to add CRM, Projects, and other tools on later gives you more flexibility without spreading your business apps all over the net. ZOHO had most of the features covered above and compares well with FreshBooks. Although ZOHO offers office productivity apps, I still recommend Google Apps for mail, spreadsheets, presentation and given ZOHO’s integration with Google Apps, it’s a good strategy. ZOHO shines in its customization, PayPal integration, integration with other modules and Google Apps. ZOHO has credit tracking that FreshBooks does not have (for those of you working on retainer). I’ve used the iPhone app to create a test estimate for a customer, and accessed invoices on the road, it rocked.
FreshBooks was rated #1 by TopTenReviews and PC MAG, ZOHO was rated #3 & #2 respectively. At the time of those reviews, ZOHO hadn’t released their accounting application. Accounting is something that SMB owners will want as their business grows which is supported by several posts that I found on FreshBooks and ZOHO support sites. FreshBook's answer to those accounting requests was to integrate with Xero. I suspect that FreshBooks is already working on a similar accounting release or partnership, but I’ve seen no indication of that from their staff. As far as Invoicing goes, FreshBooks was at-least on-par with ZOHO and had all the bells and whistles mentioned above including an iPhone app. FreshBooks integrates with more on-line payment processors than ZOHO and FreshBooks has a customer interface to Invoices that ZOHO does not have (a nice touch). ZOHO had a lot more modules available, like CRM, Projects, HR applications, support, conferencing, and office productivity that go way beyond invoicing. I found it interesting that none of the reviewers at PC MAG or TopTenReviews discuss the value of this. One thing to note is that these reviews focused mainly on Invoicing so the lack of mention of other capabilities is understandable.

Pricing of the Freshbooks and Zoho is very close but the model varies. Where Freshbooks constrains users based on number of customers, ZOHO invoice constrains pricing levels based on the number of invoices per month. One thing I don’t understand is the number of users allowed. Zoho allows a minimum of 2 users, 3 for a medium level and 5 users for their Elite level. Freshbooks is limited to 1 user at all levels and if you want more, it’s $10/month. If you choose ZOHO’s new "Books" package, you get unlimited invoicing and customers at the best price. Because ZOHO books is new, ZOHO will most likely adjust the cost of Invoice à la carte plans.

Intuit has really good name recognition in small to medium business for accounting and although they bring a lot to the table in their SAAS product, their smaller competitors outperform them in features and certainly with integration to other payment processors (Intuit only supports one, their own). Intuit leads the industry in SMB accounting but as companies move to the cloud, I think this standing will be in jeopardy. When you are ready to move your business to the cloud, find out how they rank, it won’t surprise me if they begin to focus more development on their SAAS product in the near future.
New Zealand based Xero has been getting some buzz lately and I felt compelled (and was prodded) to investigate. Xero has been around a while and I think the buzz is mostly for their accounting package. I spent some time looking at their product web site and doing some searches since they came onto my radar late in the game. They look like a company that started out doing on-line accounting and slowly added a few other pieces. Xero has the ability to pull banking data into to their accounting app which Intuit is also known for. FreshBooks lists them as an “Add On” because they lack the Accounting piece of the back-office puzzle and I gather Xero Invoicing is not in the same class as FreshBooks. Although FreshBooks users applauded this move, one of the things that I flagged were complaints that not all invoices from FreshBooks were showing up in Xero. This is always a concern when integrating systems like this. Xero lists PayPal as the only payment service integration. The main comparisons of Xero to ZOHO took an uptick when ZOHO announced their accounting app. It may not be fair of me, but the sense that I have is that ZOHO has the wind in their sales and although their accounting app may not compare favorably today, they most likely will in 12 months. It will be interesting to watch and I’d like to follow this article up with a review of accounting packages on the web in the future. On a final note, I don't like it when a company lists something like "Payroll", allows you to monitor payroll runs but after clicking on it they have xero partners (misspelling intended).

If you want to go big, might be the right answer but it reaches way further into an ERP application that I am prepared to address here. is more of a full ERP application with accounting, order and billing, accounts receivable, payables, and more. In addition, is positioning themselves to be a complete development platform as well, allowing companies to enhance what they pull from as well as develop applications that integrate with products they use at

If you are on a budget, and focus most of your time on invoicing, I recommend either ZOHO Invoice or FreshBooks.

SAAS or Cloud?

Because this is a cloud computing BLOG, I should address weather this is really a full cloud app or just “Software As A Service” (SAAS). In many people’s minds today, cloud and SAAS are one in the same and they are very close. One key difference to me is the idea of the “elastic cloud”, that is, the ability to scale extremely large while maintaining excellent performance. I don’t think that level scalability exists with the services reviewed here but they don’t need to since the target market is the small/medium business.

FreshBooks, ZOHO and others do have many of the attributes and advantages of cloud computing.

Cloud Cost Savings:

  • Infrastructure cost savings. Nothing to install, nothing to maintain, it scales to small business needs. These services are professionally backed up and managed.
  • Labor cost savings. No support teams to hire and manage, no upgrades to be installed, and security is taken care of for you.
  • Productivity. Immediate access from anywhere, anytime. It’s client independent, allows you to share and collaborate with workers and customers and integrates with others services that you use on the Net.

Cloud Eval

I can’t say I’ve done thorough and complete job of using my score card for evaluating cloud services (coming soon), but I do have a few comments about areas I call “challenges or risks of cloud computing”. Also, I received a response to my security question from ZOHO regarding security with their Security Practices attached. It’s a lot better than I originally thought.
  • Security - This is one of the first items that always comes to mind when evaluating a service provider (for me and my clients). The marketing on the Freshbooks and ZOHO sites makes me feel better about their approach and their perceived importance of security and for what I do, it’s “good enough”. Zoho’s Security Practices for both physical and network are very similar to other vendors.

  • Business Continuity - Both ZOHO and Freshbooks uses redundant hardware and ZOHO states that they backup to other locations. ZOHO’s Security Practices document goes into further detail about their “Distributed Grid Architecture” that provides redundancy and hides failure of any processing node. Given what I’ve seen so far, and lack of complaints after a brief search, I’m satisfied. Both FreshBooks and ZOHO get a “good enough” rating. I’m confident that all of these vendors know how important this is to their customers and any missteps in this area could quickly put them out of business.

  • Vendor lock-in - This is tough to evaluate. It may be high but all vendors have the ability to export data. I think that one of the big lock-ins for many customers is the sheer effort it takes to "move in". Once setup and running, businesses tend to stay. Any thoughts of moving require them to evaluate the ROI of spending time and effort to move.

  • Other - The other items listed in my article, “challenges or risks of cloud computing” don’t rank as important enough to review for my business application.

In Summary

The on-line application accounting service is definitely a cloud service and a viable growing one. I think we will see significant growth and evolution this year as companies continue to look for ways to save costs on existing overhead or new businesses look for ways to hit the ground running at a lower cost.
ZOHO BooksIn regards to the newly release ZOHO Books, it’s not a QuickBooks killer or Xero killer yet. Given their approach to release and enhance (like Google and other SAAS providers) it may very well come to that within 12 months.
ZOHO may be the guys to beat, given their large suite of apps, if they can take this vision to the next level by printing checks and integrating bank info like some of their competitors.


Related ZOHO Books Release Articles

- Chris Claborne


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  2. Manually it is difficult to manage invoices, but if you get any online invoice software then it becomes quite easy.