Whether you’re a major vendor of offline or online services or a neophyte freelancer working on the web, online invoicing can and will make life easier for you, your customers and your accountant. If you’ve been printing off invoices or even PDFing invoices and emailing them, then you stand to gain quite a bit by transitioning to a smarter invoicing system. Whether your choose Freshbooks, Xero or Transcepta, online invoicing can be an extremely sound investment.
1. Better Organization
You may or may not have an efficient system for keeping track of which invoices were sent, paid or are overdue. But nothing beats automation. With online invoicing, you can draft invoices as you go and then send them when bills are due. Then, you can keep track of which ones have been paid, which are late, etc. without entering notes or keeping tabs on each individual invoice you send out.
2. Greater Professionalism
Building on the first bullet point, sometimes you just plum forget whether or not a client paid or even saw an invoice you sent out. While it’s not usually a big deal to simply shoot them a quick email and ask, it can and does debase their regard for your professionalism when they do. They may think, “Gee, if this guy can’t even keep track of his invoices, how can I be sure he’ll be meeting his deadlines?” With online invoicing, you can definitely see which invoices were sent and paid without bugging your client. Plus, most online invoicing software has built-in “reminders” that are direct enough to get your point across but generic and procedural enough not to offend.
3. Greater Insight
How much money did you make last year? Which clients pay the fastest? How many fees are you handing over to PayPal? This is information that is baked-in to your invoices, but isn’t usually extracted and parsed out for your perusal without the help of a financial analyst or accountant. Online invoicing does it for you—you may be surprised at how much of a deadbeat one client is, or how much of your business comes from a certain sector. This information can be extremely valuable to your growth and strategy.
4. Better Audit Trail
A standardized invoicing system with well-recorded sent, viewed, payment and other dates is much more helpful to your CPA, or the IRS (knock on wood) than the system that you dreamed up on your own. Online invoicing tracks more data, making it easier to figure out where anomalies crop up.
The biggest concerns that luddites may have over online invoicing is ease of use for their clients and security. The good news is that today’s online invoicing services are as secure as any financial institution you may access online. And if this doesn’t instill confidence in your clients, you can still give them the option of paying via check or another method that they prefer. The important thing is that your invoices are documented and managed in a uniform, consistent and efficient manner. As entrepreneurs and contractors, fiscal best practices aren’t exactly what attracts us to starting our own business. Online invoicing is a happy, affordable medium between hiring a full-time CPA and winging it when you really shouldn’t be.