Invoicing ensures your business gets paid in due time for services rendered to a client.
With billing and invoicing software, you can create, customize, and track invoices effectively.
However, there are hundreds of billing and invoicing software tools out there and it can be tough to choose the right one for your business.
In this article, we have outlined essential features to look for in billing software options and key criteria to help you select the best billing and invoicing software for your business.
Read on to find out more.
TL;DR
- Every invoicing tool is capable of invoice creation, but top-quality invoice software solutions come with a wide range of features other than generic invoice creation to ensure you have all the functionalities you need to collect payments for your work quickly and easily.
- The only billing and invoicing tools that should make your shortlist are those that have an intuitive interface, integrated payment processing, data security features, reporting & analytics, and seamless integration with your existing software tools.
- Ultimately, the best invoicing solution for you may depend on the size of your business and the peculiar requirements of your industry niche.
What to Look For in Billing and Invoicing Software
The one fundamental feature you will find in every invoicing tool, even in basic invoice software, is invoice creation.
However, top-quality invoice software solutions come with a wide range of features other than generic invoice creation to ensure you have all the functionalities you need to collect payments for your work quickly and easily.
Below, we will focus on eight essential features you may require from your billing and invoicing software.
Ease of use
The first thing you should look out for is whether the software solution is user-friendly.
A well-designed billing and invoicing software platform will have an easy-to-understand interface that will help simplify your billing interface.
It will streamline the process of writing an invoice, sending the document to customers, getting paid, processing the incoming payment, revenue recognition, and scheduling future payments.
The idea is to make your life much easier.
Here are a few criteria to help you evaluate whether a billing solution is user-friendly:
- Intuitive interface: the platform must be easy to navigate. It should provide features and automated backend processes to help you carry out your billing tasks in a logical and straightforward manner.
- Mobile-friendly design: the billing software interface must offer a seamless experience across all your devices. It should be able to adapt to the different screen sizes and orientations of your disparate devices, including mobile phones, tablets, and desktops.
- Automated invoicing: the platform should be designed to automate repetitive billing tasks so you can have more time for your business. You will learn more on this in the next point.
- In-app feedback mechanisms: the billing software must be designed with reflexive confirmation cues to help users know if a task has been completed. For example, a pop-up that shows whenever an email invoice is delivered successfully to a customer.
Automation capabilities
As a small business service provider, you have to create an invoice each time you sell your service or product to your customer.
Doing things manually means writing or typing up invoices over and over again.
This sort of manual repetitive task inevitably leaves room for lots of errors. These mistakes can have an adverse effect on your balance sheet and even customer relationships.
Automated invoicing removes the need for manual invoicing, minimizes errors, and drastically reduces the time it takes to create and send invoices.
This explains why many small businesses, including yours, are making the shift to e-invoicing.
A study revealed that the online invoicing market will grow at a 17.7% CAGR from 2024 to become a $61 billion market in 2032.
Here are some of the key automated tasks you want to see in an invoicing and billing software platform:
- Automated invoicing process: you must be able to easily create unlimited invoices using pre-designed templates, fill in required details, and forward the document to customers at the click of a button.
- Automated invoice scheduling: it should give you the capability to automatically set the specific time and date your customer will receive the invoice.
- Automated payment reminders: you should be able to notify customers of upcoming payments to prevent overdue invoices. Ideally, the platform should come with templates for reminder messages that you can modify to fit your brand voice and business-specific communication guidelines.
- Automated tax management: it should have built-in features for transaction-specific compliance with relevant local tax laws and regulations. Opting for an industry-focused invoicing solution will make this much easier.
- Automated payment processing: you should be able to accept online payments the same way you can email bills to customers online. The invoicing software should come with a reliable payment gateway that lets your customers make online payments using their preferred payment methods.
- Automated subscription management: it should let your business, especially if it’s a SaaS business, create and manage subscription plans. You should be able to effortlessly modify subscription plan details and manage customer cancellations and upgrades from a robust dashboard.
Customization options
An invoice is an official statement from your business to a third party and it must be easily distinguishable from other documents periodically received by your customers.
This means the invoice must reflect your brand identity so people will know it’s from your company.
Your invoicing software should come with customizable invoice templates that you can modify to include your business name, logo, color schemes, fonts, and layout design.
The form fields must also be flexible enough for you to itemize the list of services provided, and add other required details, including customer names, prices, rates, discounts, shipping, and applicable taxes.
For example, Stax Bill lets you create customized invoices and reuse those invoices in subsequent transactions.
There is an extensive library of invoice templates for businesses across every known subscription and service-based industry.
For example, if your business requires you to create projected quotes, there is an invoice template for you, and if you charge hourly rates, there are project-specific templates and built-in time tracking tools.
You can also use electronic signatures in your bills since it integrates seamlessly with third-party tools like Adobe Acrobat, which many businesses use to e-sign documents.
Payment processing features
Your billing and invoicing platform should come with both credit card processing capabilities and support for alternate payment mediums to give your customers flexible payment options.
Customers today don’t always opt for debit and credit card payments, they can choose to pay via other methods like digital wallets, ACH transfers, auto-debit, checks, and even cash.
A robust invoicing software solution like Stax Bill comes with a payment gateway, which lets your customers easily select their preferred payment method and transfer payments to your business.
A payment link will be included in your invoice email, and once your customers make the relevant payment, Stax Bill will transfer the details of the transaction to its partner payment processor, Stax Pay.
Stax Pay takes on the responsibility of ensuring funds and information are transferred from your customer’s bank (issuing bank) to your business’ bank through secure channels.
And once the funds are transferred to your bank, you should be able to access it within 24 to 48 hours.
For businesses offering SaaS products or operating a membership model, recurring billing is essential.
So, your invoicing solution should let you set up automated recurring invoices to help you get paid in each billing cycle.
Stax bill lets you set up recurring billing, and invoices will be sent to your customers at predetermined intervals, which can be weekly, monthly, quarterly, bi-annually, or annually.
Security Features
Every business that collects sensitive financial data from customers is obliged to protect that information from illicit factors.
As a small business, you need a reliable invoicing solution provider to take on that responsibility on your behalf.
So, when evaluating your invoicing software options, you want to be sure the provider is using top-of-the-line encryption to safeguard your customer’s data.
Look for invoicing tools that use AES-256 and SSL/TLS standards to encrypt your data to secure the information when it’s being transferred between the relevant stakeholders that handle the movement of funds and information between you and your customer.
Other key security mechanisms that must be in place include access control & user roles to limit the people who can view and modify the data.
There should be robustly secure login processes like two-factor authentication to prevent unauthorized access by criminal elements leveraging identity theft techniques.
Compliance with relevant regulations like PCI DSS (Payment Card Industry Data Security). GDPR (General Data Protection Regulation), HIPAA (Health Insurance Portability and Accountability Act), and others are just as important.
You also want your provider to have robust data backup and recovery capabilities in the event of unforeseen circumstances like natural disasters, system failures, or crippling cyber attacks.
Scalability and flexibility
If you plan on getting your business into new market segments and growing your client base in the future, you must ensure your billing and invoicing software solution is flexible enough to grow with you.
With growth comes increased transaction volumes, complex billing processes, and new sales mediums.
An invoicing tool that’s only optimized for today’s needs, will be incapable of handling evolving needs as your business grows.
You will be forced to transition to new invoicing software with little time to consider your options, and that can be highly disruptive to your business if the data migration and other activities related to the switch aren’t painstakingly managed.
Scalable invoicing platforms like Stax Bill tend to offer multiple pricing plans so you can scale your volume and package of features to the next pricing bracket as your business grows.
Reporting and analytics
It’s practically impossible for you to remember all the minute details of the contract agreements you have with each client, especially for small business owners with multiple client contracts.
This is why your invoicing platform serves as a virtual bookkeeping tool that records each customer’s details so you always have up-to-date information about your incoming bill payments, failed payments, and outstanding payments to follow up on. There is expense tracking as well.
All-in-one platforms like Stax Bill will also let you track your accounts receivable, so you can always track incoming payments and know when an invoice is viewed and paid.
This detailed tracking and reporting will help you monitor your cash flow and keep you abreast of the financial health of your business.
In the Stax Bill platform, you can monitor important metrics like:
- Average billing cycle (weekly/monthly/yearly) revenue
- Days payable outstanding
- Average invoice processing time
- Percentage of overdue invoices
- Rate of failed payments
- Accounts receivable turnover ratio
Integration with other systems
Most businesses already have an existing tech stack of business operations software like your accounting software and CRM and ERP software apps.
To ensure the seamless flow of data between your digital applications, you would want your billing platform to integrate seamlessly with your existing tools.
For example, Stax Bill integrates with various popular platforms, including Salesforce, Hubspot, Quickbooks, Netsuite, the Stax Pay Payment Gateway, and many other apps.
It also comes with REST-based API and webhooks so your developers can connect the platform with your custom-made in-house software tools.
With such integration, every invoice generated on Stax Bill will be automatically reflected on your accounting software’s records, which will eliminate the need for you to manually copy and paste the data.
This synchronization of data also reduces the stress of generating tax reports come tax season since all your financial transactions are automatically recorded on your accounting ledger.
How to Choose the Right Software for Your Business
Below are five key tips to help guide you through the decision-making process of selecting the right invoicing platform for your business.
Identify your business needs
A billing and invoicing solution that doesn’t enhance the billing workflow of your business isn’t worth your time.
For example, your type of business may require you to first create estimates and quotes and send them to customers for a back-and-forth review and approval process before both parties can agree on a final project bill.
This means your invoicing and billing tool must seamlessly facilitate that particular billing process, or you will be wasting your time and money.
You also need to consider whether a basic online invoicing tool with free invoice templates will be adequate for your needs or whether you need a robust billing and invoicing platform that not only lets you create invoices, but also tracks expenses, sends reminders, and much more.
Evaluate software features
Any good invoicing software tool will make it easy for you to create customizable invoices that align with your branding, generate estimates & quotes, accept online payments, track payments & overdue invoices, and manage recurring invoices & subscriptions.
So, the focus here is on the must-have features specific to your business.
For example, if your business model is based on billable hours, you will want your billing and invoicing tool to come with an automated time tracking feature for you to track time accurately and ensure you are getting paid fairly for the effort you are expending on the client’s work.
Consider pricing and budget
The best billing and invoicing software option for your business will come down to cost and feature package.
That is, the software that has all or most of the features you need and is priced within your budget.
However, this is complicated by the fact that providers use different pricing models, and some even have hidden fees in their contracts that can stealthily drive up your monthly subscription expenses.
So you need to do your due diligence to find the actual cost of each invoice billing option.
The one with the cheapest monthly subscription fee is not always the right option for you.
A software that costs more but has all the features you need to receive and track payments could well be worth the extra fee.
Often the applicable price bracket depends on the size of your business.
Single-person and smaller businesses may be okay with simple, free invoicing software, while larger businesses tend to require more advanced features, which is more costly.
Look at customer support and reviews
You may need help to promptly deal with technical problems or security concerns and you want to ensure your provider offers responsive and helpful customer support to help tackle the issue immediately.
The provider should offer 24/7 chat, email, and social media support.
Online knowledgebases and FAQs will also come in handy when you are faced with issues or questions you can troubleshoot yourself.
The only way to confirm the quality of a provider’s service is to hear what other users are saying via feedback on online reviews websites.
A provider with overwhelmingly positive user reviews online and testimonials that show the company has a proven track record of fixing your most pressing pain points may just be the ideal solution for your business.
Test before you commit
Some invoicing software providers offer a free trial period, and most offer free demos of their software.
You should use the demo or free trial period to test the platform with your staff members and evaluate whether the software meets your requirements from their perspective.
You want to prioritize their opinion because there won’t be a successful implementation of the new software without their buy-in.
What’s the Difference Between Billing and Invoicing Software and Accounting Software?
Accounting software and billing & invoicing software are occasionally seen as one and the same, even though they are distinct financial software tools.
Accounting software is used to record, track, and manage the financial transactions of a business. It serves as a system of record, and the data it collects and organizes is used for financial reporting, tax law compliance, and business data analysis.
On the other hand, billing software in its most fundamental form helps businesses create and send invoices to customers as effectively as possible.
So, basically, accounting software documents all your finance-related operations, while invoicing software focuses on the billing and payment collection aspect of your business.
However, accounting software tools are increasingly adding invoicing features to their functionalities, though these are usually very limited.
What we can take from all this information is that you need both systems.
You need accounting software to generate financial reports and statements, create budget forecasts using historical data, and calculate & file relevant taxes at the end of each fiscal year.
While billing software tools will help you accept payments and track expenses, which will show up as part of the financial data on your accounting software.
Also, both types of software are now cloud-based, making it easy for them to communicate and share financial data.
It’s Time To Implement Billing and Invoicing Software Solutions In Your Business
This article has shown you the right criteria for evaluating the many invoicing tools on the market.
It has also established that the best invoicing software for you may depend on the size of your business and the peculiar requirements of your industry niche.
Now, it’s time for you to check out your options, compare their features to the list in this article, and make the best choice for your business needs.
Whether it’s a robust all-in-one platform, a niche-focused solution, or free billing software.
