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Small and medium-sized businesses contribute majorly to the growth of an economy. Yet with resources and tight budgets, many businesses continue to struggle with their invoicing operations. Whether it be invoicing through spreadsheets and paper-based methods, or struggling to optimize an invoicing software solution, businesses have been forced to adapt to digital modernization. Rapid digitization has only intensified within the last few years, creating a wider range of invoicing challenges for small businesses.
According to a BizSugar Survey, 36% of SMBs manage their business finances manually or on paper. With time allocation and errors as core issues in manual processes, the larger problem of finding funds and resources to afford costly invoicing software remains at the center of everything. And with businesses needing to digitize in order to advance, manual methods are less adaptable to the current work environment.
However, with the right systems in place and in budget, small businesses can optimize their accounts receivable systems so they can pay accurately and quickly. In the long run, if you can streamline invoicing your business will continue to grow in a wavering market.
Biggest challenges faced by small businesses
|1||Manual method headaches and limitations||
Many small businesses use manual methods such as Word documents or spreadsheets to create and manage invoices, yet this process eats away at time. For example, a user may have to save the document as a template, or save multiple documents on a desktop and then send an attachment through an email.
Additionally, manual methods limit flexible payment systems. When receiving a payment from a client, the business will have to manually update the record which will take time. On the contrary, using an invoicing system allows the business to connect to a payment gateway that updates the payment automatically. This is why manual processes tend to kill efficiency and create more opportunity for errors to be made.
|2||Payment collection challenges||
It can be uncomfortable for business owners to remind their customers to pay when a payment is past due. There’s a fear of straining the relationship with the customers resulting in customer churn. Unfortunately, manual processes and paper-based methods don’t allow for automated payment reminders, which eliminate uncomfortable interactions.
|3||Difficulty tracking billable time||
For actions such as time sheet invoicing and project invoicing, businesses must provide bills with the amount of time they’ve spent on services. Unfortunately, it can be a challenge to track those hours and bill accurately. What tends to happen is business owners will under bill, which ends up costing the business huge amounts of money in the long run. Contrarily, some businesses will over bill, which will leave customers feeling alienated and wanting to seek services elsewhere.
|4||Keeping up compliances||
Staying up to date with tax laws, and the specific tax rules for each country, especially with new compliances and changing ones, can be challenging when businesses use manual invoicing processes or just don’t have the resources. Using an invoicing software that updates new tax slab percentages and any other regulatory requirements will save a tremendous amount of time for small businesses and save them from costly penalties accrued from the government.
With so much to keep track of, companies can feel overwhelmed with where and how to streamline invoicing. Below are four ways businesses can start to ease the burdens of invoicing cost and time and streamline invoicing in their business.
4 ways for businesses to streamline invoicing
It’s no secret digitization has rapidly increased in the last year and-a-half and invoicing is no different. When shifting from manual and paper-based methods to cloud-based invoicing software, SMBs will reap the benefits of slashing time spent on invoice creation, eliminating copying and pasting, and fewer errors.
Online invoicing software allows businesses to have a record of all their sales transactions in one place. Additionally, it allows companies a log of every change made to the record in the application, which allows for a complete audit trail of their accounts receivable. It also allows companies to create tasks such as issuing refunds, optimizing the time it takes to send estimates. Having all your transactions recorded and accessible readily will allow for efficiency and more accurate information, a critical requirement when dealing with finances.
If a business has already digitized their invoicing, automating when possible will eliminate busy work and save time. Businesses can automate recurring features such as payment reminders, and recurring invoices. To take it a step further, recurring payments from customers and recording recurring expenses can also be automated for efficiency. Automation drastically reduces time spent on invoicing in other ways like turning an estimate into an invoice, converting time entries into bills, rebilling an expense in one click, all without having to re-enter information.
|3||Invoicing with collaborative features||
In a traditional office setting, more information is exchanged through face-to-face interactions. With the pandemic spurring work from anywhere, many businesses have struggled to keep collaborative efforts as strong as they were in person. Manual methods only increase collaboration difficulties with copy and pasting, attachments, and more. Businesses should seek out invoicing solutions that allow for easy collaboration such as the capability of sharing comments in each transaction. By using a platform that includes built in collaborative features, employees can work alongside one another and enhance productivity.
Another issue of sharing information back and forth, whether be through email or spreadsheets, is privacy. The challenge lies in making sure specific team members have access to sensitive financial information, while others don’t However, online invoicing tools with collaborative features allow businesses to set specific role-based access to define what each person can view and modify.
|4||Customer portals for enhancing customer experiences||
Customers are the bread and butter of business, so creating an optimal invoicing process will only add to customer loyalty. Some invoicing systems include client or customer portals, which allows customers to get a clear view into their purchase history, as well as interact with the business. For example, if a business is selling a good or service and the client has access to a customer portal, that client will be able to see all their invoices that have been paid and view the invoices that are still open. Additionally, a client portal can be utilized to approve estimates, add comments, and answer client questions to eliminate email back and forth and unnecessary phone calls.
While many of these points to streamline invoicing may sound appealing, not all businesses have the finances or resources to digitize their invoicing.
Recently, Zoho decided to make their invoicing solution, Zoho Invoice, free indefinitely.
In order to grow and scale, small businesses must modernize all aspects of their business, and invoicing is no different. Unfortunately, that can be difficult with limited budgets and resources, which are even more heightened from economic setbacks caused by the pandemic.
But when you streamline invoicing, you can focus on automating and creating better customer experiences, all without adding budget or staff. Seeking out a solution that aligns with the needs of your business will allow for innovation and growth on a larger scale.
Source: Small Business Trends