Accounts receivable management with a different take on reconciliation
NeatBooks is an accounts receivable-only accounting website that offers an excellent user experience, simple reconciliation, and helps you match downloaded bank transactions with original source documents, such as receipts.
You may know The Neat Company from its scanners and associated apps that parse data from any financial document you scan, such as receipts and bank statements. You may not know that the company has since launched NeatBooks, a double-entry accounts receivable service. NeatBooks’ solid accounting tool focuses on helping you download transactions from your online bank accounts and categorize them.
NeatBooks gives you four ways to bring those transactions from source documents (like receipts) into an online storage area. As it receives those source documents, NeatBooks pulls key information, such as date, vendor, and amount, and places it in the correct fields of online records. When transactions are matched with their original documents, they’re considered reconciled. You can also create and send invoices, generate customizable reports, and access reconciliation tools on a mobile device.
NeatBooks lacks some of the functionality found in competing accounting applications, like accounts payable, time tracking, inventory tracking, and sales form customization. But it’s more adept at facilitating document uploads and parsing data from financial forms. NeatBooks is an excellent first effort from The Neat Company.
NeatBooks costs $40 per month or $432 per year. NeatBooks includes the capabilities of two other Neat products, which you could buy separately if you don’t need everything NeatBooks offers. One, called NeatInvoices (free), is a simple invoicing utility that supports a payment gateway (WePay) for accepting payments from customers. The other is NeatFiles ($25 per month or $300 per year), which provides unlimited online storage for your digital financial documents. NeatFiles has the same data capture and parsing functionality as NeatBooks.
The $40 monthly price for the full service is on the high side for a first release. QuickBooks Online Essentials, which does much more, has a regular price of $50 per month. Zoho Books Premium, which has some features even QuickBooks Online doesn’t, is just $35 per month. Sunrise and Wave, which offer both accounts receivable, accounts payable, and more, are both free. All these competing products let you attach source documents to transactions, but none offer the document storage and matching capabilities NeatBooks does. Additionally, those that parse data don’t do it as quickly or as well as NeatBooks.
The setup process consists of several steps, some of which you must do before getting to work and others that can be done later. You first supply your contact information, industry, number of employees, and year established. Then the service asks if you want to connect a financial account to the site by supplying your bank login and password. You can add checking and savings accounts, credit cards, and loans (no investments). You can keep adding accounts or exit to the site.
You complete the setup by opening the Settings from the homepage. There, NeatBooks asks you to customize your categories. When you do, you’re actually modifying the default chart of accounts that NeatBooks provides.
The chart of accounts screen is divided into three columns: Parent Categories, Common Categories, and Custom Categories. Parent Categories hold your core accounts, like Income, Expense, and Asset, and below each entry are standard subcategories, including Sales and Billable Expenses, Auto Expenses, and General Business Expenses. Click on any of these entries, and the middle pane displays Common Categories for that entry (like Education and Travel), if any exist. Most categories can stand alone. You can check a box to add any listed subcategories to your chart of accounts or create your own Custom Categories in the third pane.
This process is a very simple and effective way to build a chart of accounts, but it does require some time and decision-making. Most accounting applications provide a comprehensive boilerplate list of the typical, detailed categories and subcategories that are contained in the chart of accounts, though they allow modification. NeatBooks asks you to expand the basic categories and subcategories that are automatically included on other sites. However, NeatBooks does let you enable, disable, rename, edit, and move categories. Some accountants don’t want their clients to be so hands-on with the chart of accounts because it might affect their reports and their tax planning and preparation, but there’s another level of categorization on the site that’s matched to tax forms and schedules (more on that later).
Another step involves vendor mapping, which helps speed up your reconciling. NeatBooks displays a list of the vendors it’s pulled from transactions you’ve imported and has you select default categories for them. All are selected by default. You can uncheck any you don’t want to include, though leaving them out might cause problems with matching future transactions. Most competing sites have a similar feature usually referred to as rules, which automatically associate certain transactions to a particular category, but they’re based on more than just the vendor field.
If you try to disable a vendor that has an existing transaction in your register, you’ll get a big red warning message and won’t be allowed to do it. You can also add vendors. But here again, you need to make sure the name you’re adding matches what the bank has on file exactly. If while you’re selecting categories you find that you don’t have one you need, you can click a link that takes you back to the Chart of Accounts page and add or edit it, then return directly to Vendor Mapping.
You’re also asked for the month and year when your NeatBooks bookkeeping should start. It’s important to get this date right because you can’t change it. You’re also asked to indicate which business accounts you’ll be reconciling.
You need to enter starting balances, meaning the amount of money you have in accounts at the beginning of your fiscal period. If you’ve been using another form of bookkeeping, you don’t want to have to enter every transaction in all your accounts. So your starting balance picks up where your previous bookkeeping ended.
You’re not required to enter your starting balances before you start working. In fact, the site recommends you consult with a tax professional to get them right. Once you have the numbers, you can create a Journal Entry, something accounting websites try to avoid. But it’s is a simple task. You click a few well-labeled links and enter the number.
Right after I go through the setup process for an accounting application, I like to visit the Settings. It lets me learn about new features and see what options I have to modify any default settings.
In NeatBooks, you click your company name in the upper right corner to get there. A drop-down menu appears that lets you return to the Chart of Accounts and Vendor Mapping areas. You can view the site’s User Settings, which include your password and security questions, as well as your unique NeatBooks email address. The email address is for forwarding digital documents into the system, like receipts for NeatBooks to read (more on that later).
An Account Settings area includes options for your currency (US and Canadian dollars are supported, far fewer than some other sites allow) and a link to your business profile. You can also invite other users by providing names and email addresses. Those individuals will be invited to create a NeatBooks account and will have full access to the site. You can’t manage user access permissions to the level of detail that you can in QuickBooks Online.
NeatBooks lives up to its name. It has a very tidy, colorful, and attractive user interface. Navigation uses standard conventions and is easy to understand. This usability is evident from the start when you click the dashboard entry in the vertical navigation pane on the left. The first thing you see is the Net Cash Flow chart, which you can view in a variety of date ranges.
Below that are links to four ways to bring digital documents into NeatBooks to be parsed and entered as records on the site. The app supports receipts, bills, contacts, documents, invoices, statements, checks, and, oddly, recipes. You can import them from your computer system files as Neat-acceptable file types (PDF, JPG, TIF, PNG, or BMP) or email them to your unique address. You can capture them on your smartphone using the NeatBooks mobile app.
If you have a Neat-Certified TWAIN-compliant third-party scanner (there are many of them) and the free Neat Scan Utility, you can scan documents directly into NeatBooks.
Other links on the dashboard take you to user tips, a feedback portal, and your items, meaning receipts, invoices, and so forth. Some competitors’ dashboards are more fleshed out and include a list of account balances, additional charts, and a to-do list, for example. While NeatBooks doesn’t have a to-do list per se, it does notify you at the top of the page if you have items to review. To see what’s typically included in a dashboard—charts illustrating top expense categories, cash balance, profit and loss, and total sales—you have to click on the Insights link in the toolbar.
A vertical toolbar on the left side of the screen contains links to the site’s primary tools and functions: Invoices, Transaction, Reconciliation, Insights, Reports, and File Cabinet. Farther down are links to NeatBooks support options. I like that there’s a searchable database of FAQs and well-written step-by-step instructions. You also get a form for submitting a support ticket, live chat, a phone number for support, and a scheduling page for one-on-one phone calls with site experts. These options seem more than sufficient for a relatively simple site.
Previously I mentioned that there are multiple ways to get documents into NeatBooks. How well do they work?
I scanned and emailed a simple invoice with a half dozen line items on it. NeatBooks processed it in about a minute and dropped it into my File Cabinet, under Needs Review and All Files. When I clicked to review it, a new two-paned screen opened. On the left were all the possible fields for digital documents. The right side displayed a copy of my original invoice. NeatBooks pulled in the date, item type, currency, and total amount and put them in the correct fields. It missed the invoice number and vendor name, so I added them manually and saved the invoice. I also had the option to reprocess it, email it, trash it, or export it as a CSV file.
When I tested a second invoice, NeatBooks pulled in the same fields as before, plus the vendor and category.
In the business world, there is no standard invoice or sales receipt or any other type of financial document. Fields are in various places on different forms and they sometimes don’t even use the same terminology. So I wouldn’t have expected NeatBooks to score 100 percent in its field-matching, and it didn’t. Still, it’s fast and often quite thorough.
Before you can start creating and sending invoices, you have to provide NeatBooks with some information. It wants your organization’s contact information and optionally a logo, a starting invoice number, your invoice reminder schedule, and the text for your terms and conditions. You can modify any of this information in the Invoice Settings. Once you’ve entered the preliminary data, NeatBooks walks you through a brief tutorial on creating invoices, which is well-done and worth watching if you’ve never used an online invoicing application. Despite whether you’re experienced with invoicing, the Create Invoice screen is intuitive.
The invoicing page is set up similar to competitors’ invoice screens. Several fields appear at the top that either must be filled in or are already completed. You click in the Customer field to open a drop-down menu, which contains only one entry when you first start: Create Customer. Click it, and a panel slides out from the right that contains blank fields for your customer contact information. Once you’ve completed the form and clicked Save, that record shows up as an entry in your growing list of customers, so you can just select the correct one when you’re creating an invoice. Customer data here is minimal, not nearly as comprehensive as what you get in Zoho Books.
Your invoice number and date should already be filled in, so you can move on to Terms. A drop-down list displays your options. Select one, and NeatBooks automatically supplies the due date. Below these fields is space for entering line items. Click +Product/Service, and a drop-down list appears with one entry: Create Product/Service. A panel slides out from the right with just a few fields for you to complete: Name, Description, Price, and Quantity. You can also check a box to include tax if applicable. NeatBooks does not offer inventory tracking, as Xero and others do, or there would be more fields to fill out.
Once you’ve entered a product or service, a new button appears below it: +Discount/Fee. Click it and add one or both in the pane that slides out from the right. NeatBooks enters them as individual line items. You can’t specify a percentage of the sale as a discount as you can on competing sites, only a dollar amount.
Amounts that are taxable appear with a superscript T next to them. So when you’ve finished entering products and/or services, you click the Tax field at the bottom of the invoice, then Add Tax. Enter the name of the tax and percentage in the right pane and save it, and NeatBooks calculates the tax amount. If you want to add a note to the customer, you can. Otherwise, you’re done. NeatBooks will have done all the required calculations and displayed the Total Due in the lower right corner. Save it and preview it, and then you can edit it, send it, mark it as sent, export it to PDF and print it, void it, or duplicate it. The final invoices look simple, professional, and attractive.
Once you’ve created one invoice, you’ll have an invoice homepage. The amount outstanding and past due appear at the top. You can toggle between invoices, customers, and products to see lists of the entries you’ve created and edit them when necessary. Here again, NeatBooks doesn’t offer the depth of detail that many competitors offer. For example, you can’t save invoices as drafts, and you can’t customize them at all the way you can in Wave. But a lot of very small businesses aren’t so concerned about those capabilities.
If you’ve connected your online accounts to NeatBooks, you can take advantage of its transaction management capabilities. The Transactions page displays your accounts and their balances in a pane on the right. You can add accounts here and refresh your feed. You can also change the date range and set filters and enter transactions manually. Unfortunately, NeatBooks wants you to designate these manual transactions as debits or credits, two words that accounting software tries to avoid. The register contains a good amount of information for each transaction it brings in, including columns for date, vendor, and amount. NeatBooks attempts to categorize each transaction, but it missed the mark on several of mine.
At least it’s easy enough to correct. Click a transaction, and it opens in a new window. I find having a new window a bit inconvenient, as competitors keep you on the register page to work with transactions. In any event, the new window shows the primary fields filled in. Click on the Category field to open the list and choose a new category. You can open even more fields by clicking a link, but you have to fill them out yourself. One of them is Tax Category (for deductible expenses). The Tax Category is different from the more general Category you assigned to the transaction for internal use. The list of Tax Categories includes names of forms and schedules for both the Canadian and US tax systems. Tax category assignments become very helpful when you’re preparing your taxes. You can also assign the transaction to projects and make them billable to customers.
On the right side of this screen are two more links, one for attaching a source document to the transaction and another to search your Neat files for a source document that’s already uploaded. You can save the transaction or save it as reconciled if you’ve selected a matching source document or clicked the box next to No Source Document.
Account reconciliation typically involves matching the transactions on your bank statement to the ones in your checkbook register, whether on paper or online, and making sure the difference between the two is finally zero. NeatBooks uses that word to describe its process of matching transactions to digital source documents.
When you click the Reconciliation link in the toolbar, the screen that opens displays the four “buckets” in which your transactions from each account can appear. Suggested Matches are just that: transactions and source documents that appear to be related. Refunds & Credits and Deposits are grouped together and can be reconciled. And Other Unreconciled are transactions that need to be verified, matched, and reconciled. NeatBooks makes this process very simple and understandable.
Once you’ve reconciled all the transactions for a given month, the screen displays a message that says “100% Reconciled.” That month can then be closed, and you can move on to reconcile your other accounts.
I have a mixed reaction to the site’s definition of reconciliation. It’s confusing because it describes a different process from what the word typically means in accounting. In QuickBooks Online, for example, reconciliation means matching your downloaded transactions to the ones you’ve entered on the site. You don’t have to manually enter transactions for expenses in NeatBook, for example (although you can). All you need is the source document, which is always right. Human beings make mistakes sometimes when they’re entering data.
Encouraging people to make sure they have documents backing up transactions—and providing a way to store and organize them—is a good thing. Assigning them to tax categories is also a very good thing.
NeatBooks offers templates for eight reports, which is just about right considering its capabilities. It supports standard financial reports (Profit & Loss Statement, Cash Flow Statement, and Balance Sheet). In addition, you can run an Expense Report, Spending Summary, Sales Tax, Spending Detail, and Tax Category. NeatBooks has significantly fewer reports than QuickBooks Online, for example, but NeatBooks doesn’t have nearly the functionality to support that QuickBooks does. The reports you do get from NeatBooks are very customizable and visually appealing, however.
NeatBooks has both an iOS app and an Android app, but they don’t yet do as much as the website does. Four icons along the bottom take you to the app’s most commonly-accessed functions: Search, Insights (not available yet), Capture (photos), and Reconcile.
There’s also a menu of additional options. From here, you can filter and view transactions, view unpaid invoices, access your File Cabinet, and open the settings and support functions. The app is clean and attractive and performed well for me. Considering that the site itself is so new, NeatBooks’ first mobile apps do more than many early efforts by accounting website makers.
I like the innovative approach that NeatBooks has taken to account reconciliation. It can make reporting and tax preparation more thorough, accurate, and organized. If it’s done conscientiously, with attention paid to every financial detail, it can be as reliable as the more standard method of reconciliation. On the other hand, invoices and transaction management are simpler than they are on competing sites, and there’s no accounts payable. And users would have to build extra time into their accounting work to upload all those source documents. Still, it has a place for many very small businesses.
That said, our Editors’ Choice award for small business accounting apps goes to QuickBooks Online for small businesses and FreshBooks for very small businesses and solo entrepreneurs. QuickBooks provides the tools small businesses need to manage their finances capably. The QuickBooks family of accounting websites is scalable, so you can start small and move up as you grow. It’s a perennial winner for accounting, with good reason. FreshBooks is better for the smallest businesses that don’t need everything QuickBooks offers.
Sign up for Lab Report to get the latest reviews and top product advice delivered right to your inbox.
Your subscription has been confirmed. Keep an eye on your inbox!
Kathy Yakal has been writing about PC applications since 1983, when she joined the editorial staff of COMPUTE! Publications. She began specializing in financial solutions in 1989, writing a newsletter for CPAs who were exploring the use of personal computers in their firms. Since then, she has contributed to numerous print and web-based publications, including Barron’s and Kiplinger’s Personal Finance Magazine. She also ghostwrites client content for accountants.
PCMag.com is a leading authority on technology, delivering Labs-based, independent reviews of the latest products and services. Our expert industry analysis and practical solutions help you make better buying decisions and get more from technology.
© 1996-2022 Ziff Davis. PCMag Digital Group
PCMag, PCMag.com and PC Magazine are among the federally registered trademarks of Ziff Davis and may not be used by third parties without explicit permission. The display of third-party trademarks and trade names on this site does not necessarily indicate any affiliation or the endorsement of PCMag. If you click an affiliate link and buy a product or service, we may be paid a fee by that merchant.