As an owner of any successful, growing business, you will appreciate the importance of making sure your customers pay their bills via the best invoicing software possible. Enterprise invoicing software is helping to improve the efficiency of accounting for small and medium-sized enterprises (SMEs) as well as individual freelancers or contractors, so that you spend less time with your head stuck in spreadsheets and more time doing what you do best – running your business.
How do companies handle their account work online?
Getting the accounts of your business right from the get-go can set the tone for any start-up. Managing your business’ income and ensuring accountability for every cent earnt and every cent spent is important for many reasons; not least to ensure that your business pays the tax it owes. Traditionally, businesses like yours may have used spreadsheets to monitor invoices raised and when the funds have been paid into your company account. You might have even used paper-based bookkeeping. However, these methods are time-consuming and fraught with danger, with the potential for making human errors higher than it needs to be. That’s because the best invoicing software and applications can automate some of this process and streamline your business finances.
What is Invoicing Software?
Whenever you sell goods or services as a business, your first port of call is to raise an invoice in order to receive payment from your customers. In the past, when cash payments were rife and bookkeeping was typically a manual process, businesses were all too often stung with unforeseen tax bills due to erroneous billing procedures that didn’t give a full – and correct – picture of their income.
That’s where the best invoicing software comes in. More recently, invoice management software has made accounting that much easier for small businesses without a dedicated in-house finance department to oversee accounts payable. Digital or cloud-based invoicing software allows businesses like yours to personalize all aspects of the invoicing process, creating your own invoice templates, populating all the data you need and importing generated invoices into an overarching accounts dashboard where you can keep track of paid and unpaid invoices.
How to choose the best Invoicing Software
Just as you would with any other type of software for your business, you need to do your research into the best invoicing software options to select the right platform for your needs. Primarily, you will want an invoice program that is safe to use, and keeps all your business and customers' data secure. Those new to choosing the best online invoice program may also wish to choose the best billing software that commits to 24/7 around-the-clock customer support, complete with manuals, tutorials and knowledge centers to help you hone your craft.
My Top Invoicing Software
Usage of Invoice Software
The most intuitive and best invoicing software platforms are a sound investment for your business, simply because they can help to automate a string of regular and irregular accountancy tasks that may have been traditionally handled via manual processes. However, there are some invoicing software options that are better suited to certain business demographics:
Infrequent usageLet’s say you are a small business or self-employed freelancer that only submits invoices once a month, there are cost-effective solutions for occasional invoicing. That’s because the best invoicing software platforms offer no monthly subscription fees and free distribution of occasional invoices
Frequent usageOn the flip side, there are businesses that create and distribute hundreds of invoices daily that require rock-solid invoicing software, with ‘Pro’ subscription plans that offer high-volume client lists
Free softwareIt’s also possible to get your hands on free invoice software that may not have the functionality and intuitive user experience of more expensive platforms but is still designed to help businesses comply with their tax obligations.
Features of Invoicing Software
If you are entirely new to the concept of automated invoicing and how digital and cloud-based platforms can take total control of your business’ financial picture, let’s take a look at some of the powerful capabilities of systems available to companies big and small:
Creating new online invoicesMost invoice software providers will enable you to create initial estimates. First and foremost, this will give clients an idea of what their actual bill will be. Secondly, it’s then easy to convert these estimates seamlessly into genuine invoices that are registered in the system with the date they are sent out to customers
Online invoicingOnce invoices are generated and distributed digitally to clients, it’s then possible to reconcile your books with your business bank statements in a bid to spot recordkeeping issues that could affect your end-of-year accounts
Auto-remindersGone are the days of having to sit by the telephone and hound your customers for payment. With invoice software, it’s possible to create and distribute automated invoice reminders for overdue invoices. You get total flexibility to set how many days you wish to give your customers until an automatic payment reminder is sent
Recurring billingDo you have monthly retainer work with clients? Instead of preparing the same invoice to send to clients each month, use invoice software to create recurring billing on specific dates, saving precious time and effort
Time and payment trackingMost invoicing software platforms give you the freedom to create your own Chart of Accounts (COA) to begin monitoring account activity, tracking income and expenses, as well as assets and liabilities
Revenue reportingSeamless interactions within invoicing software make it possible to apply income received to the right products or services in your account dashboard. It’s also possible to merge bank and credit card accounts and transactions into one overarching ledger for ultimate account reporting
Client portalsThe beauty of invoice software is that it’s often packaged up in a neat, intuitive application that’s far easier to engage with than an Excel spreadsheet or a pile of paperwork. Most invoice software apps are designed for seamless cross-platform use on desktop, tablet and smartphone devices too, allowing you to keep track of your income on the go
Mobile billingThere are web applications and cloud-based invoice software available on iOS, Android and many other smartphone operating systems. All of which are designed to make it easier to bill clients and keep track of payment management at home or on the move between business meetings.
Pros of Billing & Invoicing Software
The best billing system providers send invoices digitally; something which has become increasingly accepted among small businesses and their customers. It’s the quickest and easiest solution for all parties, with no need to send physical invoices, ensuring payment management can be handled with the utmost professionalism, without affecting client relations.
- Minimize late payments
With the ability to send professional late-payment reminders to prompt customers, invoice software helps to improve your business’ strike-rate of paid invoices and reduce the window between raised invoices and paid invoices, all of which helps to improve cashflow.
- Minimize missed payments
With accurate monitoring and oversight of your business’ billing commitments, as well as automated invoicing, you can ensure that you never miss collecting any payments that would ordinarily have a negative impact on your bottom line.
- Maintain a professional image
Invoicing platforms give you total freedom to design templated invoices and documents that are an accurate reflection of your brand image.
Cons of Billing Software
Although there are many benefits to invoice software for businesses of all shapes and sizes, it’s also important to be mindful of the potential pitfalls so that you can safely negotiate your way into the world of digital invoicing:
- Failed transactions
It’s unclear whether the distribution of digital invoices is 100% failsafe. It might be possible that some invoices or transactions fail during implementation, which can create unnecessary roadblocks to payment.
- Discount and promotions
Some invoicing software promotions will offer cheap initial subscriptions, followed by more expensive recurring monthly payments. Be sure you are happy with your chosen platform before committing long-term financially.
- Auto billing issues
If you struggle to get to grips with the automated features of invoicing software, you could find yourself billing clients erroneously, which can cause a crisis of confidence in your business among its customers.
Types of Invoices
Types of invoicing for small businesses and freelancers
Invoices act as the major lifeblood of any successful small business. After all, it’s your main source of cash flow and without it you wouldn’t generate any profits. The best invoicing software can handle all manner of invoice types. Some of the most common types of invoicing relevant to small firms and self-employed freelancers/contractors include:
- Standard invoicing
The most basic of all invoices, sent directly to individual customers, setting out the price to be paid for the goods or services supplied.
- Commercial invoicing
Typically, commercial invoices will be distributed accompanied with goods exported overseas to international customers.
- Progress invoice
Also known as “staged invoices”, these are useful invoices for freelancers who are working on long-term projects and have agreed to invoice for services provided in stages over the lifecycle of the project.
Timesheet invoices monitor the number of hours spent on a specific project, allowing businesses to work out the cost per hour and the overall cost of a project.
- Utility invoice
Typically used by utility companies, utility invoices/billing is used to combine usage data from meters and pair it with billing rates to determine accurate invoices for utility services like gas, water and electricity.
- Recurring invoice
Best invoicing software for small businesses with clients who are on a retainer, this gives clients certainty that they will be invoiced for a set amount, at the same time every month.
- Pro-Forma invoice
Pro-forma invoices are typically raised for customs purposes, confirming a future transaction between sellers who trade internationally. Once their goods have reached their final destination, a standard invoice can be raised, inclusive of any VAT or additional tax.
- Debit memo
Invoicing software can also help when there is a small credit balance remaining in a client account, with debit memos distributed informing them of the situation.
- Pending invoice
This relates to invoices that have been generated but are, as yet, outstanding in terms of payment from the customer.
- Value-based billing
Value-based pricing relates to the grouping of goods or services into bundles, which sellers can then charge a set amount to consumers.
- Fixed-bid billing
Fixed-bid billing relates to contractual agreements between two parties to provide predefined services for a predetermined price or price range.
- Time-based billing
Time-tracked billing relates to work carried out on behalf of a customer that is then invoiced based on the total time taken and the hourly rate.
Invoicing Software Trends
So popular has invoice billing software been around the world that national governments are beginning to spearhead the drive for e-invoice adoption. Across Europe and North America, governments are beginning to insist that small businesses input their bookkeeping using the best invoicing software that’s compliant with government systems.
Governments are also using digital invoicing as a means of driving the “real-time” economy. In short, this enables governments to have more up-to-date, accurate data on the income of businesses, whilst ensuring that businesses pay their fair share of taxes and that late filing penalties for tax returns are a thing of the past.