What is Invoicing Software? Analysis of Features, Types, Benefits and Pricing in 2024

For every product sold or service rendered, an invoice is made, the first step for you to get paid. Where before payments are mostly cash-based and books are kept manually, leading to erroneous billing and delayed payables, today, we enjoy the vast benefits of financial technologies like electronic transfers, card payments, and online payments which speed up transactions. Invoicing software makes things even faster, especially that process that rings cash to your ears: collection.

If you want to take advantage of the efficiency and productivity these apps provide, you need to know more about this type of software. This article discusses the core technology involved in invoicing software, covering the core features, key benefits, the leading solutions, along with pricing structures, and how the app works. You’ll also learn how online or cloud-based invoicing platforms can offer more powerful and convenient functionalities over on-premise, giving you a much wider choice.

Every year, more and more companies are shifting to electronic invoicing for many reasons due to their advantages over manual, paper-based billing. Specifically, processing time and the associated costs to it are streamlined compared to conventional paper invoices.

The cost and time savings offered by invoicing software do not only come from postage and printing costs as well as reduced deadlines, but also from implementing unified processes for all tasks pertinent to invoicing. This is why around 50% of businesses in North America have added digital collection systems. Moreover, it has been found that one in four companies has also moved to electronic invoicing in 2020 contributing to a project of $6.94 billion growth in the global digital invoicing market.

As always, our guide articles are here to provide you with all the relevant and useful information you’ll need so that when the time comes to acquire the software for your business, you’ll be in the position to make an intelligent decision. If you need to know more about the leading invoicing tools, you can also check out our list of the top 20 invoicing tools in the market today.

What does invoicing software do?

It’s typical for small businesses not to have a dedicated finance department to handle accounts payable. Hence, the task of billing and invoicing is handled by you or a couple of other people. With an invoicing platform, you can do the following key processes:

1. Create and customize invoices. Today’s online invoicing platforms are relatively easy to use than desktop software and are increasingly becoming the preferred choice for many. Not being tied down to an on-premise system allows you to easily access information from anywhere to create invoices and personalize them to carry your brand. Unlike the traditional way where you already have a printed invoice, using this tool allows you to build an invoice from scratch and then populate the line items with customer name, quantity, amount, discounts, sales tax, and others. You may also choose to use templates built into the software and simply fill in the fields. Most applications offer customizing options where you can modify invoice elements or include your logo and other corporate symbols. You can create new clients or import a client’s name from a database and simply click send. You have options to transform estimates approved by clients into invoices and send them also, or you can notify them to get the invoice from an online portal. Sending recurring invoices to long-term clients can likewise be automated.
2. Facilitate billing and payment. Online platforms do not require additional setup and can provide you with the capability to conveniently process payment. With invoicing software you can create an online portal for customers to directly make payments and for you to immediately process them. It also allows you to accept foreign currency payments as billing and invoicing software has features to handle multiple currencies. With invoicing platforms, managing and processing payments had become easy tasks as you have the option to either integrate with PayPal or other online payment platforms, or process credit card payments. Invoicing software usually has features to handle multiple languages, multiple currencies, and tax adjustments. There is also the functionality to track offline payments.
3. Generate reports. You can produce a variety of reports with invoicing software which can assist you to track your finances and monitor which invoices are currently outstanding. You can automate reports generation, export them as PDF files, and share or receive them by email. You can have reports generated and data analyzed to get relevant insights from your billing and invoicing operations such as the number of outstanding invoices, average time for a payment cycle, how many clients pay on time, and how many of them pay late. You can quickly get important information through the software that also manages all your records, transactions and database.

So how does invoicing software work exactly? At its simplest form, invoicing software is designed for automation and accuracy. If your business sends out invoices regularly, it would help a lot to have a system that can take care of repetitive tasks while making sure that everything is organized and accurate. And ultimately, it is designed to hasten the payment process.

What are the benefits of invoicing software?

Aside from efficiently managing all invoice-related tasks, the best invoicing software should be able to extend the following benefits:

1. Minimize late payments – The right software solution can help streamline your billing and invoicing process and allow you to get and receive payments on time. By keeping your data and schedules organized, you can have your collection on the dot and boost your profitability.
2. Minimize missed payments – By accurately monitoring and tracking your billing commitments, you ensure that you do not miss collecting any payments which will redound to a positive bottom line.
3. Maintain a professional image – A good billing and invoicing solution can help boost your company’s reputation. Most software offer support for customized logos and other design improvements to payment documents and invoices. You can put forward an organized and prompt approach to exude a professional image with your clients.
4. Help streamline your accounting and financial processes by automating important tasks. You can cut costs by reducing staff in the invoicing and billing department and save time that is spent on following up and going after the late payers. Likewise, you get to increase cash flow with faster payment of invoices and enhance customer relations with shorter times in fixing and resolving errors.
5. Minimize fraud and improve security. A good invoicing software solution has levels of bank-grade security features to ensure that the entire billing-to-payment process is protected from hacks or prying eyes. This is comparatively more secure than preparing your invoices manually and sending them as email attachments.

What are the features of invoicing software?

Although invoicing solutions vary widely in terms of feature set, the target uses, and pricing, they do share standard functionalities. A respectable app should have the following features:

1. New invoice creation. Allows the creation of clean and professional invoices that can be customized to match your brand. The system should allow for extracting and integrating information from projects, timesheets, and customer records.
2. Customer records creation. A feature that enables you to summarize customers’ personal and purchase information and attach relevant files in a single, centralized database equipped with search filters for easy access to customer records.
3. Credit card processing. The invoicing suite should enable you to save time and facilitate billing by processing credit cards promptly and allowing recurring billing and secure customer management. Some systems even enable auto-billing of credit cards so clients won’t miss a due payment.
4. Predefined templates. How your bills and invoices look is equally important as their accuracy, which is why a system should provide for professional and predefined communication templates. This will not only save you time but also let you personalize your accounting and allow you to carry your brand.
5. Multiple currency settings. This feature enables you to connect your billing and invoicing system seamlessly with the rest of your software architecture, similar to your basic financial operations. Multiple currency settings can be useful for issuing receipts, accepting payments, and managing taxes, and it is of vital importance for businesses with global operations.
6. Receive/send information. The function allows you to send quotes to your customers quickly since there is a centralized database where all their information is stored and readily made available.
7. Invoice, payment, and tax report. A good online invoicing system should eliminate the need for you to use external systems for tax reporting and allow you to perform it within the same system, without losing hours to summarize information.

Why use invoicing software?

All the aforementioned features, benefits, and advantages should be enough reasons for you to adopt invoicing software solutions. But just to drive home the point of what is invoicing software, we go over what it can do for your business with these additional reasons that favor its use.

1. Create invoices faster and more accurately. This is a far cry from what you’re used to creating an invoice from a word processor. A proper invoice document must have an invoice number with a different number on each invoice you send; details of product or service provided; date invoice was sent and date when the product was delivered or service rendered; name and contact information of seller or service provider; name and contact info of buyer; costs breakdown; total amount due; payment details; and payment due date. Imagine inputting all that information manually compared to a system that does everything for you except for the variable elements.
2. Generate invoices anywhere. In relation to the above, companies can create invoices from any location with internet connectivity since online platforms are powered by cloud technology and are web-based. Likewise, with some providers offering mobile apps, you get to create invoices even on the go, something you cannot do with on-premise software.
3. Integrate invoicing with your key business systems. Online invoicing platforms can integrate with your full accounting system for all your financial requirements and can be linked to your payroll, inventory, banking, and reporting modules using one basic source. Some invoicing solutions can even connect directly to e-commerce platforms and shopping carts as well as to external client databases and timesheets.

How much does invoicing software cost?

Invoicing software can be acquired either as a standalone application or as part of a full-packaged accounting and finance software. There is a misconception here with regards to the former. Invoicing software cannot really stand alone on its own because, to be able to exactly perform its functions, it must one way or the other use some accounting processes. Hence, most invoicing tools are bundled along with other features in a complete accounting software solution.

Prices can vary widely – from free apps for small businesses with a couple of dozen customers or fewer, to apps with double-figure pricing per month depending on the number of users and business customers. Most are offered through flexible pricing plans with Basic and Starter to Pro and Enterprise offerings.

Whatever your needs are, there should be a pricing plan to match your business. It is best that you go over the price offerings of vendors and compare and study them carefully. Cost is always a major factor in any software acquisition and a free one may not really have the features you need while a more expensive all-in-one accounting package may fall short of your expectations.

What are examples of invoicing software?

Here are some examples of invoicing software in the market today that are among the most widely used due to their proven efficiency and dependability. The list also includes specialists products, especially for service providers.

Melio

Melio is one of the best invoicing software solutions on the market today. Straightforward and easy-to-use, Melio helps small and medium businesses manage invoice and accounts payable processes in a cost-effective way. The software is web-based so it can be used on mobile devices like tablets and smartphones. Plus, it’s free to use; with no costly monthly fees and no fixed contracts. You can pay via bank transfer or using your credit/debit cards. You can also do online payment transfers even if the vendor only accepts check payments. 

QuickBooks Online

QuickBooks Online is one of the most popular web-based accounting software solutions worldwide. It offers a vast array of insights and organizational capabilities that can help companies keep accounting data organized, including their overdue items, payable bills, accounting notes, contacts’ data, and standard accounting operations. Payment is completely transformed for users with a Pay Now link to connect their invoices to credit cards or bank transfer accounts.

NetSuite ERPVISIT WEBSITE

NetSuite ERP is one of the go-to accounting platforms for many firms of all sizes across different industries. It is prized for its robust accounting module with core features including its general ledger, accounts payable, accounts receivable, fixed asset management, cash management, and tax management. It is a well-rounded enterprise resource planning platform (ERP) with modules for inventory management and order management.

FreshBooksVISIT WEBSITE

FreshBooks is a full financial management suite with great invoicing features. These include modules for client credit, sales tax, offline payment tracking, tracking invoice views, and invoice customization. The product is also very easy to use. All its features are housed in a sleek and neat user interface where all of them are easily accessible with just a few clicks. Moreover, FreshBooks also supports different types of payment methods from simple payments to credit and debit cards.

Salesforce CPQ

Salesforce CPQ is a fully native Salesforce unit. The product offers smart capabilities that help users complete the entire sales process faster. From creating proposals and quotes to sending invoices and receiving payment, it has everything you will need from an invoicing tool and more. Salesforce CPQ also helps users identify opportunities for upselling and cross-selling through its guided selling feature. Moreover, its pricing and discount module allow users to maintain consistency in product and service prices. In all,  Salesforce CPQ streamlines all of the back-end processes involved in completing a sale, including invoicing.

Sage Business Cloud Accounting

Sage Business Cloud Accounting is an easy-to-use yet powerful online accounting solution for businesses. The former Sage One app, this rebranded tool is enhanced to allow seamless financial transactions using any device, at any time, from anywhere. It offers the basic financial functionalities that small businesses need such as invoicing, payroll, tracking, and other accounting processes. This platform also helps your team collaborate more seamlessly with your accountant. It is also regularly updated to ensure that your financial reports remain legally compliant.

Zola Suite

Zola Suite is a web-based integrated practice management platform with great invoicing features. It is primarily used by legal firms and individual legal professionals. It has a built-in billing and accounting module connected to document management and contact management features. Moreover, the platform has a built-in email feature as well. This allows users to schedule appointments quickly without switching to another system. It also has a client portal and a matter management tool to help users keep track of important tasks and cases.

Easy Busy Pets

Easy Busy Pets is a cloud-based total business solution specially designed for pet care professionals. It has robust appointment management features complete with real-time alerts and notifications. Moreover, it has easy-to-use billing and invoicing tools with online payment support to make each transaction a breeze. It also has team management and collaboration tools built-in. Furthermore, it has no-code website builder capabilities with a native CMS for content management. On top of that, it also provides users with a membership management feature to help foster and grow their community.

PayEm

PayEm is a global spend management platform that allows finance teams to automate and connect their finance processes into one platform. With PayEm, users can create requests, invoices, and bills and send payments to more than 200 territories in 130 currencies. They can easily upload vendor invoices and create a bill from an invoice. The software also allows for scheduled payments and automatic amortization of your bills. Aside from its invoicing capabilities, the solution has other components consisting of spend management, corporate cards, reimbursement, find requests, AP automation, procurement, cross-border payments, and reconciliation.

vcita

vcita is an all-in-one business solution with great modules for invoicing and customer service. It is specifically designed for service providers and is prized for its robust scheduling tools and integrated invoicing features. It is also fitted with client-facing touchpoints like a client portal and client interactions management features. It also facilitates sales through easy-to-use scheduling and services menu and HTML contact form generator. Of course, like other top tools it provides support for secure online payments.

What are the common invoicing software issues?

Although considered as one of the more matured technologies in use today, invoicing software has gone a long way from its initial forms as electronic paperless invoices. However, up until the present, this type of software still has some issues that must be addressed, including the following:

No single global standard. Invoicing software operates on a diverse and complex e-invoicing environment which at the moment doesn’t have generally accepted standards. While there is a variety of standards used in different geographies, the global landscape is further messed up by different local variations in taxation as well as e-invoicing compliance requirements. Some vendors and solution providers though that operate globally are able to navigate invoicing complexities. But that’s more of an exception than the rule.

Fail-safe system. No online system is built to be an impenetrable fortress despite having all the necessary security protocols and safety mechanisms. If anything is online, it can be breached by the most determined hacker. You may have to talk it over with the online vendor to ensure the integrity of your online database and information or get the services of third-party security providers to double-check and go through existing safety measures. Also, if you want to be up to date with state of cybersecurity, you may want to acquaint yourself with the recent cybersecurity statistics for 2022.

How secure is your data with invoicing software?

Data security is a top concern for businesses using invoicing software, as it involves sensitive financial and client information. Here are key security measures commonly implemented by invoicing software providers to protect your data:

• Encryption: Many invoicing software solutions use end-to-end encryption to protect data during transmission. This ensures that sensitive information, such as payment details and personal data, is scrambled and unreadable to unauthorized parties.
• Data Backup: Reliable invoicing software regularly backs up user data to prevent loss in system failures or technical issues. Cloud-based invoicing solutions typically store data across multiple servers, offering redundancy and protection from data loss due to hardware failure.
• Secure Payment Gateways: Invoicing software that integrates with payment gateways often uses advanced security protocols like SSL (Secure Socket Layer) or TLS (Transport Layer Security) to safeguard payment information. This ensures that credit card details and banking information are securely processed.
• User Authentication: Many invoicing platforms implement multi-factor authentication (MFA) to verify the identity of users. This adds an extra layer of security by requiring something you know (password) and something you have (like a phone for verification codes) to access your account.
• Access Control and Permissions: Invoicing software often allows businesses to set role-based access control (RBAC). This means that only authorized users can view or edit certain information, helping to reduce the risk of unauthorized access to sensitive financial data.
• Compliance with Privacy Regulations: Many invoicing software providers comply with data privacy regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). This ensures that the software adheres to industry data handling and security standards.

What are the latest trends in invoicing software?

Here are some of the key invoicing software trends to watch:

Government-led adoption. With the realization of more savings and efficient processes, countries in regional areas such as Scandinavia and South America, and specific nations like Brazil and Mexico are spearheading e-invoicing adoption. Catching up are North American and European nations and countries like Canada, Australia, New Zealand, South Africa, and the rest of South America. The governments in these countries are pushing for compliance with e-invoicing requirements. The US Office of Management and Budget has declared that all government agencies had to move to e-invoicing by end of 2018, while the European Union has mandated that Public Administrators have to accept e-invoices by November 2018.

The driver of the real-time economy. Since invoicing software allows for faster and more accurate data between purchaser and supplier, businesses and governments are being driven towards a “real-time economy.” This will allow the purchaser to quickly validate data, and the supplier to immediately respond using invoices that can be modified and sent again in a span of 24 hours. This system will drastically reduce late payments and penalties.

AI and expanded automation of the invoicing process. As invoicing platforms continue to advance, more and more invoicing tasks will become automated. These automated functionalities will practically remove the need to manually monitor financial transactions with every customer and further decrease the possibility of errors, including incidences of late payments. Likewise, AI will enable invoicing to evolve further and elevate this financial process to become a dynamic, strategic element of any business. AI will push this change by automating the reconciliation process, enhancing cash flow, identifying invoice fraud, etc.

Of course, software trends in financial management as a whole are also grounded on organizational cultures and professional development in general. So, it is best to be up to date with the latest accounting software statistics including what’s going on with the profession.

What are the factors to consider when choosing invoicing software?

Just like when searching for any type of software, you need to take into consideration a number of helpful measures to ensure you’re making the correct choice. The following tips are not exhaustive but will definitely help a lot in providing you the key insights to make the right pick.

1. It should fit into your business context. Before you start shopping for your invoicing software, you must first recognize all the existing processes involved as far as billing is concerned. You need to know how the new platform that you’ll choose will help you and your team become more efficient. Instead of playing it safe by opting for a multi-functional invoicing solution, go for that platform that can deliver your specific needs. Why waste your money paying for features that you do not and will likely not use?
2. Its invoices should look professional and easy to understand. The bills you give to your clients do have some critical information, but they should not look dreadful and dull. Because invoices present an image of your business, they must be polished, expertly designed, and clear. If you just cut-and-paste your invoice directly from your spreadsheet app, rest assured your clients won’t consider your business in high regard, much more be able to understand the billing details.
3. It must be safe to use. Aside from the need to look professional, your invoicing platform must also be secured. Only select from vendors with a solid reputation in system security. Never compromise the security of your business and customer data. The invoicing software you’ll choose should have robust safeguards in place.
4. It must also offer solid customer support. All software technologies are susceptible to bugs and issues, both coming from the software itself and from using it. While there are indeed powerful, mature platforms in the market, only partner with invoicing software vendors with reliable and easily accessible customer service. Aside from providing you with useful insights into your financial operations, your vendor should also offer support in the form of knowledge centers, manuals, tutorials, and other resources.

If you’re looking for a full-suite accounting platform for your business, you can read How Much Does Accounting Software Cost? And in case you’d like to start exploring right away for that invoicing software for your business, why not try Melio, one of the best, free solutions in the market. You can start using Melio for free today.

Key Insights

• Automation and Accuracy: Invoicing software automates billing processes, reducing errors and ensuring accurate invoicing.
• Efficiency and Productivity: It streamlines the invoicing process, saving time and reducing the manual effort involved in creating and managing invoices.
• Payment Facilitation: Provides options for online payments, multiple currencies, and credit card processing, making it easier for customers to pay and for businesses to manage payments.
• Professional Appearance: Customizable templates allow businesses to maintain a professional image with branded and well-designed invoices.
• Security: Robust security features protect sensitive financial data, minimizing the risk of fraud and data breaches.
• Integration: Can integrate with other business systems like accounting, payroll, and e-commerce platforms, creating a seamless financial management ecosystem.
• Cost and Time Savings: Reduces costs associated with printing, postage, and manual processing, and shortens payment cycles.
• Scalability: Suitable for businesses of all sizes, from small businesses to large enterprises, with various pricing plans to fit different needs.

FAQ

1. What is invoicing software? Invoicing software is a tool designed to automate the creation and management of invoices, facilitating quicker and more accurate billing processes.
2. How does invoicing software benefit my business? Invoicing software improves efficiency, reduces errors, ensures timely payments, and enhances the professional appearance of your business. It also offers security features to protect financial data.
3. Can invoicing software handle multiple currencies and languages? Yes, many invoicing software solutions support multiple currencies and languages, making them suitable for businesses with international operations.
4. What are some examples of popular invoicing software? Popular examples include Melio, QuickBooks Online, NetSuite ERP, FreshBooks, Salesforce CPQ, Sage Business Cloud Accounting, Zola Suite, Easy Busy Pets, PayEm, and vcita.
5. How secure is invoicing software? Invoicing software generally includes robust security features to protect sensitive financial information, including encryption and secure data storage.
6. What should I consider when choosing invoicing software? Consider factors such as the software’s fit with your business needs, professional appearance of invoices, security features, customer support, and integration capabilities with other business systems.
7. How much does invoicing software cost? The cost varies widely, from free apps for small businesses to more expensive, comprehensive accounting packages. Pricing plans typically range from basic to enterprise levels, depending on features and the number of users.
8. Can invoicing software integrate with other business systems? Yes, many invoicing software solutions can integrate with accounting, payroll, inventory, and e-commerce systems, providing a cohesive financial management solution.
9. What are some common issues with invoicing software? Common issues include the lack of a single global standard, potential security vulnerabilities, and the need for integration with other systems to fully utilize its capabilities.
10. What are the latest trends in invoicing software? Trends include government-led adoption of e-invoicing, the push towards a real-time economy, and the increasing use of AI and automation to further streamline invoicing processes.

By Daniel Epstein

Daniel Epstein is a senior financial research analyst at FinancesOnline and the architect behind our Fintech and ERP content division. His main areas of expertise are blockchain technologies, cryptocurrencies, and the use of biometrics in fintech solutions. His work has been frequently quoted by such publications as Forbes, USA Today, Entrepreneur, and LA Times. With more than 1,800 solutions scrutinized in the last 5 years spent on our team he always prioritized offering readers an unbiased perspective on modern financial technologies.