I’m a pretty big fan of FreeAgent, it’s been the backbone of all my freelance accounting for a number of years now but there’s one issue that a lot of people seem to have with it: dealing with deposits.
If you take a look at FreeAgent’s community support board on Get Satisfaction you’ll see a lot of people wanting to know when it will natively deal with deposits. The original request on this post is 8 years old and it still hasn’t been solved. There were a few rumblings at one point that it had appeared on their roadmap but that appears not to be the case. No doubt FreeAgent have lost customers because of this. It doesn’t make sense to me why FreeAgent have left this one so long without fixing but I’m sure there are some reasons behind the stance, although I don’t believe they’ve ever been fully explained.
There are a couple of solutions for dealing with deposits at the moment, both of which have been offered as solutions by FreeAgent’s own internal team on the Get Satisfaction forum.
FreeAgent Deposit Solution No. 1
The first way, and the way I deal with deposits in FreeAgent is actually really simple. Just issue 2 invoices. The first invoice clearly states what the payment is for and that it is for 50% of the total amount. The second invoice (which I usually issue upon project completion) states that it is for the remaining balance. Whilst it’s not a particularly groundbreaking solution and the process could be slightly smoother, it does work and I’ve never had a client have an issue with this way of working.
The trouble with this method is that it doesn’t play well with estimates. If you’ve had an estimate and would like to turn it into a project it becomes quite cumbersome and doesn’t really work as seamlessly as you would expect.
FreeAgent Deposit Solution No. 2
The second solution is to create a single invoice for the full amount and send this on to your customer or client as normal. Your customer can then make a partial payment on that invoice. FreeAgent allows you to explain an incoming transaction as a partial payment and reduces that amount from the total bill. At this point you then have the option of sending an updated invoice with the updated amount now due. Further payments can be dealt with the same way – whether they contain the full final amount or not doesn’t matter (you can mark multiple incoming payments against a single invoice).
Again this method isn’t quite the fluid process you would expect. Like the first solution, it does work but it’s far from perfect. You have to send your client an invoice for an amount that you’re not expecting them to pay in a single payment and you need to communicate that to your client. I find this one a little clunkier than the first method and for that reason I always issue multiple invoices.
Despite the fact that FreeAgent is a little bit behind the curve when it comes to dealing with deposits, I still think it’s an excellent online accounting solution for freelancers and micro businesses, particularly if they’re based in the UK (FreeAgent is based in the UK). Read my full review of FreeAgent.
If you do feel like giving FreeAgent a try, you can grab a 10% lifetime discount using the link below (disclosure, I get a 10% discount too).