Does your business still send out printed invoices, or create them individually and send them out by email? If so, there’s a better way to do it. You could be saving time and money by switching to online invoicing. Here’s how.
Why invoice online?
In the traditional business model, invoices are created at the end of each billing period. Then they’re printed, put in an envelope and posted to the customer.
Many companies still do business this way, but it’s inefficient. It takes time to create the invoice, and for it to reach the customer – assuming it doesn’t get lost in the post. It also takes time for the customer to process it and most importantly, pay the invoice.
There are other problems with this method too. For example, you have to create and reuse templates for different customers and enter their billing information twice: once in your accounts and once in each invoice. Also, keeping track of bills and payments can be time consuming – especially if you keep them on your desktop or in a folder. Even sending your invoices by email won’t reduce the workload by much.
Online or ‘e-invoicing’ solves these problems, making it fast and easy to send out invoices and track them. Switching to online billing can reduce your costs and speed up payments. Here are some of the ways it can benefit your business.
Send your invoices out immediately
The faster you send out your invoices, the sooner you’re likely to get paid. Good invoicing software can help:
- Scheduled invoicing – Set up your accounting software to send out invoices automatically at specific dates and times. You don’t have to lift a finger.
- Direct invoicing – When you send invoices online, there’s no need to wait for your accountant or bookkeeper to do the sending for you. This also means you could reduce your overheads.
- Invoice any time, anywhere – Why wait until you’re back in the office? If you’re running a small business you can even generate bills when visiting clients or out on the road.
Speed is just one competitive advantage of invoicing online, but the benefits don’t stop there.
Better invoice tracking
Once you’ve sent out your invoice, what happens next? Traditionally you would wait until the due date and keep checking your bank account to see if you’ve been paid. And then start chasing if the money hasn’t arrived. But with e-invoicing comes automatic tracking:
- View payment status – Find out which invoices have been paid, as well as which ones are due or past due. See all this information on one screen, giving an overview of the money owed to you.
- Create your own reminders – Not all clients are the same. You can add notes and reminders for each client and invoice, from within the invoicing software.
- Run reports to get a better insight – You can run ageing reports on your accounts receivable, so you can see which of your clients are poor payers. You could then adjust your payment terms to suit each client.
- Create a better audit trail – Good cloud accounting and invoicing software make it easier for you to keep a detailed audit trail. You should keep track of every transaction in case your accountant, clients or the government have any questions.
Invoice tracking is important because neglected bills might never be paid. As a small business owner you can’t afford to lose money like that. Online invoicing helps ensure nothing falls through the gaps.
Get paid faster
One goal of invoicing online is to reduce the time between sending an invoice and receiving payment. It can make a big difference:
- Same day delivery – No more worrying about whether or not your invoice arrived. Some software will even send you automatic updates when your bill is opened by the customer.
- Use of payment services – Don’t wait for cheques to arrive in the post. The latest online payment services allow your clients to ‘pay now’ from within the invoice itself. It’s fast, easy and means you get paid almost instantly.
- Better security – E-invoicing software is secure and safe to use. It uses special encryption similar to that used by other financial institutions such as banks. Your clients can trust it, so they’re likely to respond to your invoices faster.
Save time and save money
Whether you handle invoices yourself or rely on a staff member, bookkeeper or accountant, you’re still paying for the time taken to do the work. Sending them electronically will save time compared with traditional methods:
Your time is money. Less time spent invoicing means more time to spend managing other important areas of your business.
Reduce your paperwork
The paperless office has been predicted for many years, but most companies still produce lots of paperwork. It all has to be filed, stored, archived and indexed, and it takes up space.
Because office space is expensive, companies often choose to have their paper records scanned and converted to PDF or other formats, before shredding the originals. But why not eliminate the need, the cost and time spent on this too?
If you keep your invoices online right from the start, you’ll never have to print them out. Everything will already be archived, indexed and stored electronically.
Online invoicing on its own won’t make your office paperless, but it’s another step towards getting rid of paper altogether.
Help your clients to pay you
Managed properly, sending invoices online can encourage your clients to pay you faster. Be sure to:
- Send reminders – Small businesses are usually busy, so it can help to send a friendly reminder when payment is due.
- Offer different payment options – The goal is to make it easy for your clients to pay you, so consider offering credit card handling, bank transfers or PayPal.
- Use a company template – Good software makes it easy to tailor the invoice design for each client, while still being consistent in how you represent your company. A professional approach is likely to result in faster payment.
- Use a payment service – Get paid faster by using a cloud-based application that will let your clients pay you immediately with the click of a button.
Get the best out of invoicing online
To make the most of your invoicing software, you need to take a few important steps before you’re ready to reap the benefits:
- Set up your system properly – Each client should have a unique code and each client’s invoice should have its own sequential number.
- Send invoices on the same day of each month – Reliable, regular billing is more likely to result in reliable, regular payment.
- Include wording about a small penalty for late payment – This will remind clients to pay on time, though it can be a good idea to cut loyal clients a bit of slack if they nearly always pay promptly.
- Set up some simple reports – Accounting software has plenty of reporting options. Review these and decide if you want to create any customised ones. Then run the reports at least once a month so you can stay on top of your company’s cashflow.
Use the cloud to manage your accounts effectively and also as an online filing system. That way you can keep your important financial documents well organised and accessible wherever you happen to be.