According to World Commerce & Contracting, contracting businesses lose up to 9.2% of annual revenue due to hidden clauses, missed deadlines, and unfulfilled obligations.
Manual invoicing systems are a leading cause of revenue loss for businesses. They’re responsible for increased manual errors, workflow inefficiencies, revenue leaks, and increased overheads.
That’s why you need to implement contractor invoicing software. But not just any software—the right system.
In this article, we’re going to look at vital features and considerations to look at when choosing the right invoicing system for your contractor business.
Key Features to Look for in Contractor Invoicing Software
While automating your invoicing process as a contractor is a priority, choosing a system that suits your needs is more important. Not all contractor billing systems are equal.
Here are some features to prioritize:
Ease of use and customizable invoice templates
An invoicing software that is easy to use streamlines your entire payment process and makes it stress-free. Ensure the software’s interface is easy to use and you can access everything with just a few clicks.
This is especially a vital feature for general contractors who multi-task and juggle multiple responsibilities.
So, what exactly should you be looking for? Here’s a list of some elements of an easy-to-use system:
- User-friendly and visually appealing interface
- Intuitive and straightforward navigation
- Extensive support options
- Simple installation
- Efficient operation
At the same time, also look for contract invoicing software with customizable contractor invoice templates. You should be able to tweak these templates to match your brand and include all necessary details for your projects.
Job costing and expense tracking
You’re in business to make money. And since you probably adopt various pricing models, you want to accurately bill your customers without missing out on any potential income.
Project tracking and job costing features ensure accurate invoicing based on incurred costs. This helps you monitor the time and materials spent on each project.
Tracking expenses helps you manage your business costs to maintain profitability. You should be able to track expenses associated with labor, materials, other overheads, and reimbursable expenses.
Some contractor billing systems may allow you to attach receipts directly to these expenses, ensuring proper documentation. By linking expenses to their specific projects, you can accurately evaluate the profitability of each project.
You can then make smart business decisions and adjust your pricing accordingly.
Time tracking and payroll integration
Many general contractors bill their clients based on time spent on the project. Your invoicing software should have time-tracking capabilities for labor cost management.
You should be able to log billable hours worked directly into the system and link the data to invoices.
In addition, seamless integration with payroll systems can help you streamline the payroll process by avoiding double data entry and errors. This helps you pay your employees and subcontractors fast.
Automated billing and recurring invoices
Timely invoicing helps your business maintain cash flow. Automation helps you streamline the billing process, eliminate human errors, and save time.
Invoicing software automates the invoice creation, invoice sending, and payment tracking processes. And since you probably offer recurring services, what would be more special than the ability to automate recurring invoices?
You can adjust the system to do this on pre-determined schedules or milestones. This is a game-changer for contractor services billed weekly, monthly, or any other regular period.
Some clients forget to make online payments on time. However a good contractor invoicing system sends automated payment reminders to ensure your business maintains a healthy cash flow.
Automated recurring invoices also provide your business with a predictable income stream. Knowing that the system will automatically send invoices and that you’ll regularly receive payments helps you plan your finances better.
Project and client management
Contractor projects often involve multiple tasks, timelines, teams, and dependencies. Missing deadlines or bad resource management can lead to delays and losses. Your contractor billing software should have project and client management capabilities.
Project management features help you to:
- Plan every project’s phase in detail
- Assign tasks to your team members and subcontractors
- Real time tracking of task progress
For example, a typical home renovation project involves electrical work, framing, remodeling, plumbing, and repainting, all to be completed at different times. With project management features, you can plan each of these tasks in order and track them to ensure they’re completed in sequence with minimal delays.
On top of that, you should have a solid client database to help you organize and maintain your client data. You can manage client data like contacts and project history in a centralized and easy-to-find spot.
The client management features should help you track your clients’ payment status and their billing stages.
Mobile access and cloud-based capabilities
General contractors are always on the move, sometimes working remotely. Having mobile access to your contractor invoicing software is essential.
Choose a contractor invoicing system with mobile access via mobile apps or a responsive web interface and cloud-based capabilities. This allows you to track time, monitor business expenses, and manage invoices, from anywhere, whether you’re on-site or in the office.
Cloud storage also helps you access and update project and client details even when you’re away from your workstation.
Integrations with accounting software
You probably use other tools, such as accounting tools, to streamline your workflow. Seamless integration helps the tools in your tech stack work together cohesively and keep your business data connected.
Integration with accounting tools like Quickbooks and Xero helps you to automatically sync your financial data. This means you don’t have to switch through apps to manually update your data.
The system should also help you with financial reporting to understand your business’s financial health. Detailed reporting helps you see where your money is coming from and exactly where it’s going.
With a complete overview of your income, you can spot your most profitable clients that bring the most revenue and services that are in high demand. You can then focus on providing high-quality services to this market segment to maximize revenue
Integration with accounting software also helps you with tax preparation. It simplifies tax calculations to ensure accuracy and compliance with tax laws.
Security and compliance
Data protection is a crucial aspect of invoicing software. You don’t want to put your financial and client details at risk of security breaches and unauthorized access.
Look for a contractor billing system with data security features, such as data encryption, user access controls, authentication, and regular backups to keep your data safe. These measures ensure that the data is only accessible to authorized users and that you can access and restore your sensitive data if you lose it.
It’s also important for the system to comply with industry standards and regulations. Check whether the system provider conducts regular security audits to protect your data.
Compliance with standards like the GDPR and ISO/IEC 27001 is a good indicator of a system that prioritizes protecting your business from potential cyber threats.
Considerations for Choosing the Right Software for Construction Business
Everything we’ve looked at so far concerns contractor invoicing software. However, you also need to prioritize your business’s needs and requirements.
Here are some considerations to make:
Company size and project volume
The size of your company greatly affects your invoicing needs.
If you’re a small business with a limited number of clients, you might need affordable and straightforward solutions with basic invoicing features.
On the other hand, larger construction firms require robust and complex systems with advanced features, like recurring billing, time-tracking for multiple teams, and third-party software integration.
Also, consider the frequency and complexity of your invoices. The solution should be able to accommodate your invoicing needs based on project volume.
Budget and cost structure
You want to find contractor invoicing software with flexible pricing. The system shouldn’t be so expensive that it eats into your profits.
Invoicing software providers often have different pricing models, including:
- One-time – You pay upfront one-time fees for complete access to the system
- Subscription-based – You pay a set monthly, quarterly, or annual fee for the software
- Freemium – You get some basic features for free but pay for advanced features
- Usage-based – You’re charged based on the number of invoices created or the volume of transactions processed
Evaluate the financial implications of each pricing model on your business and assess the value you get for your money.
Check whether the provider or vendor is transparent when it comes to the pricing. Any hidden fees could potentially burden your business. Besides, hidden costs are a red flag since the provider isn’t 100% transparent.
Also, look for a software provider that offers free trials and demo options to allow you to test the system’s features before financially committing.
Customer support and training resources
It’s common to encounter issues and downtimes when implementing software. You may also need assistance with the initial setup. Dependable customer support is vital in keeping things running smoothly.
Choose a provider that offers 24/7 support via multiple channels such as email, phone support, and live chat to ensure that any issues you encounter are solved quickly. Look for a company that also provides comprehensive training materials and onboarding support for a seamless transition.
Training resources can include tutorials, documentation, live webinars, and user guides. The provider can also offer deployment support via one-on-one sessions with experts to guide you through implementation and customization.
Reliable 24/7 customer support plus adequate training resources ensure that you’re never in the dark in case anything happens.
Scalability and future needs
While you want software that will serve your current needs, it’s also wise to consider the future. As your business grows, so do your invoicing needs.
Choose software that can grow with your business and accommodate your growing needs. Look for flexible features like the ability to add and remove users, custom templates, and capabilities for high invoice volumes.
Look for invoice software with modular features that you can add to your subscription as your business grows, instead of paying upfront for features you don’t need.
Top Recommendations for Contractor Invoicing Software
The best software for contractors is Stax Bill. Known for its extensive features and capabilities, this tool is geared towards meeting the needs of fast-growing businesses.
Here are some important Stax Bill features:
- Invoice customization – Stax Bill has customizable invoice templates to help you generate professional invoices with key details like account IDs, purchase order numbers, and other vital details.
- Flexible product catalog – You can easily run a wide range of products, services, and subscriptions. This allows you to create unique discounts and special deals, and adjust your contractor prices.
- Advanced dunning management – Dunning management helps you reduce revenue loss by following up on failed payments. The Stax Bill dunning management feature helps you reduce failed payments by up to 700% due to payment retry scheduling.
- Comprehensive reporting – Stax Bill gives access to over 40 comprehensive reports that update automatically. These reports give you insights into cash flow, retention, churn, MRR growth, and much more.
- Compliant revenue recognition – Stax Bill supports various revenue recognition options for construction companies. Most importantly, there’s an advanced milestone revenue recognition module for ASC 606 compliance.
- Tax calculation – Stax Bill provides tax calculation and charging features at state and country levels, with options for advanced tax computation.
Stax Bill pros and cons
One of the most prominent advantages of Stax Bill is payment gateway functionality where you can manage your entire business from one integrated platform. You don’t need any third-party online payment solutions to accept payments, accept credit cards, or get paid faster.
Also, all Stax Bill pricing plans have a monthly flat fee, unlimited invoices, and a wide range of advanced payment tools for your construction business. Plus we have a free demo account that you don’t pay a cent for.
And we don’t penalize your business for doing well. There are no overage fees. If you exceed your plan’s revenue band, we simply upgrade you to the next plan at the end of the subscription.
However, on the downside, to determine your monthly fee, we have to look at your annual net invoiced numbers. A business whose monthly net invoiced revenue is less than $5,000 could end up paying more than the value they receive.
This means Stax Bill might not be the best invoicing software for businesses still trying to find their footing.
How to Implement and Get the Most Out of Your Invoicing Software
Choosing a good invoicing software for your contracting business is one thing. Implementing the system to get the most out of it is another. You need to carefully plan and strategize to get the most out of it.
Successful software implementation starts with a good plan. Plan the onboarding process by mapping out the steps you need to set up the system, including customizing templates, importing client data, and integrating with other tools in your tech stack.
It’s important to also set aside time for system testing to spot and solve any errors before going live.
Adequately train your whole team to ensure they understand the system and its capabilities. Since they’re hands-on with your business processes, their input can give you great insights into what features can best serve your needs.
Leverage the customization options to tailor the software for your processes. Tailor invoice templates for your brand, configure tax and discounts based on your location and industry, and set up payment reminders for late payments and dunning management for failed payments.
Regularly review the system’s performance to evaluate how effectively it meets your needs. Update your customizable templates, workflows, and integrations to maintain efficiency as your business grows and regulations change.
Also, keep your system up to date with the latest features and security patches.
Conclusion
Choosing the right software for contractors is a critical decision to improve your business’s efficiency. The right software has the potential to positively impact your cash flow, client relationships, and operational efficiency.
When evaluating a billing system, consider features like ease of use, expense and time tracking, payroll integration, automated invoicing and recurring billing, project management, mobile access, and integration with other business tools.
Remember to prioritize your specific business goals, needs, budget, and future needs.
