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Now, for those of you who still more of a background to FreeAgent before you start, here is a very detailed review for you.
This review of FreeAgent Accounting Software was completed on December 1st, 2012 and some of the features may have been improved.
- user interface
- accrual accounting
- journal entries
- chart of accounts
- importing and syncing data from bank
- data import
- data export
- auto entry of data
- document attachment
- payment processing
- mobile app
- other features
- support / help documentation
- country it’s made in
- setup and walk through notes
You can check out FreeAgent at http://www.freeagent.com/.
FreeAgent offers a 30 day free trial and you can sign up with no credit card required.
FreeAgent is based out of Edinburgh, Scotland, United Kingdom. The company was started in 2007 with the aim of demystifying accounting for freelancers and small businesses.
2. USER INTERFACE
My feeling are divided on the interface. I have a North American bookkeeping background, and have been a long time QuickBooks user, so the terminology is a bit different than what I’m used to. I don’t know if the titles used in the navigation bar below make senses to British bookkeepers and accountants, but they are a little off to me.
Here’s a quick description of each section:
- Overiew: This is the dashboard that contains some common reports (such as outstanding invoices, cashflow and profit & loss) as well as quick links to do common tasks (such as create an invoice or enter an expense)
- Contacts: Customer and Vendor information is stored here
- Work: This is where you create projects, estimates, create invoices, and track time. This section is called “Accounts Receivable“, “Income“, or “Money In” in other accounting software
- Bills: This is bills from vendors (i.e. companies you buy stuff from). This section is also known as “Accounts Payable“, “Expenses” or “Money Out” in other accounting software
- Expense: This is personal (i.e. non-business) money you as an owner have spent on your business. This title may be confusing to people who use other accounting software, since Expenses is often used as terminology for purchases paid for in full at the time of sale (which is in contrast to Bills which are purchases not paid for in full at the time of sale)
- Banking: This is where your bank and credit card information can be found. Also, this is where you would enter non-bill expenses (i.e. purchases paid for full at the time of sale) that were paid for using the business bank account or credit card. Lastly, this is where you’d go to upload a bank statement / reconcile your bank account
- Taxes (HST): The taxes section for me is titled HST because I live in an area of Canada that has a harmonized sales tax (HST). I’m assuming this name would be slightly different depending on what region you are from. This is where you can access your sales tax reports
- Accounting: This is where you find reports and the ability to create journal entries
Once I understood what was found in each section and what the titles meant, it was much easier to use the software. A helpful feature of FreeAgent is that it explains each section to first-time users.
In terms of navigating around the software and using the forms, I found that sometimes it forced me through unnecessary clicks or steps. An example is the process to create a customer invoice. To create an invoice, you must:
- Go to “Work” then select “Invoicing”
- Click on “Add New Invoice”
- Click on “Create New Invoice”
- Click on “Add Invoice Item”
- Click on “Create and Finish” or “Create and Add Another”
- Click on “Send by Email” or “Mark as Sent”
That’s a minimum of 6 clicks. Most accounting software can do this in 2-3 clicks. I don’t see any reason why an invoice couldn’t be created in one screen.
Once I had entered all my invoice information, it wasn’t entirely clear what I was to do next. Take the screen shot below for example.
Would you have guessed that clicking on “Mark as Sent” or “Send by Email” would be the way you move your invoice from being a draft to being sent (i.e. active)? If you click on “Save as PDF” it doesn’t actually move the Invoice from the “Draft” category to “Sent” category.
I had a similar “what do I do” issue when I wanted to delete the invoice. I couldn’t find a “Delete” button anywhere. If you check out the screen shot above, you’ll notice the “Delete” button between the “Edit” and “More” buttons. But if you look at the “sent” invoice screen shot below, the “Delete” button is nowhere to be found.
I don’t understand why the interface changes and why you need to “Mark as Draft” before deleting.
One thing I did like about FreeAgent’s invoicing was the WYSIWYG (What you see is what you get). For the visually inclined, it feels like you are really creating an invoice as opposed to filling out an ugly spreadsheet.
Another example of a little thing I don’t like about the interface is how FreeAgent handles making payments to invoices. When you click on “manual payment” (to accept a payment for an invoice), you’re taken to the Banking tab (as seen in the screen shot below).
I’m used to having the option of choosing what bank account to deposit my money to, so when I go to “Select a Type”, the screen shot below confuses me because I can’t find a way to select my bank.
It turns out that the bank account is pre-selected for me behind-the-scenes (it deposits the money to my default bank account).
So why are there all these options when trying to accept a payment from a customer? The answer is that FreeAgent is using the “add transaction” feature under its Banking tab to accept a payment. Because you’re brought to the “add transaction” feature, it gives you many options with which to handle money coming into or out of your bank account. I think something simpler could have been set up.
So, the interface is not exactly my cup of tea (see, I am learning the terminology!). What I do wonder is if I was a newbie to accounting software would I have found it confusing? Since I’ve used many different accounting software applications now, what I consider intuitive and proper terminology is not necessarily true for others.
FreeAgent was quite responsive and I had no issue navigating around.
SEARCH / FINDING DATA
I couldn’t find a search feature in FreeAgent (That’s funny now that I think of it, I couldn’t find the search feature…). If you’re looking for data, you have to go to whatever section you entered it in order to find the it.
TRACKING CHANGES / UNDO BUTTON
As far as I can tell, there is no audit trail or a way to undo things such as a deleted transaction.
Yes, FreeAgent works on an accrual accounting basis, since that’s the requirement in the UK. This fact is purposely hidden from the average user by FreeAgent, as witnessed in this help article entitled “What is a P&L?”.
The journal entry window in FreeAgent will be quite odd to any accountant or bookkeeper. FreeAgent has its explanation for how the journal entry window works here.
FreeAgent is making it so that you can only do one entry at a time, one debit or one credit. It’s supposed to be easier for small business owners with no accounting experience to understand. As a small business owner with accounting experience, it confused that hell out of me at first. Again, they have an article written about how it works, and a quick read of that will enable you to understand how journal entries work in FreeAgent.
My other beef with the journal entries window is that you can’t post to bank or credit card accounts. What’s up with that?
CHART OF ACCOUNTS
Underneath the hood FreeAgent has a large set of accounts set up, but it’s both hard to access, and for certain accounts, impossible to edit. There is no official chart of accounts window you can go to if you want to view and edit all of your chart of accounts on one page. Instead, it is fragmented across various windows, such as: Banking, Journal Entries and Settings. The only types of accounts you are allowed to create and edit are income and expense accounts. You are allowed to add and edit bank and credit card accounts (which are types of asset and liability accounts), but you can’t create or edit any other asset, liability, or equity accounts.
FreeAgent does have asset, liability and equity accounts, but you have to go to the Journal Entries window to post transactions to them.
Reconciliation is a again an area of FreeAgent where terminology was different for me. Instead of using the word “match”, FreeAgent uses the word “explain”. You don’t match transactions, you explain them!
One thing I would have liked to see is the bank balance vs. the FreeAgent balance. In other words, I want to know how much my bank says I have in my bank vs. what FreeAgent says I have in my bank. When reconciling, your goal is to make these two balances match (or understand why they aren’t matching, which can happen if you have uncashed / uncleared checks or transactions that haven’t posted to your credit card yet).
If you look at the screen shot below, you’ll see how the reconciliation process in FreeAgent works. Transactions that you’ve explained have a green check mark icon, transactions you haven’t explained have a red question mark icon.
To explain a transaction, you click on it and this lets you enter the transaction’s details.
Each accounting software I’ve reviewed has a different idea of how to conduct a reconciliation. FreeAgent is no different. The reconciliation in FreeAgent is not the worst I’ve seen, but it’s also not the best.
Something I didn’t like was how manually added transactions didn’t show up when viewing the latest statement, even if it exactly matches (explains) a transaction. The manually added transaction only shows when you click on the bank statement transaction, where it then gives you the opportunity to match them.
I go into details of how a reconciliation is done in FreeAgent in the setup and walk through notes section.
IMPORTING AND SYNCING DATA FROM BANKS
Being able to sync your bank data to your accounting data is one of the promises of cloud accounting. A lot of software that’s supported by the cloud has this feature. Unfortunately, though, this automatic syncing of data doesn’t always work. This issue has more to do with the bank than the software. This being the case, your accounting software needs to be able to manually import data as well. Being able to import bank data is a big time saver, since it allows the software to semi-automatically enter data and match records for you (I say semi-automatically, since you always need to verify the data being entered). I find the ability to manually upload bank statements to be especially crucial, since your automatic bank connection can only import data from a few weeks, to at best, a few months back. This means the majority of people will need the manual upload process to work, if only at the time they are setting up their books.
FreeAgent gives you the ability to both get a bank feed (automatic download from your bank) and upload bank statements (that you’ve manually downloaded from your bank).
I did have issues uploading my PayPal bank statement, even though I followed FreeAgent’s guidelines. I’ve used the same file to upload to other accounting software, so I don’t believe it’s an issue from my end, but you never know. I also tried to have FreeAgent automatically connect to my PayPal and pull a feed. I was able to successfully get FreeAgent to connect to PayPal’s API according to FreeAgent’s instructions. It took a day to kick in, but I was able to get a month’s worth of transactions into FreeAgent.
The only type of data you can import are contacts. You can import from Outlook, Google Mail, Mac Mail or import them from Basecamp.Here’s how.
I couldn’t find any other data that could be imported, but drop me a line if I’ve missed anything.
FreeAgent has a handy export all feature. It gives you:
- Bank Accounts
- Bank Account Entries
- Bank Account Transactions
- Recurring Invoices
It’s a decent data set and it’s nice that it’s all done with the push of one button. You can access the feature using the settings link on the top right hand of FreeAgent.
Missing from that list of exportable data are most of the reports found in the screen shot below. You oddly can’t export a profit and loss,balance sheet, accounts receivable or accounts payable. What you can export is the trial balance, chart of accounts, and general ledger.
Not being able to export data on some of those basic reports is somewhat surprising.
AUTO ENTRY OF DATA
There’s a couple ways to talk about auto entry of data. I believe most people relate this to the ability to connect to your bank (or upload a bank statement) and have your online accounting software automatically enter all the transactions for you. Remember that it’s not going to be 100% reliable, so you’re going to have to verify each auto-entered transaction. You’re also going to want to match your documentation (your proof) to that auto-entered data as well. Auto entry data is cool when it works. The second way you can think about auto-entered data, is how much your software remembers transactions that you manually enter, like what expense account and taxes are associated with a particular vendor.
FreeAgent uses a bank feed to automatically pull data from your bank, which can save a lot of time. It also has a feature where it guesses how to explain bank transactions. I found that it did a so-so job of guessing. Perhaps this is a feature that will get smarter with time as it collects more data. I did run a test with more than one months worth of data, but found that FreeAgent didn’t remember previously explained transactions.
When it came to matching imported bank feed data to data already entered into FreeAgent, I found that it also didn’t automatically find matches (explanations) between them.
One type of automatic entry FreeAgent was able to do was to suggest other transactions that are similar to one I’ve just explained, as seen in the screen shot below.
FreeAgent gave me the option to match 4 UBC Parking Services receipts after I had explained the first one. Unfortunately, when I had imported a bank statement for a following month, FreeAgent wasn’t able to automatically explain additional UBC Parking Services receipts. However, once I explained the first one in the newly uploaded statement, it was again able to suggest matches to other unexplained UBC Parking Services receipts.
Reports in FreeAgent are fairly basic. You can find them under Accounting > Reports. You have:
- Profit & Loss
- Balance Sheet
- Aged Debtors
- Aged Creditors
- Capital Assets
- Show Transactions (individual account ledgers)
- Trial Balance
As mentioned in the data export section, most of those reports cannot be exported, whether to a PDF or spreadsheet file.
The drill down capabilities (the ability to move from summary data to more detailed and focused data) are not too spectacular in FreeAgent.
Since FreeAgent is based out of the UK, which has VAT, it does provide a tax report for both sales taxes collected and paid. You are allowed to track up to 2 sales taxes and are also allowed to ‘compound’ (i.e. add tax on a tax) taxes. The tax reporting and setup is basic, but it should work for the types of businesses FreeAgent is targeting, which are freelancers and small businesses (or to be more accurate, micro businesses).
I have to say that I’m impressed with FreeAgent’s document attachment capabilities. They have the best implementation of document attachment out of all the online accounting software that I have tested to date. FreeAgent allows you to attach a document to any transaction found in a bank or credit card account ledger. This means that you can attach proof for each line item of you bank or credit card statement. Perfect in the case of an audit. Why other accounting software applications can’t do this I don’t know, but I commend FreeAgent on this. The only missing type of transaction that you can’t upload documents to are invoices (although you can attach them to the invoice payments).
Something else useful is that FreeAgent nicely places a paper clip icon next to all your bank account transactions that contain an attached document. This simple addition is something that I find quite useful since I can see which transactions I have proof for.
Another great feature is that when you click on a transaction, a preview of the document is shown. That’s pretty sweet!
If you don’t want to associate an attached document with a transaction, you can click on the “Files” link at the very top right of FreeAgent to attach documents.
My two gripes with FreeAgent’s document attachment are:
- There is a limit of only one attachment per transaction. You can get around this by combining two documents into one, but this could be difficult if you are trying to combine a PDF and Excel file
- There is no way to download all your documents at once, you have to download the documents transaction by transaction. If all the documents could be downloaded with a single click of a button (like the export data button), that would be ideal
Multi-currency is quasi-supported. You can send out invoices in multiple currencies. All you need to do is choose the correct currency from a drop-down box when creating an invoice.
I say multi-currency is quasi-supported because I don’t see any way to create bank accounts in more then one currency.
Invoicing is something that FreeAgent excels at. As mentioned in the user interface section, I’m no fan of the process of creating invoices, but do feel FreeAgent has a nice feature set. In FreeAgent, you have the ability to create / do:
- Projects – This allows you to track your time and the costs you incur for a client project
- Time Tracking
- Recurring Invoices
You can see the various project settings you have available to you in the screen shot below.
The ability to set a budget, start and end dates, track project related expenses and track time are all useful features for certain types of businesses. There’s a lot more details regarding projects in FreeAgent that I’m not getting into in this review, but it is quite a cool tool that is well thought out and comprehensive in comparison to other accounting software.
Another of FreeAgent’s invoicing strengths is the invoice customization you’re able to do.
Under Settings > Email Templates, you can customize your emails. There are some nice email tags (as seen on the right hand side of the screen shot below) that let you customize the emails you send out to customers.
For the look of the invoice, you can go to Settings > Theme Gallery to change the look. The templates are decent out of the box and you can also create a custom theme (if you know how to code CSS).
FreeAgent has the ability to accept payments via PayPal, which means that clients can pay with a credit card or from their bank account as well. Check out the FreeAgent PayPal documentation here.
Something even more useful is FreeAgent’s ability to sync data with PayPal so that if a customer pays you via PayPal, the invoice can be marked as paid automatically in FreeAgent. To do so you need a PayPal Premier or Business account and you have to set up an API connection (which is actually not hard or very technical if you’ve never heard of API – you basically tick off some boxes in paypal and cut and paste a line of text into a box). Details on how to do so can be found here. I haven’t tested the feature out, but it’s pretty cool in terms of automation if it works as advertised.
Essentially, it allows people who run small businesses to get paid directly from their customers’ bank accounts – without the need to set up a specific merchant account to handle the transaction or pay any credit card fees.
Pretty cool stuff!
If you’re in the UK, FreeAgent has some simple payroll capabilities. Read about it here. As FreeAgent readily admits, it is basic payroll capabilities, but for the typical user of FreeAgent, it’s probably sufficient.
If you are in other parts of the world, no dice for you, you’re out of luck. This doesn’t prevent you from doing payroll, but it’ll be a manual entry process.
You can track basic inventory by going to Settings > Price List & Stock.
You add inventory by clicking on “add a stock item”. You’ll be able to adjust the following:
- Item Name / Code
- Opening Quantity
- Opening Balance
- Cost of Sales Category
FreeAgent has a few integrations, which you can read about here.
Here’s the full list of software that it integrates with:
- Single Sign-on with Google Apps
- Basecamp Classic
- Google Chrome
- PayPal – API Setup
- PayPal – Invoice Payments
- PayPal – Automatic Feeds and Express Checkout
- GoCardless – Invoice Payments
- Dwolla – Invoice Payments
So a bit of integration, but mostly for accepting payments. That being said, I did another search for integrations and I found this. So, more integration than I initially found in FreeAgent’s knowledge articles.
By the way, Milebox got left off the screen capture since I didn’t have enough screen real estate with my capture tool to get it in.
There is no platform specific app (such as an iPhone or Android app), but FreeAgent does have a mobile version of its site which makes it cross-platform. You can read about it here. The official release blog post can be read here.
If FreeAgent is truly able to give a user-friendly experience across multiple platforms, I think it’s a decent solution to producing several platform specific apps, which no accounting software has been able to do yet.
In my quick test, I used FreeAgent on my Android phone to add an expense and capture a receipt. It was fast, easy, and it worked! Thumbs up for this implementation! It’s still in the works as of the time of writing, so some parts of FreeAgent have not been optimized for mobile.
This feature was partially covered in the invoicing section, but I think it’s worth mentioning again. The project management side of FreeAgent is probably it’s most unique and useful feature.
SUPPORT / HELP DOCUMENTATION
I thought the support documentation in FreeAgent was fairly good. On the footer of each page you’ll find links to their knowledge base, customer support, and community discussion. You can access the knowledge base here.
I was usually able to find the answers to my questions in the knowledge base. Failing that a google search often helped direct me to the right place (which was always back to some portion of FreeAgent’s website). A nice feature of their help was the categories on the right hand side. This mean that you could either search the help via category or by a universal search.
As with most of my software reviews, I did not contact support, so I can’t comment on their person-to-person help.
One other little thing I liked about FreeAgent’s support was the inclusion of many screen shots. As you can see by this review, I like screen shots. Words can be ambiguous, images a little less so, at least when it comes to step-by-step instructions on how to use accounting software.
I have lots of suggestions for improvements FreeAgent!
- Make the journal entry window into a traditional one (i.e. allow users to enter more than one debit or credit at a time). I know you think it’s easier entering a journal entry one line at a time, but I think it’s more confusing this way
- Automatically move income and expense balances to an equity account at the end of the year. I was surprised to see that my income and expenses entered for the previous year were still there the following year
- Make drilling down into data better. The beauty of most accounting software, and one of it’s huge benefits over spreadsheets, is the ability to focus in on data and get more details. This was possible in some areas of FreeAgent, but definitely not at the same level as other competing software
- Have an official chart of accounts. I know it’s there behind-the-scenes, so why not just expose it and make it editable. I think basic users won’t even touch it, so no harm no foul, but it would be a huge benefit to bookkeepers and accountants who have to work with FreeAgent. No chart of accounts is a deal breaker for many in the profession
- Make invoice creation a one-step process. There’s no need for having two windows. Look at your competitors and see how to do this better
- And on the same line of thought, make many of your processes involve less clicks and screens. I think you’re doing this with your mobile site, so bring the same logic to your regular web app
- Allow users to select any account they want from different windows, like choosing an expense account when creating an invoice. I can see how basic users may mistakingly use the wrong accounts, so perhaps give users a warning (like QuickBooks does) or initially hide those accounts (like Kashoo does)
- Allow users to export data from any report (at the minimum a spreadsheet and PDF file)
- Allow the download of all attached documents with one click. If a user ever has to leave FreeAgent, it would be a huge time suck to have to download each document manually
- Show all documents in the “Files” section (i.e. you should show documents attached to transactions in this section as well)
COUNTRY IT’S MADE IN
FreeAgent is based out of Edinburgh, Scotland, United Kingdom. This means that users based in the UK will enjoy a richer experience than people in other countries. Why? Payroll, better bank feeds, and integration with local services such as GoCardless and HMRC.
Pricing is nice and basic at FreeAgent. Free trial for 30 days, $20 a month after that. You can check out the pricing page here.
For all that FreeAgent does, I think it’s a fair price to pay.
This recommendation is a bit of a tough one. I’ve got the feeling that bookkeepers and accountants will be frustrated with some of the capabilities, such as:
- No official chart of accounts. The accounts are there, but they are often hard to find. Also, most equity, liability, and asset accounts are non-editable
- A journal entry window that only allows for one credit or debit line at a time. This will really annoy those who know how to do a journal entry
- Limited Reports. They are handicapped in several ways: there are not many types of reports, they are hard to drill into, the data is often not exportable, and they are mostly non-configurable (you can’t choose an exact date range for example)
- Reconciliation is not a true reconciliation, difficult to understand at first, and is clumsy to use
There’s probably a few other things, but I know those fours points alone would scare away a lot of professionals.
However, this software really wasn’t designed for the accountant or bookkeeper, it was designed for the freelancer, the small business owner. Is what’s frustrating for a bookkeeper user-friendly for a regular business person?
That’s hard for me to judge. I personally don’t think the work flow and usability of FreeAgent is any better than other accounting software I’ve used and reviewed. Software like Xero or QuickBooks Online offers more power to the accountants and bookkeepers and I think the learning curve would be similar for all three accounting software. I find Kashoo the simplest to use in terms of interface / work flow, and while it has the basic accounting functionality listed above, it does lack some of the more advanced accounting features that professionals sometimes want or some of the nice goodies that FreeAgent has (such as project management and inventory).
I love the document attachment feature in FreeAgent. It’s the best implementation I’ve seen so far, with the previews, ability to attach documents on any bank or credit card transaction, and the little attachment icon that shows up beside your list of bank transactions.
I also like how the project management works. It’s better than more powerful accounting software such as Xero and QuickBooks Online.
The integration with payment solutions such as GoCardless and PayPal are also very handy for the small business owner.
The thing that grates at me, aside from accounting / bookkeeping functionality, is the interface. There’s too many steps for a lot of the processes. An invoice, as described before, takes 6 clicks to fill out. This doesn’t need to be the case. Adding an expense transaction for something paid for by credit card also requires a click fest . You have to click on Banking, then on your credit card account, then on More, then on Add Transaction, then on Create and Finish. That’s 5 clicks. I know this can be done in 2 clicks (3 at the most).
I know FreeAgent is designed for the small business owner, but why is there a tab on the main menu for out-of-pocket expenses (expenses paid with a non-business bank or credit card account) when expenses paid for with business accounts doesn’t have one? I’ve never seen any one advise a business owner to make payments from a personal bank account. In fact, “use only your business bank account or credit card to pay for things” is standard small business bookkeeping advice.
I realize that the FreeAgent work flow is to simply pull in an automatic feed from bank accounts and credit cards (or upload statements) and that this would negate the need to manually enter business bank and credit card account expenses. However, I still can’t see how an out-of-pocket expense menu button gets higher priority than business paid expenses.
This is the last interface complaint, I promise. Why do reports fall under the “Accounting” tab whereas “Taxes” gets its own tab? The taxes tab is really just a type of report and I think users are more interested in quickly seeing any other report besides their sales tax report. How often do you use a sales tax report vs. a profit and loss or accounts receivable (aged debtors) report?
I’d be interested to hear the feedback from FreeAgent users, especially those who have used other accounting software systems, to hear their impressions of the interface / workflow.
For sole proprietors and non-incorporated people who are doing their books without the help of an accountant, FreeAgent is probably just fine. You don’t need to worry as much about control over your chart of accountants and you won’t have a bookkeeper or accountant who would need to manipulate them. The interface and work flow are a bit strange to me, but once you get it down and understand where everything is, it should be a non-issue. I think a small business owner would have a similar learning curve with Xero or QuickBooks Online.
If you are an incorporation, I think you should have an accountant, and I’m assuming that unless your accountant is familiar with FreeAgent and its way of doing things, he or she will want to take the numbers out of FreeAgent and manipulate it in their own software. Which is kind of an issue, since the exports aren’t the greatest for accountants.
Now, if you’re a freelancer / solopreneur who works mainly on projects that require tracking time, re-billing expenses, and invoicing a client several times over the course of a project, this software is da bomb (yeah, I said da bomb). It does project management so well that unless you have a very complicated financial back-end, the pros will outweigh the cons.
If you’re looking around for comparable software, especially for those in North America, you should check out FreshBooks. I’d say that FreeAgent is more powerful, but FreshBooks more user friendly.
OTHER ACCOUNTING SOFTWARE
If you’re wondering about alternatives, I’m currently doing an online accounting software review and comparison. So feel free to check out that page for more reviews.
- Kashoo review
- Wave Accounting review
- LessAccounting review
- Quickbooks Online review
- Xero review
- FreshBooks review
- FreeAgent Review
SETUP AND WALK THROUGH NOTES
Signing up I had to go through these series of windows. Relatively painless, but I did have all the appropriate information at my fingertips. Check out the screen shots below to make sure you have all the required information to setup your company.
I have to apologize as I didn’t get the exact screen shot of setup page 5. What it asks you for is your banking information, like found below.
On the top right hand of your account you’ll the link to “Settings” and you’ll find the following settings that you can adjust.
Many of the settings you will already have set up during the setup phase, but there are a few other items you may want to adjust.
PRICE LIST & STOCK
One of the settings that you’ll probably want to change is the Price List & Stock. Here’s the screen shot describing exactly what it is.
Essentially, the “price list” lets you create items that you can re-use on your customer invoices to make data entry faster. The “stock” is adding inventory items, where you can track your stock levels (both in quantity and value).
OH, THAT’S WHERE THE CHART OF ACCOUNTS ARE
Under Settings > Income & Spending Categories is where you’ll find the ability to manipulate some income and expense accounts, including Cost of Goods Sold.
You can find other parts of a traditional “chart of accounts” in two places:
1. Under the bankingtab, which gives you the ability to add bank accounts, credit cards, and a PayPal account. To create a loan account, follow these instructions. Basically you have to add a bank account and then do some special things to make it a loan account.
2. Under the Expenses tab you can not only add expenses, but also assets (weird, but that’s where they are found). A full article FreeAgent wrote up about the purchase of capital assets can be found here.
3. To find the rest of the accounts that FreeAgent has but hides from view, go to Accounting > Journal Entries.
You’ll see all the accounts they have, which are non-modifiable as far as I can see, but at least do exist.
Boy, that’s a chore trying to navigate around and find the chart of accounts!
Importing a trial balance in FreeAgent first means setting up your chart of accounts. As described above, you have to go to several areas to create accounts.
When trying to create my income accounts, I ran across an issue where I couldn’t re-code (re-number) my income accounts and was stuck with having a general “Sales” income account that I could not modify (as witnessed by the lock icon in the screen shot below).
For expenses, I was presented with a huge array of pre-configured accounts.
I ended up deleting them all (with exception of the 3 locked accounts that I couldn’t) and started from scratch, since I already had an existing chart of accounts and naming system.
FreeAgent has certain categories for the “tax return box” field that you have to choose from (as seen in the screen shot below). I did my best to fit my expenses into those pre-determined categories, but sometimes I felt it was missing a category I would have liked. Since FreeAgent is UK based, perhaps the “tax return box” categories make absolute sense there, but they’re a bit different than Canada (where I am).
After setting up my income and expense accounts, I went to the Banking tab to enter my bank and credit card accounts. When I set those accounts up, it asked for an opening balance, which I entered, but maybe I shouldn’t have since I was planning on doing journal entries to make sure all my chart of account balances are correct. However, I found that my bank accounts don’t appear in the Journal Entries window. This seems odd to me that I wouldn’t be able to adjust my bank account balances through a journal entry. What I did find out was that my opening balances go to a Suspense account, so I had to create journal entries to fix this up.
When setting up my credit cards, I found it a bit confusing as to whether I should enter a positive or negative number for the opening balance.
I entered a positive amount (since credit cards usually maintain a credit balance). This I found was wrong. The correct way to enter a credit card opening balance in FreeAgent is with a negative number. As you can see in the screen shot below, entering a positive number into my credit card’s opening balance makes it an asset.
For the rest of my accounts (asset, liability, and equity) I was forced to go to Accountings > Journal Entries to enter my balances as there was no way to create these accounts.
I have to say, getting this chart of accounts and trial balance set up in FreeAgent was painful. This is largely because there is no official chart of accounts in FreeAgent, as well as no way to make a multi-lined journal entry (meaning yo can only post a journal entry a debit or credit at a time).
To import contacts in FreeAgent, click on the Contacts tab.
From there you’ll have the ability to import contacts directly from other software apps (such as outlook or gmail).
Upon attempting to upload a CSV file (the same one that I used to import contacts into Xero), I encountered an error where 13 of my 21 contacts would not import.
I don’t necessarily mind that the contacts wouldn’t import, but what I do mind is that I don’t know why they didn’t import. Looking into the importing contacts FreeAgent Knowledge Base, I find that FreeAgent never claims to able to import anything but contacts from Outlook, Gmail, Mac Mail, or Basecamp. I’m assuming if I looked up the formatting of how contacts are exported from one those software applications I could rework my CSV file to meet the criteria. For my test purposes, I decide to not import my contacts but instead add them manually.
DEALING WITH UNPAID INVOICES
In FreeAgeent I recreated all my unpaid bills by re-entering them one-by-one. I credited the sales to an income account I created called “unpaid invoices from 2011”. I then created a journal entry that would lessen my profit and loss (debit my profit and loss) by the amount of the unpaid account balance. I would have much rather attributed all the unpaid account balances directly to the profit and loss (retained earnings) account, but that was not possible since FreeAgent only allows you to attribute sales to income accounts.
I dated all the invoices their original dates (i.e. the dates were all from 2011) as opposed to dating them with a 2012 data (the start data for my FreeAgent test was January 1st, 2012).
DEALING WITH UNPAID BILLS
I did not import any unpaid bills, but if I would have needed to, I would have used the same logic that I used in dealing with unpaid invoices. To be more precise, I would have created new bills debiting an “unpaid accounts payable from 2011” account while creating a journal entry crediting my profit and loss account.
DEALING WITH UNCLEARED CHECKS
I had $4,874.34 worth of checks that had not cleared my bank account as of December 31, 2011. To make sure my opening bank account balance matched that of my bank statement, I created a new bank account called “uncleared checks” and credited it that amount (i.e. I entered a balance that was negative $4,874.34). As the checks cleared, I transfered money out of my bank account and into the uncleared checks account. Once all the checks cleared, my uncleared checks account was $0.
RECONCILE ACCOUNTS FOR ONE MONTH
I had four accounts to reconcile for the month. My bank account, VISA, Mastercard, and PayPal.
Since an automatic bank feed cannot import data more than 90 days old (in some cases this may vary), I manually imported my bank statements in order to get my bank statement data into FreeAgent. To do that I went to the Banking tab and then clicked on the “upload statement” button.
This is what the window looks like.
I chose the “Guess bank transactions when uploading this statement. You should manually check these.” box to see what would happen. I don’t think it did anything since all 29 transactions were unexplained. This is what the uploaded bank statement looked like:
I was happy to see that I could click on each line item in order to enter more information, as seen in the screen shot below.
I was also delighted to see that I could attach a document to the transaction. Also, once I “explained” the transaction and went back to the statement window, I could see that it had a green check mark icon beside it.
I was curious as to how FreeAgent handled already entered transactions. Here’s what happens when you go to explain the transaction:
You have the option to either “Use an Existing Manual Entry” or to “Add a New Explanation”. FreeAgent gives you an option to choose a manual entry to explain a transaction, but I wish it would automatically do this for me (most accounting software can do this). If you look at the statement window below, you can see that the top transaction ($65.26) matches the bottom transaction (with the blue head icon), but FreeAgent doesn’t know to automatically match those transactions together.
I think the system could do a better job of matching (like Xero’s excellent matching feature in its reconciliation window).
Something that I knew would inevitably happen was the need to do a split transaction. A standard transaction has two accounts. A split transaction involves more than 2 accounts. For example, I have a car loan where part of my payment goes to principle (paying off the loan) while the other part goes to paying interest. To record that transaction properly in accounting software, I need to do a split transaction.
In FreeAgent, it initially didn’t appear to give me the option to split a transaction, so I manually entered two separate transactions: 1) a payment from my bank account to account for the interest payment, and 2) a transfer from my bank account to Honda Finance (the loan payment part of the transaction). I then went to explain the loan and interest payment, matching the manually entered loan payment ($135.19) to the total payment amount imported from my bank statement ($170.61).
When I did that, the “statement” window showed that only a partial amount was explained while leaving the remainder ($35.42) still not explained.
The partial explanation split the imported bank statement transaction into two, as witnessed by the new $35.42 amount with the red question mark icon beside it. As a practical solution for reconciling the bank statement this method works, but if you were to ever compare FreeAgent’s bank account ledger to your bank issued statement, the line items will not match. This is not a show stopper, but it can lead to confusion for anyone looking to verify that a bank account has been reconciled. The saving grace for how FreeAgent handles split transactions is that it does visually group the split transaction together, as witnessed in the screen shot below.
Also, when you click on an individual split transaction, it’ll show the other transactions that it is associated with.
I ran into another split transaction issue when I had to explain a bank deposit that was for a single payment made by a customer for multiple invoices that I had issued. Searching the help files I found that my situation was a popular help topic. The article “Pay off multiple invoices in one payment” explained exactly how to handle my situation. Essentially what you do is lower the “credit value $” field to the amount of each individual invoice. Not explaining the full amount (like for the above car loan situation) splits up the transaction.
Once I finished reconciling my bank account for the month I knew I did a good job and could relax!
After the reconciliation I was still curious as to what the “I chose the “Guess bank transactions when uploading this statement. You should manually check these” box would do, so I uploaded a statement for the same bank account, but for another month. It managed to correctly explain a few transactions and incorrectly explain a few more. If FreeAgent did a better job at explaining, I could see this being quite a useful feature. In my admittedly limited test, I wasn’t wowed by its accuracy at guessing. Perhaps using the feature for a few more months would have been different.
Another test I ran was to manually input bank transactions before I uploaded a statement. Before is a key word, because if you manually enter transactions after you upload a bank statement, FreeAgent does nothing.
Doing manual entries in advance allowed FreeAgent to automatically explain those manual transactions, which is shown by giving the transaction a green check mark icon. One thing I didn’t like about this process was that FreeAgent didn’t give me an option to approve the automatic explanations. I couldn’t tell whether the transaction with the green check mark icons were explained by guessing on the part of FreeAgent or by matching the transaction to a manually added transaction.
The last test I ran was to uncheck the “guess bank transactions…” box and upload a bank statement. This resulted in no matches, even for manually entered transactions.
One thing you should be careful of is if you go to delete an uploaded statement. If you have the “guess bank transactions…” box ticked and FreeAgent automatically explains some manually entered transactions, it will deletes all those manually entered transactions when you delete your uploaded statement. So, be careful!
While reconciling my credit card account I discovered another feature of FreeAgent, which was to use the rules of how one transaction was explained to explain similar transactions. Below you can see a screen shot of other transactions that FreeAgent is asking to explain.
Reconciling my PayPal account was more challenging. FreeAgent did not accept a QIF file I presented it and also would not import a CSV file. Reading the FreeAgent Knowledge Base I found that the CSV had to be formatted very specifically.
I also tried to pull a bank feed from PayPal following FreeAgent’s PayPal API instructions. I was able to successfully connect, but bank feeds were not pulled immediately (but were the next day).
This is the end of the setup and notes section. Hope it helped!
Review taken from Small Business Doer.