Online Invoicing for Small Businesses
Online invoicing is when invoices are created and managed online on a website in the cloud, via a web browser. By opting for online invoicing, small businesses are able to simplify the billing management system which leads to enhanced cash flow management.
Advantages of Online Invoicing
Let us now explore the advantages and disadvantages of using online invoicing:
Ease of accessing data
In terms of access, the online invoicing mechanism is highly flexible. Data is able to be accessed anywhere, from the home or office, or anywhere else. Similarly, access can occur on any device, such as a computer, tablet or smartphone. Furthermore, there is no need to worry about operating systems, including Windows, Max OS X, Android, IOS or Linux.
Enhanced Team Collaboration
When using online solutions, it is easier for the team to collaborate in regards to invoicing data. For example, the bookkeeper or accountant is able to collaborate and discuss anything that might be a challenge in terms of billing, collection, accounting or any other aspect of invoicing. A great advantage is that it does not matter where the collaborating teams are located. The entire team is able to access the cloud using the internet and using a basic device.
Automatic Software Update
Operational ease is achieved when using cloud-based online invoicing systems. This is because the service provider is responsible for updating and maintaining cloud functions. So, there is no administrative burden for the business to update and maintain the server or to take care of updates.
Automatic Backups & Enhanced Security
The company data is stored on the cloud server and the service provider is responsible for taking care of the data backup, data security, system updates, maintenance and all aspects of compliance applicable to ensure that the user is protected from any loss or damage of the data.
Cloud data centers implement certain controls such as frequent backup, encryption, physical security, regular audits, data residency, logging and monitoring, and network security, as well as others. For this reason, cloud data centres have top security standards in place to guarantee that your business privacy remains intact. There is no need to cross any administrative burdens regarding data backup and security when opting for online invoicing.
Smooth Execution of the Billing Process
All data processing, such as calculations, installation, syncing, backup and other operations are executed using the system capability of the cloud server. This means that the billing process can be executed smoothly on low-end office hardware. Hence, the business does not need to be concerned with software incapabilities, disk space, system requirements, or any other technical aspects of the process execution. Implementing the cloud-based invoicing clearly makes for a simpler process.
Real-time API Integration
API integration facilitates real-time syncing and processing of the data with other platforms. For example if the invoice is created in the online invoicing program, the content of the invoice is able to be communicated with the payment gateway, via API in real-item, to enhance the efficiency of the billing process.
Disadvantages of Online Invoicing
Following are the disadvantages of using an online invoicing software:
Dependence on the Internet
Any chosen online invoicing system is fully dependent on the internet. Any downtime of the internet service provider will lead to hindrances in the billing process. In order to solve this problem, keeping a backup internet facility is recommended.
Limited Flexibility & Customization
Cloud-based invoicing solutions do not offer completely customized solutions and so there is limited flexibility in terms of workflow customization and automation. Despite this, it is necessary to ensure that the potential invoicing solution that is chosen, can meet any specific business requirements and can be customized to an acceptable extent.
Ongoing Monthly Expenses
When opting for online invoicing, the business must pay for the ongoing monthly expenses. There is no option to purchase a lifetime license such as those offered by desktop software providers. The reason for this is because the cloud infrastructure requires ongoing expenses such as electricity, amortization of servers, computers and hardware as well as salaries for the system administrators, security services, back up and storage, licensing fees, compliance costs and others.
Online Invoicing Solutions for Small Businesses
We will now explore further, online solutions for small businesses, in terms of online invoice generators, online invoicing software and invoicing mobile applications.
Online Invoicing Software
Online invoicing software refers to a web-based software that helps to create and manage invoices in the cloud via a web browser. It offers advanced functions and features that help to automate and streamline the revenue or billing mechanism of the business.
The features and functions just mentioned include, invoice generation, client management, products & services management, delivery tracking, payment reminders, customization, multi-currency support, reports and analytics, API integration and lots of other features.
A great benefit associated with online invoicing software, is that it allows customers to view invoice details online and allows customers to make payments via online payment platforms in simple and easy steps.
In addition to the above, online invoicing software can be integrated with the accounting ledger and operational dashboard. It creates an ease when it comes to tracking and managing receivables balances. These solutions enable the business to automate recurring invoices, payment reminders, and other notifications.
This means that if the business expectation from the online invoicing tool is to execute advanced operations, then it will be ideal to opt for an online invoicing software.
Online Invoice Mobile Application
An online invoice mobile application just means that there is a mobile version of the online invoicing software. If you need to manage your bill processing using a smartphone or tablet then opting for this will be convenient as software providers usually provide smartphone applications to facilitate users in the execution of the overall billing process. Some more advanced features may not be available on the mobile version of the software, However, it is still an optimal solution, as it allows the management of the essential billing processes such as sending invoices and the analysis of the dashboard.
Online Invoice Generator
An online invoice generator is a basic invoicing tool that enables invoices to be generated by using the service provider’s website. In order to use this tool, basic transaction details must be entered into the system to generate the invoice.
Since this is a basic tool, it does not offer any advanced features or allow the storage of data in the cloud for subsequent uses. If your business needs are to generate professional-looking invoices without the requirement of advanced features, then an online invoice generator is ideal.
Comparison Table of Online Invoicing Solutions
The next table compares features of the online generator, software and mobile application:
| Features/functions | Online invoice generator | Online invoice software | Online invoice mobile app |
| Free version | Yes | Yes (Limited) | Yes (Limited) |
| Invoices | Yes | Yes | Yes |
| Invoice Management | No | Yes | Yes |
| Inventory Management | No | Yes | Yes |
| Customer management | No | Yes | Yes |
| Invoice Customization | No | Yes | Yes |
| Recurring invoice | No | Yes | Yes |
| Proforma invoice | Yes | Yes | Yes |
| Quotes/Estimates | Yes | Yes | Yes |
| Debit Note | Yes | Yes | Yes |
| Credit note | Yes | Yes | Yes |
| Send via email | No | Yes | Yes |
| Payment Reminders | No | Yes | Yes |
| Bulk Operations | No | Yes | No |
| Payment Details | Yes | Yes | Yes |
It is important to note that different service providers will have different policies in regards to functions and features. Nevertheless, free versions come with essential invoice generation ability. Advanced or paid versions are expected to provide the more advanced functions and features.
Next will be a discussion on how to choose the best invoicing tool, in line with your business needs and demands.
Choosing the Best Online Invoicing Solution for your Business
The decision to choose the right invoicing tool is considered as one of the most crucial aspects of the billing and management process. The first crucial step, is to understand the business requirements and expectations from the view of the implementation of the invoicing solution.
This understanding involves the considerations of necessary features such as, invoice generation, scalability, integration, compatibility, level of customization, mobile access, multiuser access, automation, reporting requirements, compliance with the standard of revenue recognition standards, among others.
Following will be an elaboration of these features:
Quick invoice generation
The solution must be fast, efficient as well as having the capacity to generate customized invoices quickly. It is important that there must not be any compromise on the working accuracy of the invoice generation, otherwise it could potentially lead to massive interruptions in the billing management process. If your business revenue model is subscription based, then it would be wise to look for a solution that provides the facility to create and manage recurring invoices.
Similarly, to ensure the operational effectiveness of the billing process, the invoicing solutions must be capable of customizing the invoice format and content of the billing document.
If your business use is limited to online invoice generation, opting for a simple invoice generator which is accessible, free and efficient, would be ideal. However, if your business is looking for more advanced options, then selecting an invoicing software would be more appropriate.
Scalability
It may be worthwhile to see if the invoicing solution that you are interested in using, will be able to handle a growth in the business. The online invoicing solution must be able to handle increasing data processing requirements along with the increased business transactions.
This factor helps to analyze the long term viability of implementing the invoicing tool. You may, at the start of the business use a basic version of invoicing software.
Integration and compatibility
You can check to see if the potential invoicing solutions can support integration with external apps. For instance, the business may need to connect the invoicing function with the inventory management tool, customer relationship management tool, accounting software and others. This integration may be vital for seamless business operations. This is why, ensuring that a potential invoicing solution can integrate with external applications, is essential.
If you would like to choose an invoicing solution integrated with other apps, then you may want to consider implementing the invoice software or invoicing apps with API features.
Level of customization
The invoicing solution must be customizable in line with the business requirements. Since each business is different, their business requirements are also different. This therefore means that you will need to understand your expectations from the invoicing solution, as well as the extent of the customization that you need, in order to run an effective billing department.
Access for the multiusers
It is prudent to consider if you need to allow access to multiple users, and if the invoicing software can meet this requirement. In addition, make sure that you are confident about the pricing aspect, as multiuser access may only be part of an advanced subscription, which can often be costly.
Financial reporting requirements and compliance
Ideally, you should opt for the invoicing solution that provides comprehensive and real-time reports for economic analysis and decision-making. You will also be required to consider if the extent of reporting is sufficient to meet regulations and compliance requirements. The invoicing solution should be capable of reporting on customers' evaluating billing trends, monitoring cash flow, providing valuable insights, and forecasting cash collection.
The software interface should be simple and easy to use as well as being easy to navigate through all the features.
It is important to note that the definition of the best invoicing solution changes with each different business. This is because each business is expected to have a different expectations from the invoicing solutions. That is why it is essential to understand your requirements and expectations for the features and functions offered by the invoicing tool.
To illustrate this, as an example, just say that your business needs are to just generate and download an invoice. In this situation, is would be advisable to opt for an online invoice generator, which is free. On the other hand, if you would like advanced features, such as payment integration, automation, recurring billing, and automated accounting, then you may want to opt for invoicing software.
Another important aspect to consider when selecting the invoicing solution is value for money. This necessitates an analysis of the cost and benefits before opting for any specific solution.
Let us now go though the expected cost of online invoicing tools.
Cost of the Online Invoicing Tools
As previously discussed, an invoice generator is available free of any cost. However, this solution is limited in terms of function, as all it does is generate the invoice. On the other hand, the price of invoicing software ranges from approximately $10 per month to $200 per month. This price is dependent on the functions and features that you require. The software offers related services such as payment processing, invoicing management via mobile, and real-time monitoring of payment requests, as well as others.
Usually, the price of the online invoice mobile application is included in the subscription cost of the software. However, some service providers may charge additional fees to activate any application usage.
Are There any Free / Cheap Options for the Online Invoicing Tool?
Yes, an invoice generator is a completely free online invoice-generating tool. There are also no usage restrictions on generating the invoices. However, if your business requires advanced features such as payment integration and payment status monitoring, you must opt for an online invoicing software that provides excellent working mechanics as well as integrated functions and features.
It is also important to note that some service providers provide advanced features in the free version. These features could include, monitoring the invoice status in payment, sending payment reminders, setting recurring invoices as well as others. However, there are usage restrictions regarding sending invoices and adding customers. So, if you are a scaled business with a strong customer base, you should opt for the paid version.
Conclusion
Online invoicing tools help to create and manage small businesses in regards to overall revenue and billing systems. These kind of tools come with advanced functions and features, such as payment gateway integration, real-time reports and dashboards, status monitoring, and the ability to facilitate the customers' payment.
There is a strong need to understand the business requirements in order to opt for an invoicing solution that meets your requirements. This is because each business is different and requires a different set of features and functions from the software.
Generally, there are various benefits offered by online invoicing solutions. These include, but are not limited to, quick and efficient invoice generation, higher scalability, enhanced integration, comprehensive financial reporting, and access to multiusers, among others.
In general, invoicing tools for small businesses can be an online invoice generator, online invoice software and also an online mobile application.
As mentioned, an invoice generator is free and is capable of generating the invoice by having a basic input of transaction details. Online invoice software offers various functions and features that facilitate billing and cash collection. There is also the ability to have access to the invoice software’s features on your phone screen by using online invoice mobile applications.
Pricing is an important factor to consider when deciding to implement an invoicing solution for the business. Free invoicing solutions are available for price-sensitive companies that do not require any advanced invoicing features, along with unlimited usage. One such example are invoice generators, which are entirely free. The unlimited availability of software features depends on whether you have opted for the free or paid version of the software.
Invoicing tools: