2 min read
A consolidated invoice is when a customer pays for multiple services or products at the same time. They are common in industries such as SaaS where a customer company might use several different services offered by the same provider that would otherwise be invoiced separately.
With invoice consolidation, a customer need only pay once for all the different services they have used during a particular time frame. For a simple example, if a customer company hires a web design team from a provider, and also hires their content creator during the same payment period, then the provider can bill the customer for both services on a single consolidated invoice.
There are several benefits to using consolidated invoices, as explained below.
Benefits of invoice consolidation
There are multiple advantages to using a consolidated invoice system instead of billing separately for each and every service or product used within a timeframe (usually a month). For the customer, the immediate benefit is seeing everything they need to pay a single provider all on one invoice. This makes it easier to track payments and manage the amount of outsourcing and third-party products used.
For the issuer of the consolidated invoice, there are three main benefits:
avoid missed payments
Avoid missed payments
Sending multiple invoices each month or payment period to the same customer runs the risk of one or more of them getting lost in the shuffle. Even the most well meaning of customers can get overwhelmed with paperwork and administration. Simple human error will also always be a factor, and it can be confusing dealing with multiple different invoices from the same client.
Consolidating the billing process into a single invoice involves breaking down each of the products or services used and how much they cost. The consolidated invoice will have the grand total of money owed so there is no confusion. The customer can then pay the total in one go and eliminate the risk of an invoice getting misplaced or forgotten about.
It is much quicker and easier to break down a customer’s purchases or subscriptions onto one invoice than to generate multiple separate invoices. This saves you a lot of time and energy which can then be better spent on less mundane aspects of the business.
By streamlining the invoicing process with consolidation, you immediately improve your productivity by freeing up more time to grow the company.
Multiple invoices means more paperwork or digital documents to manage. Conventional invoicing makes it more difficult to keep track of records and analyse revenue growth. Consolidated invoicing minimises the amount of documentation required in thebilling and payment process and makes it much easier to organise and stay on top of everything.
Consolidated invoices also make financial forecasting easier, as you have a more concise overview of your income.
How to consolidate invoices
The most important element of consolidating invoices is using the same billing date for each of the services or products used by the customer within the payment timeframe. This can be awkward if the services used have different start dates, but you can solve this problem by prorating your billing.
A prorated invoice means you only charge the customer for the actual time they have used your service.
For example, a monthly billing date for the first service used by a customer will act as the consolidated billing date. They will be conventionally billed for the full month for that initial service, withprorated billing used for any subsequent services used by the customer.
We can help
GoCardless enables businesses to collect invoice payments directly from their customers’ bank accounts. It is easy and cost effective.
GC integrates seamlessly with 200+ partners, including major invoicing software like
Xero, QuickBooks, and Zoho – which puts payment visibility right into the workflow of the business.
If you’re interested in finding out more about invoice consolidation, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.