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I have been using Freshbooks (http://www.freshbooks.com) now for about 3 years and it is amazing.. it does recurring invoices automatically, so each month I don’t need to go in and create a new invoice for monthly invoices.

It also allows payments directly online as well as a nice easy to use interface, and I can use it on my iphone.

Xero is also great, I use that for my accounting however it doesn’t send out recurring invoices, or at least i can’t work out how.. it does integrate with Freshbooks though!