Billing and Invoicing Software Buyers Guide
This detailed guide will help you find and buy the right billing & invoicing software for you and your business.
Last Updated on November 16, 2023The billing and invoicing software market is highly variable, especially considering the ways different organizations operate their accounting workflow and billing processes. Some organizations use the billable hours model, while others bill by the percentage of project completion. Also, the invoicing and billing process is related to how a company presents its image to clients, so there’s a degree of relationship management involved as well.
But that’s only the beginning of how billing software applications can differ. Other factors that impact a business’s billing and invoicing needs include:
Size of the customer base
Method of invoice transmission
Length of the billing cycle
Time frame of processing payment
A wide range of billing and invoicing software tools is available on the market, but it’s not easy to find a billing system that perfectly fits all of these categories. This guide will help you understand the various factors you must consider when shortlisting an invoicing and billing software solution.
Here’s what we’ll cover:
What are the key considerations of billing and invoicing software?
What are the market trends of billing and invoicing software?
What is billing and invoicing software?
Billing software organizes and automates the billing and invoicing process. It ensures timely collection of payments, tracks multiple invoices, flags any unpaid invoices, and reduces manual data entry errors.
Billing and invoice software is used in various industries including utilities, telecommunications, and professional services firms such as legal and medical billing services.
Due to the range of industries served, most vendors offer customizable systems that can support various business models, pricing structures, and payment types (e.g., ACH payments, recurring payments). Features can also vary significantly based on the organization the software is meant to serve.
For example, it’s common for law firms to bill for the time spent working on a project. A manufacturing company, on the other hand, may charge its clients upon the delivery of goods or tangible items.
If you use time as the main billing measure, look for software that tracks time as your tasks are completed, so you don’t have to guess the total hours your team members have logged against a project. And if you bill clients upon the delivery of products or items, select a software tool that can track the product status as it progresses from the shop floor through shipping.
Creating new billable entries in Bill4Time (Source)
Common features of billing and invoicing software
Different vendors offer different features as part of their billing and invoice software. Selecting software with the right features is easier when you know what the common features are and what they do. Here’s a look at some of them:
Time tracking | Assign rates based on the project, employee type, or billing cycle. Track billable time, and export timesheets to create client invoices. |
Creating invoices | Customize invoices with your company logo, payment terms and conditions, client information, and more. |
Sending invoices | Set up one-time or recurring invoices. Some systems will send you a notification when an invoice has been viewed by the recipient. |
Send payment reminders, and add a late fee to overdue invoices. Accept online payments via credit cards, automatic bank transfers, or payment gateways (e.g., PayPal, Stripe). | |
Reporting | Generate financial statements and reports, including expense reports, profit and loss statements, payments collection reports, and accounts aging reports. |
Third-party integration | Integrate your billing software with other software tools such as customer relationship management (CRM) and project management software. |
What type of buyer are you?
Before you start evaluating billing and invoicing software options, you'll want to know which buyer category you belong to. Most buyers belong to one of the below categories.
Stand-alone system buyers: Some buyers demand a high level of customization and flexibility in their billing solution. These buyers are often focused more on billing than other business processes and may simply need a stand-alone system. With a stand-alone tool, they can focus on their unique billing needs and handle other business processes differently.
Integrated system buyers: Some 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.
Buyers with unique billing requirements: These buyers have such unique billing processes that they need software tools designed exclusively for their industries or line of business. In the most extreme cases, they need to build their own systems or outsource the software development process to a third party for custom work.
What are the benefits of billing and invoicing software?
While some benefits of billing and invoicing systems may be clear from our discussion above, we've listed the most notable ones in this section.
Avoid missed or late payment: 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 or delay a collection, thus staying profitable in the process.
Provide a summary of bills and invoices: A billing and invoicing software solution offers a centralized dashboard that shows the real-time status of your bills, invoices, and monthly estimated revenue. Some billing software systems also track when your clients open their invoices, which you can view in real time on the dashboard.
Eliminate paperwork: Manual billing and payment processing involves a lot of paperwork. Moving your billing, payment, and invoicing online ensures you don't have to print anything because all documentation is indexed, archived, and stored electronically. This helps your business cut down on paperwork as well as manual efforts.
What are the key considerations of billing and invoicing software?
Listed below are some factors to consider when purchasing a billing and invoicing system.
Mobile app availability: Check if the billing and invoicing software you’re planning to purchase offers mobile apps for iOS and Android devices. A mobile app will let you create and send invoices to your clients, even if you’re offline or have limited access to the internet. Data collected offline will sync automatically once internet connectivity is restored.
Customer support: Inquire about the type of support provided by your shortlisted vendors: 24/7, 24/5, or only during business hours. Also, verify if they offer your preferred support channels, such as email, phone, or live chat. Support services will help fix any software issues that can lead to delays in receiving payments from clients.
What are the market trends of billing and invoicing software?
Businesses looking to invest in a billing and invoicing system should keep the following market trends in mind as they evaluate solutions:
Software-as-a-Service (SaaS)-based billing systems are gaining popularity. SaaS-based billing systems are gaining widespread prominence among businesses due to benefits such as low upfront costs and easy implementation. Consider using a Sa aS solution if these advantages are important to you.
The use of artificial intelligence (AI) is expected to increase in billing and invoicing systems. AI technology is expected to play a critical role in the automation of billing and invoicing processes. AI can help identify billing frauds, reduce errors, and automate the billing settlement process. Due to these benefits, the use of AI-based billing and accounting software will continue to grow in future.
Note: The application selected in this article is an example to show a feature in context and isn’t intended as an endorsement or a recommendation. It has been obtained from sources believed to be reliable at the time of publication.