Picture the scene: an optimistic entrepreneur named Jennifer starts her own business. She is excited to land new clients and deliver work for them. Along the way she realizes that in order to get paid, she has to invoice her customers.
She starts a spreadsheet to keep track of her customers and projects. Most customers are ok with a Google Doc invoice, while others request a Word document and a handful pay via Paypal.
Her invoices are so spread out that she has trouble generating her next invoice number. Sometimes she forgets to send invoices when payment is due. As her client list grows, she wonders: how am I going to scale this process?
Sound familiar? Managing the invoicing process can be an arduous task for any business, whether it’s a one-person shop or a large corporation. Keeping the task of invoicing offline - either confined to printed or emailed documents - can be even more costly and time-consuming.
Hundreds of online invoicing tools are just a quick Google search away, and many of them are free or have low fees. Here are just a few of the reasons to consider using an online invoicing tool.
Everyone saves time. Invoicing tools are bastions of time savings. First is the concept of all assets being organized and in one place. Invoicing tools allow business owners to list all customers, projects, and invoices in the same system.
That means Jennifer has no more shuffling through files to find critical information on what to bill customers and which projects were completed. Customers benefit from this organization as well. They can access all invoices and any recorded comments through the customer-facing invoicing tool, rather than having to dig through emails to find an invoice, or worse, a giant pile of paper on their desk.
Invoicing tools also provide many features that take tasks off the business owner’s to-do list. Many invoicing tools allow users like Jennifer to create email templates that can be customized, so she doesn’t have to compose an individual email message with each invoice.
And if her customers don’t pay within their payment timeframe, some invoicing tools offer a “chasing” feature that allows businesses to send reminders to customers on missed payments.
Businesses get paid faster. So there’s the obvious benefit - many online invoicing tools enable customers to accept payments online via credit/debit cards, Paypal, Stripe, bank transfer, etc. With online payments, Jennifer doesn’t have to wait for a check in the mail - she receives payment as soon as the customer submits it.
There’s also the added benefit of setting the invoicing process on autopilot. Businesses can use invoicing tools to set regular billing cycles. Jennifer doesn’t have to remember to manually send her invoices on the last day of the month.
Her invoicing tool has all the information about how much to bill each customer and sends those invoices for her, and the “chasing” functionality that will follow-up with customers on delinquent invoices. In addition to standard invoicing, numerous invoicing tools also offer subscription billing.
If any of Jennifer’s customers are purchasing the same service on a monthly basis, she can set up a subscription bill with automatic payment.
All parties can access invoices from anywhere. Let’s say Jennifer is at a conference. She receives an email from Bob - he has lost the invoice she sent him last week and can’t find it in any of his email folders.
Could she resend it to him? All of Jennifer’s files are on her desktop computer at home. She can’t resend it until after the conference, thus delaying payment from Bob. With an invoicing tool, Jennifer has many options.
She can log into the invoicing tool and resend the invoice to Bob, or ask him to log into the customer-facing system that many invoicing tools offer and download the invoice himself (or a receipt if he needs one). She can even share customer access beyond Bob (her main contact) to Mary, the accounts payable manager, to speed up the payment process for future iterations.
Tracking takes the guesswork out of invoicing. It’s the end of the month, and Jennifer goes through her regular manual process of emailing or mailing her invoices to her customers.
Unless she has read receipt software on her email and/or mails her invoices using registered mail, she won’t know if or when her customers receive her invoices. With an online invoicing tool, Jennifer can log in to see which of her customer invoices have been viewed and whether or not a payment was issued.
She can also run reports at regular intervals to see which of her customers haven’t paid 7 days, 14 days, or 21 days after receiving an invoice. Jennifer can use all of this data to make improvements to her process.
She might run a report to look at 6 months worth of payment history and find that 2 of her customers are regularly delinquent on their invoices. She can offer these two customers a 5% discount if they pay within 14 days of receipt to see if she can speed up payment.
Businesses can communicate within their existing framework. Jennifer has been in business for five years now, and her company has grown from just her to 50 employees and 300 customers.
She’s finally ready to start using an online invoicing system that will save her business time and money, but there’s one issue she’s grappling with. She’s really worried about losing all of the historical invoicing data she has, or having to maintain two systems (her current one and the new invoicing tool).
Online invoicing providers have anticipated this issue, and many offer a way for business owners to import their historical customer data into the new invoicing system. The import process can require some upfront work in terms of data formatting, but the end result is having all customer billing history in one location.
Online invoicing providers also offer integrations with existing account software. Maybe Jennifer has gone beyond a simple spreadsheet and is using Quickbooks or Xero for accounting. She can sync the data and payments collected by her invoicing tool into her accounting software for tracking purposes.
Various invoicing tools have extra functionality for specific business needs. In addition to many of the standard features mentioned, invoicing tools offer a wide variety of supporting features for specific types of users.
Among the types of functions are time-tracking, mobile payments, multi-currency billing and revenue recognition. Jennifer’s business might benefit from a time-tracking tool to manage time spent on client projects, or multi-currency billing if she has expanded outside the U.S.
Check out comparison sites such as Capterra or Consumer Affairs to review invoicing tools and the features that distinguish them, and find the online invoicing system that best fits your business.
Managing an invoicing system may seem like a headache at first - if you stick with the traditional offline method. A plethora of free and fee-based invoicing tools have flooded the market, all offering time savings, faster payments, easy access and tracking tools.
Some take it a step further by integrating with existing business systems and offering add-on functionality. With all the available options, there’s no reason to stick with the status quo. Make the switch to online invoicing to save your business time and money.