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.