Whether you’re a small-time freelancer or a major big-box retailer, online invoicing is a smart, relatively easy transition that could make life easier for you, your customers and your accountant. With the IRS breathing down the neck of every business owner, desperately trying to collect every penny it can to offset the unassailable national debt, it’s never been more important to track expenses and income to avoid an audit. Online invoicing can help with this, and it offers a range of other benefits.
No longer will your accountant need to sift through an unorganized bag of receipts. No longer will businesses be unsure if invoices were sent, viewed or paid. Online invoicing tracks this data, helping business owners make informed decisions. By always having up-to-date knowledge of payments, companies know how much money they have available to appropriate to other processes, such as marketing and workforce expansion.
This article will help you decide if your company would benefit from online invoicing. You may be surprised at how many advantages small- and medium-sized businesses (SMBs) can enjoy with automated invoicing.
If you regularly send invoices to 10 or more clients, it’s easy to forget if one was sent or paid. Although you could simply call or email a customer and ask, it’s not very professional.
If a company can’t keep track of its invoices, then what else is being overlooked? If you need to confirm an invoice was paid, this question may cross your customer’s mind.
Online invoicing lets companies track which invoices have been sent and which have been paid. Also, some software sends automated reminders to invoice recipients. Unlike a personal email from the business owed money, these invoices are generic enough to avoid being offensive, but they still get the point across.
With up-to-the-minute reports on expenses and income, business owners save time. How much money is owed by customer A? How long has the invoice been overdue for customer B? Online invoicing lets you immediately answer questions like these, without meticulous calculations, reducing the likelihood bills go unpaid.
What was the company’s income last year? Which customers make payments the fastest? How much money is the company losing in transaction fees, such as with PayPal?
Automated invoicing software provides fast answers to these questions, giving business owners a more accurate idea of the available capital. By tracking customer behavior, businesses can see which clients are most valuable. Understanding the amount of money lost in transaction fees could convince a company to adjust its payment method to bank drafts or even mailed checks.
Detailed Audit Trail
Instead of spending hours or days compiling income and expenses, business owners can generate tax information with a few clicks. The last thing a company wants to deal with is an audit, and if you can’t account for every recorded expense, you may be facing fines or even the loss of your business license.
Automated invoicing helps by recording this information in an easy-to-access database. On top of being able to quickly view these numbers, this organization demonstrates a certain level of professionalism that will be noticed by IRS auditors.
Automated invoicing doesn’t need to be a headache to implement. In fact, many of your customers would be delighted to simplify the process.
The key to making a smooth transition is finding the right online invoicing software provider. Their customer support can guide you through the process from start to finish. And when it comes time to file taxes, the benefits will be obvious: better organization, less wasted time, a higher level of professionalism and useful insight into the year’s transactions.
Automated invoicing doesn’t need to be a major expense, either. In fact, many providers offer free online invoicing for small business.
Take the stress, worry and uncertainty out of collecting payments; with online invoicing, the benefits will be immediate and they will positively influence a range of business processes, which, ultimately, can increase your bottom line.
Image by recreahq from Flickr’s Creative Commons
About the Author: Dane Wade is a financial advisor who audits corporate financial transaction systems for improvement.