Every business owner knows that professional invoices make a great impression on their clients. Small business owners and self-employed entrepreneurs learn very quickly though that creating invoices manually can be time-consuming and prone to errors. The right small business invoice software can help them build invoices quickly and correctly while also speeding up payment.
From automated invoicing to expense tracking and integrated payment options to customisable templates, businesses are making the most of the latest tools to enhance professionalism, ensure timely payments and get up-to-the-minute insights into their finances. With so much on offer, from free cloud-based apps to premium desktop solutions, it can be difficult to choose a software platform to grow with.
Invoice software refers to any software or application designed for the creation, sending and receiving of digital invoices and electronic invoices (e-invoices) and the management of business activities related to invoicing. Invoice software is generally available on all devices including desktops, tablets, and mobile phones. Many are cloud-based, meaning that the application is run from a web-browser and the data is stored on the provider’s servers.
Invoicing software is replacing traditional paper invoicing, and as such carries out the same basic function as the paper invoice. However, this is only a fraction of what invoicing software brings to businesses with the functionality of different software solutions encompassing invoice generation and brand customisation, automation for generating invoice content, and facilities to track payment status of sent invoices and provide reports.
Many invoice software products offer integrated payment solutions, expense and time tracking, financial reporting and integration into other business systems, as well as assistance with compliance for tax and the latest security features to protect business and customer financial data.
The benefits invoice software brings to small businesses are enormous, especially if we consider the specialised invoicing tools on offer for niche business requirements. Small business invoice software aims above all else to simplify and streamline the invoicing process, helping businesses save time, reduce errors, improve their overall financial management, and most importantly, get paid faster.
Automation of invoice filing is a key factor in improving efficiency for small businesses. It reduces errors in invoice generation and all the associated problems it may cause, from upset customers, and delays in getting paid. Fewer errors means more time for small businesses to focus on more productive activities.
Integration into other business systems means having all invoice data available to other business-critical applications like a customer relationship management (CRM) system or dedicated accounting software. The real-time tracking and reports available through some software allows up-to-the-minute data on invoice status and feeds into better financial decision-making.
The benefits to the customer with small business invoicing software are multiple too. The increased professional image generated through customised invoices, timely invoicing and reminders, and integrated payment solutions, add to customer trust and satisfaction as well as reducing late or unpaid invoices.
Understanding the different types of small business invoice software is crucial for businesses. Although trials are available for many software solutions, it is paramount to understand a business’s needs and what each software can provide before taking the plunge. A free solution may work, or a more specialised premium software might be in order.
Available online invoicing software includes free or ‘freemium’ solutions - many with a fantastic range of features for free and paid add-ons or limits in functionality which may be accessed with paid versions. These contrast with paid solutions that range from monthly subscription services to enterprise-level software. The kinds of payment types supported by each invoicing software vary, which is something to consider based on the particular business models and customer bases a company is working with.
Small business invoice software includes applications that can run on phones and tablets, many with cloud-based services, and desktop software that may be cloud-based or locally installed.
When looking for invoice software, certain invoicing features are non-negotiable. As a bare minimum, the ability to quickly generate invoices, enter specific products and services, create prices, and add local taxes are among the most basic requirements. Additionally, most small businesses will benefit from more advanced features to further simplify their financial processes.
Automatic payment reminders
Automatic payment reminders allow companies to streamline their invoicing process. By setting up polite notifications for clients approaching invoice due dates, businesses can ensure timely payments, improve cash flow and enhance efficiency by reducing the need for manual follow-ups.
Late payment reminders
When automated payment notifications don’t work, polite and timely automated late payment reminders allow businesses to gently let the client know that payment is overdue without the need to manually contact the customer about outstanding invoices.
Customisable invoice templates
Almost all small business invoice software lets enterprises create tailored invoices that reflect their brand identity with customisable invoice templates that allow them to bring business invoices on-brand. Adding a company logo and brand colours to an invoice raises the game and brings a professional aspect to the billing process.
Expense tracking and management
Some software allows companies to monitor and keep tabs on unbilled expenses before they are sent to clients. Autoscan capabilities for recording receipts and integration with mobile phone GPS for calculating travel expenses can integrate comprehensive expense tracking into the invoicing process, further streamlining it.
Time tracking and management
Time-tracking features let companies optimise their time management solutions and bill clients accurately for work done. Recording the exact minutes and hours clocked on each project or task and sending these to the invoicing software’s calendar helps to ensure fair compensation for time spent, and contributes to transparent client billing, fostering trust and confidence.
Multi-currency and multi-tax support
For businesses with customers in multiple countries, being able to support the presentation and collection of payments makes it easier for their customers to do business with them. Furthermorel, being able to support the collection of multiple value-added taxes (VATs) from the same software simplifies the process of tax collection and reporting.
Accounting, CRM, and payment gateway integration
The real game-changing time-saver for small businesses is being able to integrate invoice software with other tools used to manage their operations. Typical integrations to look for are connections to popular accounting software tools, CRM offerings, and payment gateway services. Some software providers offer invoicing as a feature of a larger package like accounting software, while others offer paid upgrades.
Being able to click a button to pull customer data for an invoice from a CRM, then click another button to push the invoice into their accounting system, and offer a seamless way for their clients to pay with a payment service integration, reduces the whole process of generating invoices down to minutes or seconds with very little opportunity for error.
Payment types supported
The massive growth in digital payment methods in recent years has contributed considerably to the advantages of invoicing software for small businesses. The inclusion of online payment methods in modern invoice solutions includes credit and debit cards, links to online payment gateways including after-pay solutions, and integration with digital wallets that help ensure swift payment.
Some software provides the facility for bank transfers and the delivery of cheques or cash for customers who cannot pay by other means.
Options for recurring payments or partial payment options are available with some software and some solutions offer automated payment reminders for clients, and currency options for international business. Ultimately, getting paid is much easier than it was in the past with so many options available to facilitate clients in the process.
The differences between free and paid small business invoicing software can be broad in terms of features and scalability. However, the functionality of many free solutions is excellent, offering just the right amount for small businesses with limited budgets and moderate invoicing needs, whereas paid models offer companies with more specific or complex business-requirements the tools to optimise their invoicing practices.
The most proficient free invoicing software for small businesses typically includes invoice generation and customisation, basic reporting and some level of payment integration. They are ideal for small start-ups with straightforward invoicing requirements, yet a need for professionalism and are easy to use, generally running on phones, tablets, or desktops.
‘Freemium’ is a term that describes software that contains limited features that can be expanded or upgraded through payment. Examples might include a limited number of users or a limited number of invoices per period for free, after which payment options start. Taking into account the limitations of free solutions or the hidden costs of freemium software is important as it will affect its ability to scale with businesses.
The market offers a huge range of paid invoicing software for small businesses with the range and complexity of features scaling according to a company’s allocated budget and needs. Businesses with complex invoicing requirements, a need for advanced reporting, comprehensive automation and integration into other business software might consider it.
Scalability is a cornerstone feature for paid solutions offering businesses long-term growth flexibility in expanded functionality and number of users. Similarly, customer support might be a consideration, including help in onboarding for more complex software and active support when problems occur, features not often available with unpaid software.
Data security is another consideration when looking at paid vs unpaid invoicing software for small businesses. Taking into account the payment integration for free software and the levels of security inherent in these services, both paid and free solutions offer good security, although paid solutions will often include much more rigorous kinds of authentication from users to access invoicing software.
Free vs. paid considerations
The key here is functionality vs cost. There are hundreds of options on the market in both the paid vs free categories and the precise needs of a business must be understood before settling upon one or the other. Invoice tracking, scalability, integration, payment solutions, and customer support are primary considerations to reap the most benefits from invoicing software.
A typical reason why free offerings are available is that the provider is making extra money somewhere else, either through paid advanced features, or by inflating the cost of payment services and other transaction fees. A free service may end up costing more in the long run than a paid subscription.
Quadient Impress Invoice
Quadient Impress Invoice simplifies invoice creation using AI to automatically enter invoice data, and includes automation to streamline approval processes. It’s straightforward enough for small businesses to make invoicing easier, while having enough process and workflow customisation to handle the needs of growing businesses. It drives cost savings and efficiency gains!
Xero Accounting
Xero online accounting delivers excellent invoicing capabilities. Its range of features makes it a market favourite, including its integration features that allow companies to make bank connections and reconcile payments, track time for expenses and run basic payroll from the app. It is available for desktop or mobile on a monthly subscription basis.
Wave Accounting
Wave is a free and easy-to-use software that features unlimited invoices, invoice tracking and excellent payment options for clients paying their invoices. Wave makes money by charging transaction fees for payment processing and credit card transactions. They also make money if small businesses use their other accounting solutions.
Sage
Sage is a somewhat more premium invoicing software solution, charging a monthly subscription fee after a free 3-month trial. It offers ample invoicing and reporting capabilities, lots of integration solutions and has excellent and wide-ranging customer support. What's more, for UK businesses, it is HMRC-approved for Making Tax Digital which will be compulsory for all businesses by 2026.
Quickbooks Online
Quickbooks Online is an extensive bookkeeping and accounting software package for small businesses, favoured by accountants and includes fully featured and integrated invoicing capabilities. They are also Making Tax Digital ready.
Zoho Invoice
Zoho Invoice is part of a suite of software offerings for small businesses. They offer very capable online software (cloud software) that helps small businesses send invoices and receive payments, including tracking invoice status, sending reminders, collecting recurring payments, and localised payment gateways. Zoho plans are free for up to 5 users in the same organisation, with some limitations such as the number of invoices that can be sent per year and customisation. Zoho's business model is to attract customers into using other tools like their CRM, Books, Projects, and Campaign software modules.
FreshBooks
FreshBooks is another fully featured, small business focused accounting software package that offers online invoicing. One of their unique features is that they have a free invoice generator that businesses can use at no cost, unless they want to add online payments, personalise the invoice, or send automated reminders.
Square
Square is better known as a portable payment processing system, yet it also includes a free invoice generator. Their invoice capabilities are mostly comparable to other systems, and they also offer a paid version with additional features. It has an advantage in being better integrated with Square as a payment processor, but has less integration with other tools like CRMs.
PayPal
PayPal is another example of small business invoicing software. Its very capable yet simple invoicing capabilities enable businesses to send unlimited invoices and receive payment on one of the world’s best-known and most secure platforms. PayPal makes money off the transaction fees it charges for payment processing.
For any business not already using invoicing software now may well be the moment to adopt. Taking into account the vastly capable free and freemium options currently available, as well as the more specialised paid offerings, in addition to requirements of Making Tax Digital, taking the plunge into using invoicing software and taking advantage of the expense management benefits isn’t simply a good decision, it’s a necessary one.