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. The invoicing process itself is related to how a company presents its image to clients, so there is a degree of relationship management involved as well.
But that’s only the beginning of how these applications can differ. Other factors that impact a business’s billing and invoicing needs include:
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:
Billing software organizes and automates the billing and invoicing process. This helps ensure timely and consistent collection of payments and reduces errors due to manual data entry.
A wide variety of industries employ billing and invoice software, including:
Due to the range of industries served, most vendors offer customizable systems that can support various business models, pricing structures and payment types. As such, features can vary significantly with respect to the particular 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. Other organizations, such as a manufacturing company, may charge a client upon the delivery of goods or tangible items.
For companies using time as the main measure of billing, look for software that can track time as work is completed so professionals do not have to guess their total hours logged against a project. For businesses that invoice clients upon final delivery of goods, first ensure the software can track the status of a product as it progresses from the shop floor through shipping.
Some common capabilities of billing and invoicing systems include:
|Time tracking||Assign rates according to project, employee, flat-fee or hourly. Track billable time, import into invoices.|
|Creating invoices||Customize invoices with company logo, payment terms (e.g. upon receipt or Net 30) and client information.|
|Sending invoices||Set up one-time or recurring invoices. Some systems will send alerts when an invoice has been viewed.|
|Online payment software||Send payment reminders, add late fees to overdue invoices. Accept online payments via credit card, automatic bank transfer or payment gateway (e.g. PayPal or Stripe).|
|Reporting||Generate financial statements including expense report, profit and loss, payments collected, accounts aging and more.|
|Integrating with other systems||Integrate with other software systems, such as customer relationship management solution or project management application.|
Of course, different types of buyers will need to consider different aspects of a software system at the time of purchase. For example, small business owners might need a more customizable invoicing system based on their needs. 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.
It's important to note that billing and invoicing functionality could be a module inside of a suite other than one that's strictly accounting. Child care management software includes billing functionality specific to daycare organizations, for example, while salon software offers these features in tangent with Point-of-sale (POS). Or, for medical organizations, vendors such as MediTouch offer medical billing features for inpatient care providers, outpatient providers, specialists and outsourced billing services for health care organizations.
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.
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 it 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.
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). SaaS is becoming more and more widespread for nearly all types of systems. 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.
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