Historical data from the US Bureau of Labor Statistics reveals that around 20% of new businesses close down before their second year, 45% on their fifth year, and 65% on their tenth year. Of all the businesses that open, only around three businesses make it to 15 years or more.
Cash flow problems, particularly lack of working capital, remain among the top reasons businesses fail. To ensure good financial standing, business owners and managers should look into the efficiency of their invoicing and billing process.
Being the source of revenue, the billing process is vital to the financial health and existence of any business. Proper billing ensures timely and accurate collection of revenue which can be used as working capital.
For years, businesses have relied on manual process wherein employees complete an invoice form and send it to the customer. While it is generally effective, it can’t be denied that it is prone to errors such as incorrect transaction details, invoice numbers, or billing cycle faults. These clerical faults can cause undue delay in collections and payments, customer disputes and dissatisfaction, and ultimately, frustration and stress.
Fortunately, there are electronic billing systems that automate and speed up this process. It removes the bottleneck, minimizes the margin of error, and significantly improves efficiency. Although there are numerous billing software solutions available today, not all of them are the same.
It is crucial to choose a billing system that is responsive to your needs. Below we take a look at some tips on how to choose the right billing software for your business.
1. Understand your needs
Not every business has the same business process and billing needs, hence, it is important to first know yours. Some businesses might just need simple software to track and manage invoices. Others might need comprehensive accounting software that is integrated to other systems.
Billing needs depend on the size of the business, complexity of its process, and volume of transaction. You should also consider access to information, such as who will use it, how often, what reports are needed, and where it will be accessed. These are just some of the needs to evaluate when choosing enterprise billing software.
2. Set your budget
Your budget is another crucial consideration that can influence your purchasing decision. Software developers often offer two payment models: upfront, one-time payment or monthly, subscription fee.
Billing software hosted on-premises is paid up front. Usually, the price tag is hefty but you won’t have any recurring fees unless it’s time to upgrade. Meanwhile, cloud-based software has subscription plans that you can pay monthly, quarterly, semi-annually or annually. There are also full enterprise suites that include accounting and invoicing capabilities.
Carefully read the fine prints to prevent any hidden charges. You should also consider the potential costs in the future, such as upgrade fees or technical service bills. Don’t just look into the upfront costs but also the future maintenance costs.
3. Choose industry-specific software
As mentioned above, there is no one-size-fits-all billing solution. Look for industry-specific billing software that meets your unique business needs.
If your company is in the healthcare field, perhaps you need software that is equipped with insurance and medical coding capabilities. This ensures accurate and timely billing. If you are in the retail sector, your needs are completely different and a healthcare billing system is not compatible in your industry. You might want to consider a program that is linked to inventory.
Better yet, ask around to get ideas. Ask recommendations from your accountant or colleagues within the same industry. They can give you ideas on reliable billing software they currently use. If possible, ask to visit their workplace to see how their invoicing system works and whether it matches your business processes.
4. Compare different software suites
Don’t sick with just one software system. Look for several off-the-shelf software packages and compare their specifications. If you plan to develop custom software, ask quotations from various developers.
Carefully examine the packages and what’s offered. You want to know about the type of information included in the invoice, such as company details, line items, and other sections. Also check what the basic functions of the software are. It should include editable formats, invoice duplication, scheduled or automatic sending of invoices, notifications for late payments, feature for managing and tracking invoices, and reporting functions. Likewise, compare the advanced options, such as remote access or a mobile version, which you can use on the go.
5. Compatibility with existing system
If you already have an existing IT system, choose billing software that is compatible and can be integrated to it. Ideally, the invoicing software should link to other accounting databases and programs, and other office software.
The ability to access information across the IT network streamlines business processes, reduces errors, and saves on data entry work.
6. Ask important questions
When choosing a billing system, ask yourself the following questions.
- Is the system user-friendly?
- Is the price worth the features and services? Are there hidden costs?
- Does the software have security features?
- Can it be customized or upgraded to meet the business needs?
- Does it have a sound database back-up function?
- Does the developer offer initial training and technical support?
These are just a few important questions. Feel free to ask queries relevant to your needs. You should also ask to have a free demo to see how the program works.
Cash flow problems remain the leading cause why many small businesses shut down – and, surely, you don’t want your business to be among them. Keep your revenue streams healthy through proper billing and invoicing.
Billing software can help avoid all the hassles of sending and managing your invoices. But you don’t just go for any system, use the tips discussed above to evaluate the best software package for your business.