The billing and invoicing software market has especially high variability, especially considering the ways in which vertical markets differ. Some organizations choose to bill by the hour; others may bill by project percent completion. But that’s only the beginning of how these applications differ. The invoicing process is related to how a company presents its image to clients, so there is a degree of relationship management involved as well. Other factors include the size of the customer base, method of invoice transmission, time frame of payment collection, and processing of delayed or late payments. It’s not easy to find the system that fits all of these categories appropriately for a particular buyer, but this guide can make the selection process easier.
Here’s what we’ll cover:
What is Billing & Invoicing Software?
Billing software organizes and manages the billing process. Most vendors offer customizable systems so that organizations can bill according to their pricing model. To ensure the ease of invoice delivery, a billing software program can include a feature for converting invoices to a uniform file format and sending it through email immediately. This saves paper and ensures that invoices will be distributed effectively through a high degree of automation and organization. The automation can also help in the case of a routine payment system. Software programs can automatically generate and transmit an invoice at a pre-set time to a specific client.
A wide variety of industries employ billing and invoice software, including utilities and telecommunications providers, architects, freelancers, and professional firms such as legal or medical services. The key features of a particular type of billing and invoice software vary significantly with respect to the particular organization the software is meant to serve. Many companies, such as law firms, use billing software to keep track of time as a measure of payment owed.
For companies using time as the main measure of billing, software can log time as the work is completed so that professionals do not have to guess their total number of hours. Billing and invoice software sometimes comes with several different templates to choose from for the appropriate business image. For any given industry, there exists a software system which can make the billing and invoice process easier in the correct way.
Of course, different types of buyers will need to consider different aspects of a software system at the time of purchase. Here are the main types of billing and invoicing software buyers:
- Stand-alone buyers. Some buyers demand a high level of customizability and flexibility in their billing systems. These buyers are often focused more on billing than other business processes, and may simply need a stand-alone system. This way, they can focus their purchase on their unique billing needs. Other business processes can be handled differently.
- Integrated system buyers. Other buyers need a billing and invoicing module that’s part of a larger accounting system. These buyers prefer a holistic software experience, in which billing and invoicing modules can automatically log collected payments into the accounts receivable portion of the general ledger. These buyers usually value specific billing functionality over integration with other systems.
- Highly unique buyers. These buyers have such unique billing processes that they need tools designed exclusively for their industries. In the most extreme cases, these companies need to build their own system or outsource the building to a third party for custom work. Utilities companies often fit into this category.
Market Trends You Should Understand
- Software as a Service (SaaS). SaaS is becoming more and more widespread for nearly all types of software. The benefits are quite compelling; they include lower upfront cost, easier implementation, and often a more user-friendly interface. Consider seeking out a SaaS solution if these advantages are important to you.
- Changes to billing methods. Many industries, such as professional services organizations, undergo adjustments to their billing procedures due to market pressures. If you are in a volatile industry in terms of billing methods, consider a solution that has flexibility in this area - multiple options for billing schemes is an important consideration for some.
Benefits & Potential Issues
Buyers who successfully implement a billing and invoicing system can expect the following benefits.
- Fewer late payments. By streamlining your billing and invoicing needs with the right software system, you’ll find that it’s much easier to collect payments on time. Keeping your information organized empowers you not to miss a collection, staying profitable in the process.
- Fewer missed payments. Of course, when you keep better track of your billing obligations, you’re far less likely to miss a payment. This may seem obvious, but the rewards can be astounding.
- Maintaining a professional image. With a good billing and invoicing system, you can preserve a respectable company image. Most systems support customized logos and other aesthetic improvements to invoices and payment documents. Furthermore, your prompt and organized approach will also reflect well on your reputation with clients.
Potential issues with billing and invoicing software mainly involve human error and system flexibility issues. For example, a user can charge the wrong rate to a large number of clients simply by checking the wrong box or entering the wrong value for a given field. While software usually succeeds in minimizing human error, it does not eliminate it completely.
Secondly, a system that lacks sufficient flexibility can cause trouble for an organization. The legal services industry, as an example, is undergoing structural change in the way clients are billed. Alternative billing arrangements - such as flat rates - are becoming increasingly prevalent. With this in mind, users should consider flexibility in case they must change the way their bills are processed in the future. Similarly, a scalable system is always an advantage; when the software can adjust to the needs of a growing business, operations run much more smoothly. This way, businesses can avoid outgrowing their technology and botching their billing and invoicing procedures.