Freelancers are saved because of invoicing. Every freelancer is bound to have polished invoicing skills because there are two major problems faced by freelancers at present. Either they don’t receive the correct payment or they don’t receive the payment on scheduled time. Surely both sucks and if you happen to be a freelancer and want to prevent any of the problems happening to you, here is how to write an invoice for freelance work
One of the most commonly asked questions concerning invoices has always been how to write an invoice. Let’s get started with the basics before we learn how to write an invoice for services.
Why do freelancers need to know how to write an invoice?
One of the main reasons why freelancers should focus on invoicing because it helps in keeping a track of all the projects done with various clients and provides convenience in the long run by managing tax fillings. In simpler words, invoicing is the professional record-keeping of all your finances as a freelancer. It helps your image look more professional and helps you to maintain the crucial data conveniently in lesser time.
Say, for example, you have been a freelancer for the past couple of years. At any given time if you are required to find any specific project by a given date or year, having an invoice will be a blessing. You are cutting time and wasted labor by just going through the invoices of all your past projects instead of going through your past work through emails. Not only is that time-consuming but also chaotic and will surely give you a headache.
What is invoicing?
Technically speaking, invoicing is a piece of document which is time and date stamped and is used commercially to keep the records of every purchase ever made by clients from the concerned party. The concerned party can be both an individual such as a freelancer or a corporate business. Invoices usually have the terms and conditions of the products and services availed by customers or clients along with the various methods by which the corresponding payment can be done.
For freelancers, an invoice is important because it helps them to keep proper records of all the services they provide for different clients regularly. Not only do they make managing work easier for them, but also make you look professional and highlight your expert knowledge in your niche. For these reasons, it is crucial that find out how to write an invoice for freelance work.
The types of invoices
According to a variety of businesses and clients, invoices have six different types. Before we shift to how to write an invoice, freelancers must know the different types of invoices to understand which would be the right fit for them and their services.
The pro forma invoice contains the specifications of the project including the payment amount and deadline. But this invoice doesn’t demand payment neither provides the clients with different methods of making a payment.
The interim invoices are written for big projects which require a longer period of completion thus the payments are demanded in instalments. This invoice helps freelancers to maintain cash flow even if the project requires a long duration of time to get completed. Often, the payments are used to cover the service charges among others.
Recurring invoices are used to renew the purchase of products or sales. Some businesses use this invoice for the renewal of subscriptions or memberships.
The past due invoice is for those clients and customers who haven’t yet made the payment neither have responded to the prior sent invoice. In such cases, freelancers ask their clients to settle the payment through this invoice.
The miscellaneous invoice is sent to clients to ask for payment to cover the cost for mere things when providing services.
Last but not the least, the final invoice is sent to clients and customers to make them aware of the fact that the project has been completed and they can make the payment through any of the different modes of payment mentioned in the same invoice.
The elements of an invoice
Before we shift on how to write an invoice for freelance work or how to write an invoice for services, one must know the different elements present in a general invoice.
First and foremost, before mentioning the products and services availed by a client, make sure you have mentioned your company’s name and logo. This is your identification. Even though you are a freelancer, you must have a number for your brand and a logo to make an impression on the internet. The name and logo would help clients to identify you faster.
How to write an invoice: contact details
The next thing is contact details. How will the client make contact for your services? Not many realize this but have options in contact details makes your invoice look more reachable. Start by your email address, phone number (provide two if you happen to have one), and your address. Make sure you double-check when you fill in contact details so that the client can communicate with you if there’s any problem.
Make sure you match the client and their corresponding products and services availed from you. If you want to avoid any unnecessary delay in the payment, do double-check the client details. It might take up some more of your time, but it will make your invoice foolproof.
How to write an invoice: the importance of unique invoice number
The next step calls for the date and the invoice number. The invoice number is very essential because that number is going to help you and your client to make references in the future. The invoice number is going to help you in managing the paperwork. When you are learning how to write an invoice for freelance work, always remember no two of the invoice number would be the same. Every purchase of products or services is called for an invoice with a unique invoice number.
While arranging your invoices, you can do it year-wise, it not only looks neater but the stacks would also be more manageable. But if you want, you can also keep the invoices according to project names or by the number of clients who have provided your products and services too. The key is here is to stick to whichever system you feel more comfortable with.
The importance of project brief
The next element which you should know before you learn how to write an invoice is the project brief and amount as payment. Project brief can include the name and details of the project, products, or even services provided by you and the payment amount would obviously have the final amount that needs to be paid by the corresponding client.
If you happen to be a freelancer, then always remember to be specific with the project brief. Break down the different contents, for example, don’t write miscellaneous in place of service cost. Make sure you put worth in your services otherwise the client won’t. When sending an invoice, you have to make sure your client is aware of the different parts of the project to understand the set amount as payment.
Many freelancers wonder how to write an invoice for freelance work, but don’t emphasize the importance of providing a detailed project brief to the client. The client must know which costs what and whether the payment would be done on an hourly basis or on the amount of work done. To sum up, the entire brief, mention the entire amount that is due for payment.
Due date, payment options and penalties
Another thing to remember is when learning how to write an invoice is the importance of deadline. Mention the deadlines of both the project and payment. It is advised that you communicate with your client regarding the payment options. Freelancers should keep multiple payment options open to prevent any delay of payment. Be aware of the transfer and conversion fees and remember to mention these details to the client.
Please note that when you are focussing on how to write an invoice for your freelance service, you have to set a policy for late payments and missed deadlines, i.e. what will happen when a client misses deadlines. Highlight the policy and the amount you will charge as interest if there is any delay from the client’s side. You can even send a second invoice reminding them of your pending payment through a past due invoice.
How to write an invoice for freelance work
Here are the compulsory data that one must include when learning how to write an invoice.
- Details of the invoicing party.
Here you have to mention the Name and address of your company. You can place this information at the bottom of the invoice document.
- Details of the recipient party.
In this section, the details of your clients have to be included. The number and address are primarily the content of any invoice. This information can be typed at the top left corner of the invoice.
- Unique client and invoice number
These are one of the most crucial pieces of information in an invoice. It separates every invoice from one another. The unique client and invoice number can be typed on the right side below the recipient party data.
- Date and time of the invoice
Mention the word INVOICE in capitals and bold to highlight the purpose of the piece of document. You can directly write the date and time just below the unique customer and invoice numbers.
- Project brief
You must insert a detailed project brief of the products and services that the corresponding client has availed from you. The body of the invoice document will contain the project brief along with the individual prices and quantities of the products and services availed.
- The total amount before any taxes is added to the purchase.
- The total amount after the taxes is included with the purchase.
- Deduct any amount if any discounts or offers are applicable.
- The final amount needs to be paid by the client.
You can add the entire section of the amount total below the project brief, one after the other. You can even highlight the final amount for the client to recognize it faster.
You have to mention the terms and conditions of the payment in the invoice document. You can so by mentioning below the final amount. Highlight the subheading (payment terms or terms and conditions of payment) and list down the different terms.
Your invoice then has to have the different modes of payment available at your company. You can list them down for better comprehension and honestly, it looks a lot more professional and neat.
Last but not the least, you can show your gratitude by adding a thank you and a personal note of how grateful you are for the services that were availed by the corresponding client from you.
Why you should know how to write an invoice for freelance work?
Not only it provides a professional look and easy record keeping of all your sales, but it also provides you with the extra security of your products and services. It makes the entire process of filing taxes very easy. When you are learning how to write an invoice, you are also learning the effective and easier trick to file taxes more conveniently.
If you happen to be a freelancer for a long time, then invoicing will help you in organizing your sales faster.
Always write an invoice to get the value for your service. Even if it’s a friendly deal, put your service above everything. you can also purchase online invoicing software to get the best of the invoices, they are fast, easy, and very effective. If you thinking to purchase invoice software, then you can sign up for a free Billdu trial and find out why it is one of the best invoicing software platforms available in the current market.
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In this post, we’ll show you why automated invoicing is a hot topic and how auto invoicing software can save your business valuable time and even improve performance and cash flow. Intrigued? Read on…
Invoices are an integral part of every business, big or small. There are typically two types of invoices – electronic or paper. In most industries, invoices are created using invoicing tools or manually, sent to the finance department for review and approval, and then are forwarded to the concerned person or company.
The process might sound very simplistic but it can get quite complicated due to the involvement of different bodies. Plus, it isn’t common for invoices to get delayed due to the process residing in several hands including staff members that may not always be available. Delayed invoices result in delayed payments that can cause cash issues.
Also, the process doesn’t stop. Once invoices get approved, data has to be manually entered into a software, and invoices need to be filed (often physically).
While this traditional method works for some companies, it does come with issues including:
- Misplaced or lost invoices
- Security and compliance risks
- Error-prone and costly feeding of data
- High cost of paper
- Space needed to store paper invoices
- Not a part of analytics
- Difficult to respond to customer inquiries
These and many other problems can be solved with the help of auto invoicing software. There are many such software on the market, in this article, we’ll talk about automated invoicing and why it might be a good idea to use an automation tool.
Automation is the Future
Before moving ahead, let’s talk about automation.
If you look at a dictionary, you will find this definition: “the technique of making an apparatus, a process, or a system operate automatically.”
While it’s true, it doesn’t fully explain invoice automation. In the world of business, automation is defined as “”the creation and application of technology to monitor and control the production and delivery of products and services.”
Businesses are recognizing the importance of automation and the fact that they cannot survive without automating processes including their accounts payable department.
Here are some stats that highlight the importance of automation:
- About 45 percent of currently paid business tasks can be automated by using technology. This can help businesses save up to $2 trillion in annual wages. (Source)
- About 30 percent of people or businesses choose automation because it helps save time and about 25 percent automate processes as it makes analysis easier. (Source)
- A study found that workers spend around 69 days performing administrative tasks including taking care of invoices. This costs companies more than $5 trillion a year. Automation can help save this money. (Source)
- Nearly 67 percent of employees believe that using software or digital products can help give businesses a competitive edge. (Source)
- It takes the average professional about 18 minutes to find a document manually. This includes invoices. (Source)
- Professionals who still use traditional methods of invoicing and documentation spend about half of their day finding documents manually and looking for information in files.
- Small and growing businesses are expected to quickly adapt automation giving a boost worth $1600 million to the industry. (Source)
While these stats cover automation in general, they do highlight the importance of automating invoices. Organizations need to automate invoicing so that the process is no longer a back-office, tactical function.
According to this 2018 IOFM study, about 51 percent of accountants believe that their companies will eliminate the use of paper invoices by the end of the year. The same study found that nearly 33 percent of accountants believe that their department will eliminate up to percent of paper invoices received from suppliers.
But What is Automated Invoicing?
Automated invoicing refers to removing human interaction and allowing software to take care of invoices.
To fully understand auto invoicing, we must first understand the term invoice.
Investopedia defines an invoice as “An invoice is a time-stamped commercial document that itemizes and records a transaction between a buyer and a seller. If goods or services were purchased on credit, the invoice usually specifies the terms of the deal and provides information on the available methods of payment.”
Creating invoices requires data including the name of the recipient, the date, order summary, etc. The entire process can take a lot of time and leave workers tired. Companies, however, are now using auto invoicing software as a part of their procure-to-pay (p2p) process, also known as source-to-pay.
How Does Auto Invoicing Work?
Auto invoicing works like normal invoicing but without human involvement. These are the few features that come into play:
Auto invoicing tools come with monitoring features, i.e.: the ability to know when an invoice has been read. This is a great feature because it removes guessing and tells you exactly when your buyer has read the invoice that you have sent.
Without this feature, you will need to ask for assurance and verification to ensure your client has received your file.
We find this feature of huge importance since clients do not always like to receive emails asking if they’ve received an invoice or if they’ve read it. It works quite like the ‘blue mark’ we are used to seeing on WhatsApp.
If you don’t get a blue tick or notification within a day or two, you can take your next step, i.e.: verify if the email is correct, still active, etc.
Billdu comes with this important feature. With our software, you will be able to know exactly ‘when and by whom an invoice was opened and viewed.’
This will help you know when to send a reminder because emails are not always read right away. You should ideally give your clients some time to clear invoices. With this feature, you will not only increase your chances of getting paid, but also improve customer service by sending fewer messages to your buyers.
Reminders are an important part of the game. Very few people clear invoices right after they receive them. In fact, the average invoice can take up to three weeks to get paid. Plus, it isn’t uncommon for people to forget about an invoice, which increases the importance of reminders even more.
The job of a reminder is simple: to tell your clients an invoice is pending and that they should clear it.
Managing customer reminders and follow ups can be quite a tidy task. No business works with one person. There are several invoices being sent and received throughout the day, each with a different name and amount. Managing all this manually is not only time consuming and tiring but also very risky as even a small mistake can end up causing you to lose not just your client but money as well.
With our software, you will be able to “remind clients when a payment is coming up, due or late” without requiring any manual work. Create a template that can be sent to all your clients with their names and according to their due dates.
Auto invoicing software like Billdu can import data from ERPs and other such tools. This removes the need to manually input data since everything can be imported and fed into the system with a single click.
Some tools even have the option to correct typos or send back files to employees for a review if the AI finds issues with names or other information. This automation task may sound too simplistic but it can be a difference maker. Businesses have to process hundreds and often thousands of invoices on the same day, including some to the same client.
Manually looking at each file can take a lot of time and there is always a high risk of errors. With auto invoicing software, the risk factor is greatly reduced.
Automating invoices means not having to worry about manually calculating the amount.
Almost all auto invoicing tools can do the maths and provide you the final figure based on the unit price and the number of units offered. You may not even have to enter unit amounts as they can be saved into the system. This removes the need to memorize figures, which can be risky.
While all tools come with this feature, we suggest that you use an automatic invoicing software that also comes with the option to add taxes, discounts, etc. This is because it is common for businesses to offer discounts from time to time. If your tool doesn’t have this feature, you will have to use another software to add or subtract this amount, which kills the purpose.
Similarly, tax rates differ from product to product and location to location. For example, clients in Europe have to pay a VAT whereas clients in the US do not. An invoicing tool that can add relevant taxes and charges, such as shipping, can be of huge value.
Today’s invoicing software are smarter than ever. They don’t just send files they can also communicate with the recipient and automatically keep a log of the conversation.
With this feature, you will have all the information stored in the cloud that can be easy to access and search through. When it comes to invoices, a conversation isn’t always in the form of dialogues. It refers to information such as:
- When an invoice was sent
- When an invoice was read
- When a reminder was sent
Such information can be very important to gauge how reliable a buyer is. With this data, you can know how long it takes your average buyer or a specific client to clear invoices. This can help plan things and ensure you have no cash flow issues.
Auto invoicing tools like Billdu take automation a step ahead by automating the process of exports. All our “documents are saved on a secured server, similar to a bank,” with little to no risk of losing your or your client’s private and confidential information.
You will not have to worry about saving invoices or details as today’s auto invoicing software can take care of saving data and update files automatically.
With this feature, there is little to no risk of losing data, which can be a major concern with physical invoices.
Though rare, some auto invoicing tools now come with the ability to verify invoices, i.e: ensure payment received against an invoice is correct by cross-checking the amount against orders.
Some tools also have the ability to cross-check invoices to ensure no duplicity and missing amounts. In some cases, there may be additional payments necessary, such as a late fee surcharge, to settle invoices.
With automated invoicing, you will not have to worry about this either because tools today are powerful enough to add surcharges based on deadlines and other such factors.
Why Use Auto Invoicing Software: Benefits of Invoice Automation
Invoice automation software have been in existence for a while but it is still considered a maturing area of automation. There appear to be limited implementation risks yet significant benefits.
Here are some reasons to consider automating the process:
Help Save Time
Time is of huge value, the hours spent on taking care of invoices can be spent on other important tasks when you have auto invoicing software taking care of things.
It is believed that the average mid or small company takes around 25 days to process one invoice when using manual processes. With automation, this time can be reduced to just a day based on the tool you’re using and the process in place
Can Be a Money Saver
According to Hypatos, invoice automation can help businesses save up to 90 percent in cost (invoicing). You don’t only get to save money spent on paper but you also get more out of your workers who are less tired and more productive, which helps the business.
Access to Valuable Data
Auto invoicing software make it easy to analyze data by removing the need to do any manual work. Information can be presented to you in the form of charts or tables that you can have a look at to understand how your business is performing.
You can get answers to questions like:
- How many invoices are issued per day, per week, per month, etc.
- The average size of your invoice.
- The buyer with the most number of invoices.
- The time it takes to receive payments.
- How many reminders are sent before payment is approved.
Such information is highly valuable because it helps businesses plan marketing strategies.
Good For Your Image
Clients like businesses that are technologically advanced. By using auto invoicing tools, you can leave a positive impression on your buyers and enjoy a good image.
Which Automated Invoicing Tool to Use?
About 15 percent of Fortune 500 companies are already using the latest auto invoicing software. While there are many automated invoicing tools out there, it is important to choose a program that offers more than just automation so that you don’t have to use multiple invoicing software to take care of your accounts.
Billdu is one of the most reliable automated invoicing tools. Called the best auto invoicing software by many, Billdu takes auto invoicing to another level by offering features like read receipts, cloud saves, and more.
Get in touch with us today to find out more about Billdu and how it can help your business.
Did you know that 82% of small business owners fail because of inconsistent cash flow? Some small business owners struggle with other financial issues such as debt repayment, lack of funding, and emergency expenditures.
Running a small business can feel like running a small country because there are many factors you have to consider in order for it to be successful. In today’s article, we’ll be talking about the top 6 financial issues small business owners have to face.
The good news is that each financial problem has a solution. Find out what these solutions are so that your small business continues to grow.
1. Inconsistent Cash Flow
Some small businesses struggle to manage their cash flow. The basics of cash flow involve balancing accounts payable and account receivable. Without the necessary cash on hand, you won’t be able to pay your employees or your bills. And if you don’t have the consistent cash flow you may be forced to take out additional loans
So what affects a small business’s cash flow? Well, a simple bad word about your company can cause your profits to plummet. Not marketing your business effectively can also decrease cash flow. However, there are ways that you can maximize your cash flow and keep it consistent. Take a look at the following tips to help you:
- Cash flow forecast: A cash flow forecast is crucial for small business financial planning. It’s the process of estimating the flow of cash coming in and out of your company. Develop a cash flow forecast to identify any funding needs or excess cash for short or long-term periods. Your cash flow forecast is an important tool to help you make decisions about capital expenditures and investments as well as funding.
- Invoicing: Small businesses rely on invoicing to get paid on time which can help with consistent cash flow. Invoicing is also a valuable tool for accounting and helps you with your financial reports. For small businesses, simple invoice solutions are ideal because you can create professional invoices fast which can help you optimize your cash flow.
- Establish clear payment terms: You should always establish when and how you’d like to get paid so that customers and clients adhere to your terms. By stating your payment terms there will be no confusion of when payment should be made. Most companies allow customers to pay within a certain period of time such as 10 to 15 days. Take full advantage of these terms because it helps boost your company’s cash flow and decreases borrowing costs.
Use these tips to improve your cash flow so that you’re never out of pocket. You should always have a clear forecast and reports of the money coming in and out of your business so you can see where improvements need to be made.
2. Lack of Funding
The second in our list of top financial issues is luck of funding. Many business owners have stated that you have to spend money in order to make money. However, this statement has led small business owners off course. Small businesses fail because they run out of cash because they’re spending more than what they’re making. What’s more, their sales struggle to keep up with their expenses.
Funding is essential for long-term success but you have to choose the right funding so you don’t experience financial issues. Here are some options if you need access to funding:
- Small business grants
- Small business bank loans
- Venture capital firms
If you decide to take out small business loans make sure that you can afford to make repayments each month. Late repayments can cause problems with your credit rating and the lender will start legal proceedings and if you fail to make repayments you may have to file for bankruptcy.
When structuring your small business financial planning make sure you can get access to the funds you need without putting financial strain on your business.
3. Emergency Expenditures
An emergency expenditure is when you have to pay money for an unforeseen circumstance such as a natural disaster, pandemic or fire. You may even experience an unexpected tax bill. Whatever the situation is a sudden expense can throw your cash flow forecast out the window. What’s more, some small business owners cite that unforeseen expenses are their major financial issue.
If you’re not prepared for unforeseen expenses it may derail your small business. You should have a cash reserve where you save money each month for unexpected expenses. You should put at least 20% of you profit into a savings account. Some business owners may save between 20% and 35% of their profit for emergencies.
You can also use your past records to help you budget for certain situations. For example, maybe you operate 10 printing machines for your business and you need to gear up for potential maintenance and repair costs. Your expense history can show you how much you’ve spent in the past on maintenance and repairs so you’ll know how much money to put away for future expenses.
On the other hand, no matter how much you budget, unforeseen circumstances can still take a large chunk out of your budget. That’s why you must have a savings account for any expenditure that you weren’t anticipating.
4. Poor Marketing Strategies
Marketing helps build brand awareness and turns leads into sales. Poor marketing can lead to loss of sales. If you’re not getting new clients or customers they’re going to your competitors instead.
Some business owners struggle with their marketing strategies, especially through digital channels. Facebook and Google are extremely competitive so it’s difficult for small businesses to compete with large companies that have the budget to spend on expensive advertising.
Furthermore, marketing requires plenty of time and small business owners simply don’t have the hours to spend marketing their business online. If you do decide to use digital marketing consider outsourcing someone to help you.
If you’re a small business owner that needs new customers to help you achieve your financial goal then try these easy and affordable marketing tips:
Create a Website
Nowadays every business has a website where they showcase their branding and general information about their companies. The advantage is that some website builders are affordable and don’t require coding experience to develop a professional site. You can use your website to write blogs, sell products and even communicate with your audience. Studies show that an average profitable website can earn you $2000 per month. Engaging a professional web design company is always recommended due to the skills they have.
Google My Business Listing
Have you ever searched for a company near you on Google and you were presented with a list of organizations not far from where you live? That’s because these companies registered their business on Google My Business Listing. The advantage of registering your business on Google is that it’s 100% free and it creates location SEO. So when people search for companies like your organization, your company name may pop up in the search engine. The visibility of your business listing online could attract plenty of customers and in turn, increase your profit. You should also work on increasing your organic search visibility in the long run through SEO.
Social Media Marketing
Traditional marketing such as billboard ads and printed flyers are all expensive and not suitable for small business owners. The most affordable way to marketing your business is through social media. Create a business Facebook page or a LinkedIn profile to start marketing your organization. 3.96 billion people use social media globally so if people can’t find your company on their social media platforms they may go to your competitors instead which can cost you money.
Another affordable way to keep people interested in your business is through email marketing campaigns. Most people who visit your website may not buy immediately. So use your website for customers to capture their contact details so you can send them email content that may be of interest to them. You can send out coupons or advertise when you’re having a sale or even send personalized discounts when it’s your customer’s birthday. Email marketing is an excellent way to nurture your leads and entice them to buy from you.
There are plenty of other affordable marketing strategies for small businesses that may help with financial challenges such as content marketing. Use these tips to gain the finances you need to keep your small business afloat and avoid future financial issues.
5. Tax Compliance
One of the most common financial issues small businesses face is tax compliance. Getting the tax basics right has never been more crucial for a small business owner. ATO is getting more intelligent with its data and making more follow-ups with people who make mistakes on their taxes. That’s why you must ensure you always have the following documents to make the process easier:
- Correct account codes
- Proper financial statements
- Prices accounting for cash transactions
- Record of all your invoices
On the other hand, did you know that 85% of small businesses overpay on federal income tax? These business owners could have saved that extra money or invested it back into their business. Other business owners underpay their taxes which results in fines and legal action from the IRS.
However, one of the major financial challenges organizations face isn’t always payment, it’s the cost of compliance. These compliance costs are all the expenses an organization uses to adhere to government regulations.
There are ways you can reduce compliance costs by developing risk management. This means you must be prepared for any non-compliance and compliance costs when doing your taxes. Emergency funds might come in handy here because you’ll have the cash to pay for any unforeseen expenses when doing your taxes.
6. Too Much Debt
Last but not least of the top 6 financial issues. Many small business owners take out loans to launch their business if they don’t have cash on hand. At the early stages of a business, it’s difficult to say how the company will perform. You’ll need to make money through your business in order to make loan repayments.
Unfortunately, a financial challenge most small organizations face is getting into too much debt before making a good income. Many factors cause a business owner to run into too much debt such as running up credit cards or taking out additional loans for emergency expenses.
It takes time to develop a consistent cash flow and having extra debt is going to have a short and long-term financial impact on a business.
If you’ve accumulated too much financial debt take a look at these tips to help you recover:
- Find ways to raise cash: If you’re struggling to make repayments because of a lack of cash flow there are creative ways you can raise cash. Try crowdfunding or angel investors.
- Consolidate business loans: The best way to reduce debt repayments is to consolidate all your loans into one payment. This may help reduce your monthly costs without compromising your credit score. You may also get a lower interest rate on repayment depending on the lender you choose.
- Consider immediate payments: Some small business owners allow customers or clients to pay for goods and services at a later stage. Consider getting immediate payment before offering your goods and services to clients. Immediate payments are less of a liability and you’ll have access to funds when you need them.
- Offer a percentage off on products: Many customers love marked-down sales on products and services. If you develop a proper markdown strategy you may attract more customers and in turn, make more profit.
Are you looking for effective ways to manage your small business finance? Then you need the right tools for the job. Billdu has plenty of digital tools to help you develop an effective financial management strategy. Use Billdu’s online expense records to manage your receipts. Or if you’re an online retailer use the Inventory Tracker to help you manage your stock and keep an eye on your inventory.
What’s more, Billdu offers unique invoice templates so you can create professional documents and get paid quicker and you can use them for financial reports. You’ll get paid 2 times faster using Billdu’s invoicing tools which will help you optimize your cash flow and sort out your financial issues with a click of a button.
Create an account with Billdu today and get access to all the financial tools you need to boost your company’s finances.
Why consider an invoice management system and how to choose the best one for your business? Read on to find out.
As a small business owner, you will have to deal with dozens of invoices on a daily basis. Things might get even more complicated as your business grows and you start to have working relationships with more people.
This can make managing invoices a very difficult job since it doesn’t only involve creating invoices, it also includes managing payments and ensuring you get paid on time.
Is It Really a Big Problem?
According to reports, the current invoicing scenario for small businesses is not very bright. Small businesses just in the U.S. are owed more than $825 billion in unpaid invoices.
This is a big problem because it can lead to cash flow issues. Let’s not forget that about 90 percent of startups fail within the first five years and around 82 percent of small businesses shut down due to cash management issues.
On average, each business has around $84,000 in unpaid invoices. This is a lot of money for a small business that’s still growing. Moreover, the problem isn’t just related to unpaid invoices, it’s also related to time wastage and delays.
Reports found that most businesses in the country have to wait three weeks to get paid. For some, it can take months. Wholesale trade, for example, usually has a 30 day cycle, which can make management difficult since the average business only has 27 days of cash reserves. This doesn’t leave much space for wiggle.
This is a huge figure, especially when you consider the number of people involved in small businesses. There are more than 29.6 million registered small businesses in the US employing around 50 percent of the country’s workforce.
Not getting paid or not getting paid on time can cause your business to suffer heavy losses and shut down. This is why it is important to take care of the invoicing process and pay attention to invoicing management.
The process might not look very intimidating when you’re dealing with only a few clients but it can get complicated once you grow. Don’t wait for things to get complicated, invest in invoice management today.
What Is Invoice Management?
Invoice management can be defined as the process of invoicing clients for services and products they purchase. Moreover, it also includes tracking and monitoring invoices to ensure you get paid on time.
Back in the day, invoicing was done manually. While some businesses still use the old method, it’s dated and very time consuming. Imagine having dozens of products and hundreds of clients. You will have to create separate invoices for every order on an Excel sheet.
The task can be tiring, time consuming, and boring. By automating the process, you can make things easier. An invoice management software can perform a variety of tasks and even help improve communication.
What Are the Benefits of Using an Invoice Management System?
A reliable invoice management system can solve invoice-related problems faced by small businesses. Still not sure? Check out some of the benefits of using invoice management software.
Helps Save Money
This might come as a surprise to some but invoice management tools can be a money saver. If you run a small business, you must know how costly it can get to hire people to take care of invoices.
Some small businesses have multiple people in the finance department assigned the task of creating, sending, and managing invoices. An invoice management system can do this all, removing the need to hire multiple people.
You will need one person to manage the software and the system will take care of the rest. While a good invoice management system will cost you money, it can offer good savings in the long-run.
Can be a Great Time Saver
According to estimates, the average team spends up to 15 hours on billing and invoices. This includes customer calls, editing invoices, and calculating discounts and late fees. This is a lot of time that can be used elsewhere. Plus, this is based on using a simple invoicing tool.
By using a neat invoice management software, you can greatly reduce this time as the latest invoice management software can automate processes from inputting data, calculating amounts, adding applicable taxes and discounts, and more.
The time saved can be used elsewhere. Since small businesses usually have limited staff, it is important to save as much time as possible and make every second count so you can get more in less time.
Good for Your Image
Competition is tough. There are dozens of businesses selling the same product or service, and at the end of the day, how you manage invoices can prove to be a difference maker.
Invoice management software can be great for branding as they allow companies to add logos, change the font and color scheme according to their brand image. While not the most important factor, this can make clients feel you’re highly professional and interested in giving a strong voice to your brand.
The good thing is that most professional invoice management systems allow users to save templates that can be used and reused; hence, you will not have to add logos or brand signage every time you create an invoice. You can use a premade template and make changes according to your requirements.
Can Improve Cash Flow
Believe it or not, there is a connection between your cash flow management and invoice management system. As mentioned earlier, most small businesses don’t get paid right away. Following up and waiting for money is not only troublesome but also financially taxing.
An invoicing management system can help improve cash flow by sending regular reminders and ensuring you receive money in a timely manner. Consider invoice management tools as virtual assistants that can communicate with clients and send reminders to help you get paid.
They reduce the risk of bad debt and ensure you have a decent cash flow.
Make Employees More Productive
There are few things as boring as creating and managing invoices manually. The job involves writing down names, prices, etc. It can get boring after a point and cause workers to lose focus and reduce productivity. This reduced productivity can cause businesses huge losses since it results in reduced profits and often missed deadlines.
With an invoice management software by their side, your employees will spend less time taking care of invoices and hence will face less tired and exhausted. This could allow them to concentrate on other tasks and be more productive throughout the day.
Ensures There Are Little to No Mistakes
A very big problem with manual invoicing is the high risk of mistakes. There are two main types of mistakes – incorrect calculations and wrong details.
Incorrect calculations refer to not adding or subtracting amounts correctly due to typos or pressing the wrong button. On the other hand, wrong details refer to adding the wrong number, name, or service.
Computers do not make calculating errors. You can rest assured, the figures will appear exactly as fed. Plus, they can even remind you to add discounts, taxes, late charges, etc., so that you don’t get robbed out of your due share.
Picking a calculator and reviewing invoices are two very tough tasks. When you have the right support in the form of an invoice management software, you will not have to worry about manually feeding data every time you have to invoice the same client. Everything from the client’s name to address can be fed automatically and you will only have to enter details such as quantity.
Invoice management systems can even input item prices and find the total on your behalf without you having to do any maths. This, we think, is one of the best reasons to get an invoicing tool.
Helps You Move to the Big League
No business starts with the intention to remain small. Most want to make more money, hire more people, grow the network, and get bigger. You will find it very difficult to break the barrier if you continue to do things the old way.
This gets even more important when you start to work with the biggies. Small companies do not enjoy working with businesses that use the traditional method of invoicing. They feel it is too unprofessional and risky. Plus, even the governments are pushing for businesses to use the latest technology.
The US Office of Management and Budget requires all government agencies to use online invoicing. The scenario is pretty similar in Europe where all public administrators are required to accept online invoices.
Even if you are not working with the biggest or government agencies today, you should consider getting an invoice management software so that you are prepared to take on the opportunity should it arise tomorrow.
These were some of the main advantages of using an invoice management system. Let’s now help you pick the right one.
What to Look for In An Invoice Management System?
There are many invoice management software out there, make sure to get your hands on one that comes with these features so that it can support your small business.
Cost and Licensing
We understand that small businesses cannot afford to spend lavishly, hence find an invoice management software that is affordable with a suitable license type.
Ease and Simplicity
What’s the point of having a tool that makes things complicated? Choose a program that comes with easy to create invoices and doesn’t have a learning curve.
This is an important feature since everything is going on the web and even small businesses are going mobile. Pick a tool that lets you store data including invoices on the cloud so you can access files on the go.
We talked about the importance of ready-to-use and customized templates. If you are serious about branding then look for an invoice management system that comes with this feature.
Files and Attachment
Choose a system that lets you attach files when you send invoices. Clients often want to see completed milestones and more details before they can clear invoices. Having the ability to attach files will save you time and ensure clients have all that they need to make payments.
Choose a program that works on mobile devices – iOS and Android – so that you have the ability to work from anywhere. Most top invoice management software come with mobile apps hence you will not have much of a problem finding a reliable tool.
The tool must have the ability to store and import customer data for easy input. This will save you from having to feed the same thing again and again.
The invoice management software you choose must be secure with the ability to limit access. Cloud security is another important factor since clients want to work with a business that takes steps to ensure their safety.
Businesses are not always online. If you make offline sales then it is important that you choose an invoice management software that works well without internet access.
Choose a company that takes its job seriously and is available with the right kind of help so that you never get stuck.
The invoice management software that you choose should be able to convert currencies based on your client’s location, especially if you cater to international clients.
Multiple Payment Methods
The tool should support a variety of payment methods including PayPal and credit cards as they’re most popular in the US. Moreover, it should ideally have a single click payment option so that users don’t have to do much work to clear invoices.
Want to make things better? Choose an invoice management system that lets you talk to your clients by sending a notification when they open your invoice. This can prepare you to send a follow up message.
Following up is very important since very few people pay the invoice just as they receive it. Choose an invoice management software that gives you the option to send timely reminders to your clients with the ability to use pre-made or customized email templates.
Taxes and Discounts
This is a very important factor for businesses since they offer seasonal discounts, quantity discounts, etc. Plus, they also have to pay taxes on sales. Your invoice should take all these factors into consideration, hence make sure to pick one that has the option to add or subtract amounts.
The invoice management software should let teams work together. This is important for small businesses where there are multiple offices or branches. The ability to log into the system from anywhere can make audits easier.
Top 3 Invoice Management Systems
Ready to choose an invoice management system? Here are our top three invoice management software:
Call us biased but Billdu is our #1 pick as it has all the features mentioned above and some more. With our tool, you get to save time and have fun managing invoices. Start with a free demo to know more about how it works.
One of the most popular names, Zoho comes with some great features with a bunch of plans and packages. However, its customer service leaves a lot to be desired and there are integration-related issues as well.
Xero is an easy to use and reliable tool that is said to be suitable for small businesses with features such as payroll and accounting; however, it’s quite expensive and can be slow at times.
We at Billdu believe in empowering small business owners through our software. Don’t trust us. Try our invoice management system today.