Challenge

In 2003, running a small design firm out of his mother’s Toronto basement, Mike McDerment used Word and Excel to send rudimentary invoices to his clients. Then came the day he mistakenly saved over an old invoice, costing him hours of work. Both exasperating and all too common, the mishap spurred McDerment to found FreshBooks, an accounting software that saves business owners hundreds of hours per year with tools for invoicing, expenses, payments, and financial reporting.

To date, FreshBooks has reached more than 30 million customers in more than 160 countries. Its customers include small business owners and accountants across many industries, such as construction, IT, and legal. FreshBooks began using Stripe-hosted payment solutions in 2014, including Stripe Connect, which enabled businesses to connect their own Stripe accounts to the FreshBooks platform.

“Providing a leading user experience for small business owners, their employees, and their clients is deeply important to us,” said Andrew Gunner, senior director of product for payments at FreshBooks. “We really wanted to work closely with a partner that would allow us to continue to own those aspects of the user experience that are important to us.”

As FreshBooks experienced significant growth over the years, so did many of the businesses it served. By 2023, FreshBooks’s payment needs had changed, and it wanted to offer an end-to-end payment experience with easier onboarding, reduced friction, more control of customers’ payment journey, and the opportunity to offer more financial services going forward. With this new solution, FreshBooks aimed to drive adoption of integrated payments, building its payments ecosystem as a revenue stream. FreshBooks also wanted to ensure its new payment solution could help its customers mitigate fraud even as they scaled their businesses.

Solution

FreshBooks chose Stripe originally for its ability to innovate with FreshBooks to meet customers’ evolving needs—the company chose to expand with Stripe for this same reason. In 2024, FreshBooks opted to change its existing Connect integration from a hosted solution to a white-labled payment solution, FreshBooks Payments, which helps business owners send payments-enabled invoices, manage payments, and track revenue—all from within FreshBooks’s platform. By shifting from a Stripe-hosted solution to a white-labeled approach, FreshBooks was able to gain greater control over the payment experience and customize the user interface directly within its own platform.

Knowing that managing cash flow cycles is key for small businesses, FreshBooks implemented Connect’s embedded component for Instant Payouts as part of its updated integration. This solution enables businesses to access cash within minutes, day or night, even on holidays and weekends. For card payments, funds become available when the transaction is complete. For ACH and debit payments, funds are available as soon as a payment has settled.

To drive adoption and repeat use for its Instant Payouts solution, FreshBooks participated in a growth advisory workshop. During this event, Stripe experts from product, risk, and marketing shared strategies for monetization, risk management, and promotional campaigns. FreshBooks plans to use Connect embedded components for onboarding to create a faster, streamlined onboarding flow that doesn’t require customers to leave the FreshBooks platform at any point. Stripe’s embedded components solutions for onboarding are compliant across geographies, enabling FreshBooks to deliver a seamless onboarding experience for its global customer base without having to build or maintain a unique onboarding flow for every country.

“Embedded components are something that we’re really excited about,” said Gunner. “We can use Stripe’s embedded components to provide a single consistent experience. It allows us to do that in a way that is relatively easy to develop. By using embedded components, we save time, we gain speed, and we gain learning without having to do a full API build first.”

With Connect, FreshBooks can continue to build on its financial offerings because Connect’s modular design serves as a foundation to easily add financial products and services, such as faster payouts and business financing, to help businesses manage cash flow and grow. This modularity also makes it possible for FreshBooks to further customize its Connect integration in the future using Stripe’s APIs.

FreshBooks also implemented Stripe Radar for Fraud Teams to automatically detect fraud and write custom fraud prevention rules. It also adopted Radar for platforms, addressing a key business challenge. Traditionally, separate merchant underwriting and transaction monitoring processes made it hard to quickly spot unusual payment activity. Radar for platforms links these processes, enabling more accurate and timely fraud detection across both merchants and transactions while reducing false positives.

FreshBooks worked with Stripe professional services to build the integration on a short timeline and to ensure a smooth experience for users migrating to FreshBooks Payments. The professional services team provided workshops to help FreshBooks accelerate the onboarding process, restructure its pricing strategy, and prepare for migration. The professional services team maintained close contact with FreshBooks developers throughout the process, providing guidance and expertise through weekly progress calls and daily Slack messages. Later in the project, the teams also partnered with the Stripe migrations team to ensure a seamless migration process.

The teams developed a strategy to migrate the customer data from FreshBooks’s connected accounts in cohorts, based on key success factors such as data volume, system complexity, and customer readiness. During the migration planning phase, the data migration team identified an opportunity to streamline the process: they built a custom migration tool that enabled simultaneous data import into thousands of separate connected accounts, significantly improving the efficiency of the FreshBooks migration effort. With this tooling, each cohort’s customer migration was completed within a day of data receipt.

Results

FreshBooks Payments improves customer experience with end-to-end payment journey

FreshBooks launched FreshBooks Payments and used Connect’s embedded components to quickly bring to market a fast, simple, white-labeled onboarding process that customers can complete within minutes. And once onboarded, those customers have access to a complete payment solution fully integrated into their accounting software.

“We really move the expectation of what a customer experience is from just a user interface experience to an end-to-end financial services journey,” said Gunner. “That’s where we really think we’ll have a step-change improvement in how we serve our customers today.”

Embedded payments increases efficiency for FreshBooks teams

FreshBooks expects its added Stripe solutions to yield efficiency gains for its internal teams. FreshBooks’s expansion with Stripe provides the business with more ownership of the payment journey, which gives it more transparency into customer data. That means when customers have questions, FreshBooks’s customer support teams can quickly address and resolve them.

Instant Payouts and growth advisory workshop boost revenue 31% in 30 days

Following FreshBooks’s participation in Stripe’s growth advisory workshop, the company saw quick results from its Instant Payouts offering. Within 30 days of implementing the workshop recommendations, FreshBooks grew businesses using Instant Payouts by 22%, improved monthly retention by 9%, and increased revenue by 31%.

FreshBooks gains ability to quickly bring new financial services to market

FreshBooks considers its expanded Connect integration a jumping-off point, knowing it can easily add new capabilities and lines of business with Stripe’s integrated financial solutions.

“We’re looking at implementing things like faster funding and real-time funding for our owners so that they have better visibility and control over their cash flow,” said Gunner. “In many ways, we think we’re at the start of this journey. We’re excited to use the power of Stripe to help solve problems for our customers.”

Radar for platforms helps FreshBooks block fraudulent accounts

With Radar for platforms, FreshBooks is now able to use dynamic, risk-based decisioning that provides a real-time view of its portfolio health daily.

“This tooling has significantly increased the efficiency of our risk team to focus efforts where manual intervention is truly needed, and has allowed us to block more than 300 fraudulent accounts from onboarding onto our platform in just 3 months,” said Gunner.