Invoice Management Guide for SMBs

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.

Why consider an invoice management system for your business? Learn what invoice management is, get top tips, and find the best system for your needs. Let’s get started!

What is invoice management?

Imagine you run a small business and need to track every bill you send and receive. How do you keep it all organized? Invoice management is simply the process of creating, sending, receiving, and tracking invoices to ensure smooth payment and record-keeping. Whether you handle one invoice a week or multiple invoices daily, managing them efficiently keeps your business running smoothly.

In professional terms, invoice management refers to the systematic approach of handling and processing invoices from the point of issuance or receipt to final payment and record reconciliation. It involves tasks such as invoice creation, approval workflows, tracking payments, and ensuring compliance with financial regulations, ultimately contributing to efficient cash flow management and accurate financial reporting.

The task can be tiring, time consuming, and boring. By automating the process, you can make things easier. An invoice management software like Billdu can perform a variety of tasks and even help improve communication.

Unlock the Power of Invoicing Automation!

Billdu’s invoicing software starts at $4.99/month, offering automation tools to streamline invoicing and speed up payments!

Is late payment a problem for Entrepreneurs?

Reports show that small businesses in the U.S. are owed over $825 billion in unpaid invoices, leading to cash flow issues. On average, each business has around $84,000 in unpaid invoices, which can seriously affect growth.

Delays are also a concern, with most businesses waiting up to three weeks to get paid. Some industries, like wholesale, have 30-day payment cycles, but most businesses only have 27 days of cash reserves, creating further challenges. Managing a few clients may seem simple now, but as you grow, things can get complicated.

What is invoice management software?

Entrepreneurship has many romantic aspects, including setting your own hours and rates. Invoice management is not one of them.

Although not a fun part of being in business, invoice management software is necessary. Keeping track of your invoices shows you the work you’ve performed and how much you’re owed. It also helps you keep tabs on who’s paid and who hasn’t.

Invoice management software is a tool that helps businesses create, send, track, and manage invoices all in one place. It automates the invoicing process, making it easier to get paid on time and keep financial records organized.

Managing invoices is no easy task. It takes planning and coordination. But when done effectively, you’ll never be unsure of what you’ve done or how much you should have. And what can be better than using a simple iPhone invoice app or the Android invoice app?

What Are the Benefits of Using an Invoice Management Software?

A reliable invoice management software can solve invoice-related problems faced by small businesses. Still not sure? Check out some of the benefits of using invoice management software.

1. 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.

2. 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.

3. 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 business 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.

4. 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.

5. 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.

6. 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 for sales tax and other financial aspects to review 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.

7. 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.

Create invoices in seconds with Billdu!

Billdu’s invoicing software for the Canada lets you create professional invoices in seconds, fully compliant with local tax regulations. Simplify your billing and get paid faster!

– Cloud Support

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.

– Customized Templates

We talked about the importance of ready-to-use and customized templates in word and pdf. 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.

– Mobile Support

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.

– Customer Data

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.

– Security

The invoice management software you choose must be secure with the ability to limit access. Cloud security management is another important factor since clients want to work with a business that takes steps to ensure their safety. Zero standing privileges strategy is one way to keep your sensitive data protected through limited access.

– Offline Access

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.

– Customer Support

Choose a company that takes its job seriously and is available with the right kind of help so that you never get stuck.

– Currency Support

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.

– Communication

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.

– Follow Up

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.

– Team Work

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.

10 Steps to Effective Invoice Management

Invoice management isn’t as easy as throwing all of your invoices into one pile. You must establish a system of organization and double-checks. If you don’t, some of your clients could be stiffing you without your knowledge. Read on to learn more about essential components of a functional invoice management system.

1. Payment Reminders

An automated payment system is an excellent investment for any entrepreneur.

Automated payment systems allow you to set reminders of payment for your clients. The reminders include how much they need to pay you as well as the payment due date.

You’ll be notified of a client’s failure to pay. That way, you can contact the client and address the situation.

There are several ways that an entrepreneur can be paid. Common ways include by hour and by project. If you require payment by project, many systems allow you to send a request to the client for project approval.

The most convenient aspect of automatic payment systems is not having to keep checking for payment. Normally, you don’t have to contact clients unless they haven’t paid you. With one of these systems, you’ll be sure the only reason you have to contact a client is for payment.

2. Invoice Numbering

All transactions should have a unique number attached to them. That number allows both you and the client to reference the transaction. All invoices should have the corresponding transaction number printed or written somewhere on them.

Furthermore, you should have a system for keeping track of all numbers. Many business owners use software or an online invoice maker tool. Even basic programs such as Microsoft Excel, Word and Google Sheets can do the job.

For example, Excel offers powerful automation features which can streamline tasks such as invoice numbering and tracking.

Old-fashioned entrepreneurs might not be comfortable with relying on computers to keep records. In this case, a record book or filing drawer can satisfactorily substitute.

If you stick to written records, be sure your invoice numbers are arranged in some kind of order. An easy solution is to combine the date and number of the job.

For example, let’s say you do two jobs on December 20, 2017. The first job would be 2017122001 and the second job would be 2017122002.

Avoid Common Invoicing Mistakes!

Avoid common invoicing mistakes that can delay payments and hurt your cash flow. With proper invoicing tools and attention to detail, you can streamline the process and get paid on time!

3. A Simple Payment Process

A simple payment process can make all the difference in how effective an invoice management system is.

The most convenient payment system is one where both you and the client can view the client’s invoices. Ideally, this system would allow both of you to edit information, especially payment information.

If such a system is not available, the next best thing is an e-mail receipt. E-mail receipts are sent directly to a client’s e-mail address. E-mails can also be set to send you a notice once they have been viewed.

This kind of system also typically updates you as soon as you receive payment.

4. Penalties

An honest day’s work merits an honest day’s wage.

Some clients don’t see it that way, though. And some struggle with their own expenses.

Regardless of the situation, you need to be paid for the work you’ve done. And you should be paid on time.

The best way to ensure you’re paid on time is to set up a penalty system. Include a statement on your invoices that you will charge a penalty fee if the invoice is not paid on time.

It wouldn’t hurt if that penalty also increased over time.

Stiffed invoices are a bane of entrepreneurs. For this reason, it’s also a good idea to make all clients sign a contract promising payment by a certain date. That way, you can take that client to court if you don’t get paid.

5. Automated Invoices

Running a business is tough work. It’s hard to keep up with invoicing, especially if you’re a one-person business.

Thankfully, automated invoicing exists.

In your invoicing system, simply select the timeframe for which you want to bill and hit “print” or “send.” Depending on which you choose, all of your invoices for that timeframe will print for mailing or be sent to clients via e-mail. Recurring invoices are a great feature, too. You can have invoices created an sent automatically – try Billdu invoice maker!

6. Timely Billing

Regardless of whether or not your invoices are automated, they need to be sent out on time.

Sending your invoices out on time helps you keep track of who has received their invoice and who hasn’t. In turn, timely billing helps you determine who still needs to pay.

Timely billing goes beyond efficient invoice management system. It makes you look professional and reliable. It is important to always maintain that impression for clients.

7. Template Customization

Invoices with mismatched templates are hard to read. The information is jumbled together, and often the due date doesn’t stand out.

You can remedy this with an invoice management system that allows template customization. Template customization allows you to move elements on your invoices. It also lets you remove elements altogether.

That way, only relevant information will be displayed, and it will be easily readable.

If template customization isn’t available, there is another option. You can use a colored highlighter to mark the important areas of your invoices.

8. Time Tracking

Keeping track of your time is important. If you bill by the hour, your time determines your wage. If you bill by the project, you can see how much time you’re investing in a particular project.

Time tracking is also important for clients. It lets them see how much effort you’re putting into your work for them.

9. Short Due Dates

Part of ensuring you get paid on time is short due dates.

Don’t give a client more than a couple of months to pay up. In a couple of months, that client could have moved on to a different area. That leaves you with an unpaid invoice for hundreds, maybe thousands of dollars.

If possible, set the due date for a few weeks rather than a few months.

Short due dates also let you determine which clients are reliable for timely payment. Unreliable clients can be weeded out and refused future work.

10. Professional Language

It goes without saying that you should always use professional language when dealing with a client.

It can be difficult to maintain a professional face with a client who hasn’t paid up, though.

When dealing with these clients, always use “please” and “thank you.” In other words, “Please pay this bill by this date” and “Thank you for your business!”

Including such language on your invoices shows your professionalism and appreciation for your clients’ business.

Also, to be a pro, you need a software that streamlines the process of invoice creation. With Billdu, you can create invoices online. Adding items to your invoices can’t be easier, too, as you can just scan their barcodes without the need to enter any information.

8 Tips for Effective Invoice Management

Which programs help the process of invoice management? If you rely on invoices for payments, it’s best to be knowledgeable in several invoicing processes. Take a look at these 8 invoicing programs and methods.

1. Checklist

This is the most basic part of the invoicing process. When compiling your invoice, have a checklist of the tasks you performed, the hours you worked, and if applicable, break down each of these points in term of compensation.

It’s helpful to include this information:

• Name
• Contact information (email, phone number, etc.)
• Address (if you receive physical checks)
• Tax ID (if you’re being paid through your business)
• Any information regarding individuals who handle billing

Try to be as thorough as you can. Report any breaks you took, include your exact rate of pay, and the days you worked.

It’s recommended you work on the checklist as you work, not in crunch-time right before your invoice needs to be submitted.

2. Automation

We live in an amazing world where everything is done conveniently without human assistance, and an improved invoice management system is included in this mix.

Accounting software is available which automatically integrates order and billing processes into reporting systems.

Your reporting procedure will improve and you won’t need as much assistance from an accountant. Since there’s no middle-man, automated invoicing speeds up the time you receive your payment.

And since this type of invoicing is done automatically on the same program, it will ultimately reduce the cost of invoicing procedures.

Look into integrated accounting software such as QuickBooks, if you haven’t. Automated invoicing can be done online or through a downloadable program, depending on your preference.

3. Electronic Invoicing

Most professionals are switching to electronic invoicing because of the convenience. However, there are more reasons to make the switch from a paper-to-electronic invoice management system.

The most important reason is improved security. Electronic invoices combat fraud by utilizing digital signatures and immediate transfer.

With electronic invoices, you avoid the step of printing and sending paper invoices.

You don’t have to wait to receive your invoice — some electronic invoicing programs allow you to receive compensation immediately. And the environmental professionals appreciate saving paper.

You even have options to pre-design your invoices and download reusable templates to expedite the process. With Billdu Invoice Maker, you can easily customize one of our professional invoice templates.

4. Online Payments

Online payments have become the preferred and most effective method of receiving money. And the reason why is simple: online payment systems are quick, easy to use, and you receive money immediately.

They link to your bank account for easy transfer. This type of transfer prevents checks sent by mail, so no significant amount of time passes between your payment being shipped and received.

Your account information is safe from your employer and also from hackers.

These systems use powerful encryption so there will be no issue accepting a large amount of compensation from your employer.

Common examples of online payment programs include PayPal, Venmo, and Stripe.

5. Other Types of Money Transfer

If you don’t wish to use an online payment program, there are other payment methods you can use that are just as convenient and fast. These payment methods are just as straightforward and easy to use as online payment systems.

These include:

Direct Deposit

This service uses an Automated Clearing House (ACH) to immediately transfer funds into the employee’s bank account. The company will require your account and routing number and may require a physical check from you.

Using the direct deposit method completely eliminates using physical checks.

Debit/Credit Card Merchant Account

This is when you give a debit or credit card to an employee and load their payment on the card. Just about all major card carriers have this service available.

The fees are low for the employer, which makes these cards a convenient option.

Paper Check

Believe it or not, businesses still hand out physical checks in 2017. This is often the least-approved way — you have to go to your bank and deposit the check, and other issues regarding security and shipping issues could occur.

But generally, paper checks have been the tried and true way to pay employees.

You can expedite the process by depositing the physical check into your account by taking a picture and uploading the picture into your bank’s app (if applicable).

6. Monitoring

Even though so many factors contribute to secure and effective payment transfer, monitoring is still the key to best invoice management system practices.

Get in the habit of regularly monitoring your invoice system. Make sure your invoice was sent out and that payment was received.

7. Establish Reminders

While you’re monitoring your invoices, you want to make sure your employer remembers to pay you. Send automatic payment reminders to your employer(s).

Send these reminders the day before. Make sure you use an automatic program — you may not remember to send them manually, which could result in a late payment.

8. Reduce the Amount of Accounts Receivable Days

To get you in the habit of monitoring your invoices and get your employer in the habit of sending your payment on time, reduce the number of accounts receivable days.

The accounts receivable days is the number of days between when your employer sends your payment and when you receive the payment.

A good rule of thumb is to receive a check every week to be sure you’re getting paid frequently.

Conclusion

Do you understand what invoice management is? It’s more than just tracking payments; it’s key to keeping your business financially stable.

Implementing invoice management software can simplify the process, reduce errors, and ensure you get paid on time, giving you more time to focus on growing your business.

Keep growing your business with Billdu!

Find Out More About Invoice Management!

Billdu is a full invoice management system designed for your convenience and your clients’ convenience in mind. Our system includes payment reminders, recurring invoices, and other must-have features to keep you on top of your invoices.

To find out more about invoice management, please visit our blog reel!