How to set up a small business billing system

As a small business owner, getting paid is integral to your business’ success. 

After all, if you’re moving tons of product but not getting payments on time, your cash flow and ability to operate will be negatively impacted. The billing software you choose can automate back-office tasks and reduce the number of late payments you receive. In turn, this lets you prioritise business growth rather than spend hours manually tracking down late invoices or inputting information line by line. Great accounting software streamlines your business processes and keeps your books in order.

Keep reading for comprehensive explanations of billing systems and what to focus on when comparing different solutions. Or you can jump directly to a section you’d like to learn more about.

What is a billing system?

At its most basic definition, a billing system is the process by which a business bills and invoices customers. Billing systems often include payment software that automates the process of collecting payments, sending out recurring invoices, expense tracking, and invoice tracking.

Purpose of a billing system: Why is a billing system important?

Billing software helps ensure that your customers have a streamlined way to pay for goods and services.  

Billing services are critical for small businesses because they offer:

• Administrative control and supervision over payments and payment tracking

• Payment and payment-agreement transparency between your small business and your customers

• Ability to manage your company’s cash flow more easily than manual invoicing

• Billing process automation that helps reduce errors automatically by compiling costs and estimates

• Ability to optimise business operations and reporting practices

How to set up a billing system

Small business billing systems include necessary features like payment tracking, integrated payment processing, accounts receivable, accounts payable, and many more. You can learn more about the most critical components of a billing system in the sections below.

Data input

When you’re setting up your billing system, it’s important to be able to create customer profiles. You’ll need a place to input important details like customer or client names, billing addresses, and terms of payment. Having this information on hand helps with your customer relationship management (CRM).

Besides customer information, it’s also crucial to record and verify information about third-party payers like insurance companies. Smart accounting systems allow you to both input and verify this kind of information.

In addition, you’ll want a billing system that allows you to store product and service information. Depending on your business, this might include prices, quantities, descriptions, and discounts.

The ease of inputting this information is paramount because you don’t want to spend an excessive amount of time figuring out an inefficient billing platform. Usability should be a major feature to look for when you’re evaluating different billing solutions.

Billing codes

Billing codes are particularly important for tracking money and categorising the products or services you offer. Codes might identify consultations, supplies, products, devices, services, or equipment. You can also leverage billing codes to assess how you spend your resources and time. Recognising larger price patterns and resourcing needs can help when you grow larger and need to focus more on enterprise resource planning (ERP).

Integrated payment processing

It’s always a good idea to accept as many payment methods as possible. Your customers might pay you in cash, by check, through an online payment system like PayPal or Stripe, or by credit or debit card. It’s in your best interest to provide customers with flexibility in the payment methods you accept.

Payment tracking

In the UK, a majority of invoices are paid late, but this is not always the consumer’s fault. In fact, payments are often late because of inaccurate invoicing.

To limit delinquent payments, you can configure your billing system to remind you of approaching due dates. This prompts staff to send out payment reminders for customers who have an impending due date.

Your billing system should also make it simple and straightforward to find and contact customers with delinquent accounts.

Some invoicing solutions even allow you to manage collection services for past due debts directly from the billing system.

Safety and security

Any kind of invoicing or billing system software will access sensitive bank and financial information that might include credit scores, income, or Social Security numbers. Since this information is private, it should only ever be accessed by authorised users who have permission to do so.

If you accept credit card payments, you’ll need to ensure that your billing platform meets the payment card industry standards. This includes regular updates to enhance the overall network security.

How to use QuickBooks to manage customer billing

QuickBooks is an excellent invoice software and accounting software that seamlessly integrates with your workflow and offers robust functionality. QuickBooks also automates many manual aspects of the billing process. As a result, you save time and resources. Below, we’ll dive into some of the main benefits of using QuickBooks for your small business accounting needs.

Customise your invoices

It’s important to send out professional invoices that exude professionalism. Luckily, with QuickBooks you can personalise your own invoice template with your company’s logo and colours.

You can also set up recurring invoices with customers that you bill regularly.

Add billable hours

You can automatically add billable hours to invoices with Google Calendar or QuickBooks Time. This is especially helpful if you work as a freelancer or contractor.

Get real-time notifications

With QuickBooks’ instant notification system, you’ll know exactly when customers view their invoices and get real-time alerts when they pay. You can also use automated payment reminders.

Automatic matches

With revenue recognition, QuickBooks automatically matches payments with invoices so your books are always in order no matter what payment method your customers choose.

Accurate invoices

You can customise and send multiple invoices to your clients without relying on manual billing processes.

Flexible pricing

QuickBooks Online uses a subscription-based pricing model. Different pricing levels match your business model and needs whether you work with freelancers, contractors, or clients, making QuickBooks a configurable accounting system that provides you with everything you need to track payments and organise and manage your books.

Takeaways: Billing systems and your small business

Getting paid is an incredibly important part of ensuring that your business runs smoothly. Having a well-organised billing system is one of the best ways to send invoices and receive payments for products or services rendered. Accounting software like QuickBooks allows small business owners to keep their payments, invoices, and other essential accounting elements organised. And the less time you spend on back-office tasks means more time to spend on what really matters: growing your business.

We hope you’ve found this article about billing systems helpful. Our guide to starting your own business in the UK can help you grow your business further - simply fill out the questionnaire to find out where you’re at in your business journey and what your next steps are.