As a small business owner, you’ve got a lot on your plate. From tracking employee time to managing payroll, your hands are full. Try to streamline your administrative work by switching to electronic invoicing–the process can save precious time and money.
There are a host of benefits when it comes to electronic invoicing. Here is a guide to some of the new trends in electronic invoicing to watch, along with its benefits, and how to send an electronic invoice.
1) Cloud Computing
What happens when you have a power surge and all your computer hardware at the office fries? That doesn’t happen because you have surge protectors, right? What about fire or flood? There’s no protection for that – and if you save your company data on your hard drive, or worse – it’s on paper – well. Can you imagine?
The future isn’t coming – the future is here. Cloud computing is nearly a household term and, as more and more accounting activities find a home in the cloud, more real-time insights and statistics become available.
With so many systems already operating in the cloud, invoicing is sure to follow suit. So much of the data you work with every day is pivotal – including your cash flow.
With cloud computing, real-time data is instantly available, which means you can take action immediately if necessary. When you can address issues concerning payments urgently, it works in your favour. You can build a strong reputation for your company, its partners, and your clients.
Options for invoicing from the cloud have even made their way onto your mobile devices. Mobile invoicing apps make billing your clients even easier–say you or your representative is in the field and ready to make a sale. It can be done by accessing your invoicing application from your smartphone.
According to the GlobalStats StatCounter, an online stat counter, as of 2016, mobile access of the internet exceeded desktop for the first time. In fact, many companies consider this standard practice today. With Canadian self-employment higher than it’s ever been, many of your reps might already work remotely. When you can leverage the benefits of instant sales, you’re happy and so are your clients.
2) Accessing the Real-Time Economy
Switching to electronic invoices has many benefits such as:
- Getting paid quicker
- Getting insights on managing your cash flow
- Saving time on manually creating invoices
When you invoice your clients, it’s an unspoken expectation that they pay and within a certain amount of time. Regardless of your payment terms, you hope your client pays right away. Late payments for goods or services you’ve provided probably occur more than you’d like to admit. In fact, even if your terms state Due Upon Receipt, it doesn’t mean the payment is on its way.
You’ve been there: you just ran a cash flow report using your desktop accounting software. Things look great. But what you didn’t know is four transactions just occurred on behalf of your business that hasn’t been entered into your system yet. What you thought was a surplus of about $15,000 just became a negative of about $3,000. If you base your business decisions on that report you just ran, things could get ugly – and fast.
Your cash flow fluctuates – sometimes on an hourly basis. Invoicing electronically helps you manage this fluctuation in funds. Electronically billing your clients also reduces your reliance on paper documents. Not to mention it takes less time and the invoices are accessible from anywhere.
Aspects of invoicing can be processed in as little as a few hours to a day, depending on your company’s size and production. By using e-invoicing, you can partake of the benefits of real-time customer interaction.
3) The Benefits of Automation
You’re probably already seeing the benefits of automation in your day-to-day operations. Everything from your company’s payroll and vendor payment reminders can be automated today. Your HR or payroll department no longer scours overloads of spreadsheets, crunching numbers, and manually issuing cheques and payments.
Your small business accounting software lets them perform all of that with just a couple clicks. And for staff that is on salary, those cheques’ figures never change – meaning the payroll for those employees is simply sent each pay period with no extra effort on your part.
Automation and invoicing
One of the key benefits of electronic invoicing is automation. Adopting this incredible feature is the best small business & self-employed advice you can get, as it eliminates the constant tracking of interactions and lessens the likelihood of mistakes.
If your client’s payment hasn’t been received, a reminder is sent with no effort on your part. And this doesn’t only apply to invoices you’ve sent – your invoicing application can also be set to automatically make payments to your vendors on specific dates.
By introducing automation to your business activities, your team can focus on other tasks that require manual attention.
4) Blockchain Technology
As more and more businesses hop on the blockchain train, you could be left in a cloud of steam if you stay in the depot. Blockchain technology allows you to streamline your entire invoice process. Your transactions are all recorded in real-time, and records kept. It eliminates any need for additional resources or third-party applications or interactions.
With blockchain, you can send and pay invoices using any approved currency, as well as digital currencies, such as Ethereum, Ripple, and Bitcoin. Blockchain verifies the details of both incoming invoices and outgoing, meaning risks associated with fraud and other activities that can occur in a small business are significantly mitigated. As time goes on and blockchain is easier to scale, it could eventually disrupt traditional methods of invoicing.
5) Global Acceptance of E-Invoicing
Most businesses have at least some familiarity with the concept, but many still depend on aspects of standard invoicing. Countries around the world are beginning to embrace the clear advantages of electronic invoicing, but it’s a slow process. Even with cost savings of nearly 90% for those companies who adopt this invoicing method, some habits are hard to break.
The first places to adopt electronic invoicing were Scandinavia, South America, and Mexico. Electronic invoicing has different regulations surrounding its use, and these can be different depending on the originating country.
The Canada Revenue Agency (CRA) has established a set of regulations regarding the use of electronic invoicing by Canadian companies. While countries such as Canada and the United States weren’t as quick to adopt e-invoicing, they’re making strides in its implementation. Russia and Asia are a bit farther behind, but in the process of catching up as governments make the push to implement this format across the board.
Small businesses to large corporations are independently beginning to utilize the e-invoice format, but it’s not something being applied across industries consistently. It’s now up to governments to work toward a standard of electronic invoicing across the board.
The Benefits of Electronic Invoicing for Businesses
Making the switch to electronic invoicing is beneficial for all sizes of business, even if you’re self-employed. These benefits include:
- Cost reductions across departments – Electronically invoicing your clients means there’s much less time spent by your billing team on tasks that are now automated.
- Time spent chasing late payments is reduced substantially – Again, it’s normally your Accounts Receivables team that’s on the phone or emailing clients concerning late payments. The electronic invoicing system immediately notifies both you and your client when payments are late.
- Cash flow increase – Client invoices, overall, are paid much timelier and, because you don’t have to remember to send anything, there’s no wasted time trying to get an invoice out in the midst of other company business.
- Improvements in security and fraud is minimized – Your sensitive data and that of your clients remains unaltered. No one is able to hack into your system and alter sensitive data or change amounts due on invoices. Due to sophisticated aspects, such as protective SSL and encryption, the data can’t even be read by anyone other than you or your client.
- Customer relationships improved – If an error is found on an invoice, it can be found and fixed much more quickly than with traditional invoicing. You can also communicate faster, meaning both you and your clients are happier. Happy clients are often returning clients – and give great positive referrals – meaning your small business can continue growing.
- Stay competitive – By adopting electronic invoicing in your small business, you can reap the rewards mentioned above, as well as remain competitive among others in your industry. In addition to fostering improved relations with your clients, even your team can feel the difference as productivity soars. Gone are the days of boring, repetitive tasks.
Should Your Business Charge Late Fees for Delinquent Invoices?
While it’s tempting to slap late fees on an invoice that’s been sitting unpaid, be careful. You can only charge late fees or interest if the original contract for products and services allows it. Make sure when you draw up your agreement that you specify the number of late fees that can be charged (usually a percentage of the outstanding balance accruing monthly), and mention the time frame governing late fees as well.
Even if you’re legally allowed to charge them late fees, you may find you get paid quicker if you offer the customer incentives for paying (such as a discount if payment is received within a short time frame), rather than threatening the penalty of late fees.
How to Set Up an Electronic Invoice
- Set up your electronic billing system before sending invoices. To do this, you need to input and save information that eventually goes into the invoice.
- Input your business’s contact information, such as a physical address, website link, contact information, and preferred payment methods.
- Add the customer’s contact information from your customer database that includes the person’s name, billing address, phone number, and email address.
- Create a menu of products and services you provide with a basic description of what your company provided along with a price for each line item.
- Select payment methods you accept, such as credit, debit cards and e-cheques.
Online payments make it easy to receive money and may encourage quicker payments from your customers. It’s a convenient option that prevents cheques from getting lost in the mail.Electronic payments are also more secure.
After you fill out all of this information into an invoice, click Send and the invoice goes to your customer’s inbox.
Find invoice templates according to industry here.
Customize Electronic Invoices for Clients
You can also create customized electronic invoice templates for each client. Customization may include adding fields for purchase order numbers, customized product descriptions, and tax rates. Remember to add phrases like “Thank you for your business” and “Please call with questions and concerns” to the invoices, which lets you clients know you’re just a phone call away.
Electronic makes a positive impact throughout all aspects of business across all industries in the future. QuickBooks Online can help you create invoices, customize or choose invoice templates, and accept payments online! Start accepting payments and invoicing today with QuickBooks.