Until the widespread use of computers and email, invoices were generated at the end of each billing period. Then they were printed, put in an envelope and mailed to the customer.
Some companies still send invoices this way, but it's inefficient. It takes time to generate the invoice, time for it to reach the customer – assuming it doesn't get lost in the mail – and time for the customer to process it.
There are other problems too. For example, you have to create and re-use templates for different customers and you have to enter billing information twice: once in your accounts and once in each invoice. Also, keeping track of invoices and payments can be time-consuming.
Then there's the cost of document management and storage, and the environmental impact of sending paperwork. Also, your customers have to transcribe the information in your paper invoices, and mistakes are easily made – especially with bank account numbers and sums to be paid.
Automated and online invoicing solves these problems, making it fast and easy to send out invoices and track them. Switching to online invoicing could reduce your costs and speed up payments.
Advantages of automated invoicing
Online invoicing packages enable business owners to set up scheduled invoices that go out automatically at specific dates and times. No more manual data entry or laborious paperwork. Also, one-off invoices can be issued swiftly and directly without the need for a bookkeeper or accountant. They can even be sent from a mobile device at any time and from anywhere.
E-invoicing systems make invoicing part of your work-flow, with automated invoices being delivered immediately. Most up-to-date payment services allow customers to click straight through via the invoice to settle their bill immediately. This pay-now facility boosts cash flow and reduces accounts processing time, for the seller and the customer.
The best systems offer a range of payment options, including credit cards, bank transfers and Direct Debit to make it easy for customers to pay. Make sure you choose invoicing software that integrates with established online payment providers.
When payment processes move online it makes tracking invoices much easier. Most systems use a dashboard that shows payments already received, those pending and those that are overdue. It’s also possible to set reminders for customers who have yet to pay and run reports to get a snapshot of those who are on time and those who are persistently late. With such thorough and detailed record-keeping, it’s simple to get information should your accountant or the authorities demand it.
Five major advantages of online, automated invoicing
1. Send invoices out immediately. The faster you send out your invoices, the sooner you're likely to get paid. You can set up your accounting software to send out invoices at specific dates and times, automatically. There's no need to wait for your accountant or bookkeeper to send out invoices for you. This also means you could reduce your overheads. You can also invoice at any time, from anywhere. If you're running a small business you can even generate invoices when visiting clients or out on the road.
2. Better invoice tracking. With online invoicing you can track your invoices automatically. You can find out which invoices have been paid, as well as which invoices are due or past due. Invoice tracking is important because neglected invoices 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.
3. Get paid faster. The major goal of online invoicing is to reduce the time between sending an invoice and receiving payment. No more worrying about whether or not your invoice arrived. With online invoicing you can even receive automatic acknowledgements when your invoice is opened by the customer. The best 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. Businesses using online tools are paid 33% faster than those issuing paper invoices, according to cloud accounting provider Xero.
4. Save time and money. Online invoicing can save time – and therefore money – compared with traditional invoicing. It lets you keep track of your company’s cash flow by sending invoices to your clients directly from your accounting software on a weekly, monthly or quarterly basis. You can send new invoices based on previous ones to the same client. Invoices are numbered automatically for you.
5. Reduce your paper footprint. Paperwork all has to be filed, stored, archived and indexed, and it takes up space. 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.
Automated online invoicing systems
Modern online accounting software often includes automated invoicing, either as part of the package or as an optional add-on. Such software is popular because it saves time and money.
It’s quick and easy to buy and set up off-the-shelf invoicing software packages or subscribe to cloud-based providers. GoCardless has an extensive list of available partners, many of whom offer automated invoicing. You can see them all here.‹ View table of contents Next page ›