5 best ways to manage small business invoicing

Manually keeping up with invoices can be tedious, and frustrating if clients aren’t paying on time. Small businesses depend on timely invoice payments to manage cash flow, which makes automation—for invoicing and predicting late payments—very important, especially at scale. By following just five steps, you can simplify your manual invoicing and prevent most late payments, while preparing for and speeding up collection of what late payments you do receive.

1. How to choose an automated invoicing platform

Managing your invoices manually can be tedious, and potentially costly at scale due to human error. Using a digital platform with automation features is your best option for staying organized, saving time, and getting paid faster at any business size.

Several small business accounting platforms allow you to send and track invoices, as well as accept payments and run profit and loss reports. These include QuickBooks Online, Freshbooks, and Wave. Regardless of which platform you choose, automating your invoicing process will help you ensure all invoices go out on time and monitor your cash flow by tracking payments.

9 benefits of automating your small business invoicing

One analysis of how organizations send and receive electronic invoices identified nine significant advantages to e-invoicing compared to manual invoicing:

1. Business process automation
2. Faster processing of invoices
3. Faster delivery of invoices
4. Improved business effectiveness
5. Reduction of employee time
6. Reduction of costs
7. Business process tracking
8. Increase of productivity
9. Lower error rate

The results were extrapolated from a survey of organizations in Slovenia, where B2G e-invoicing was mandated in 2015 and B2B e-invoicing will become mandatory in 2027.

2. How to clarify payment expectations with invoicing clients

Regardless of whether you run a sole proprietorship or a business with 100 employees, make sure every new client understands and agrees to your invoicing policies. Discuss both sides’ expectations at the outset, before issuing the first invoice to a new client. Some things to address here include:

• Who should you send the invoice to?
• What are the terms and conditions of your relationship? What amount will you be charging and for what products/services?
• When does your client prefer to receive invoices? When do you expect to be paid—and do you expect payment in a lump sum or in intervals?
• How would you prefer to receive payment, and how would your client prefer to pay?

3. What details and links to include on your invoices

Even once you’ve discussed payment requirements with your clients, include as much detail as possible in your actual invoices—you’ll likely get paid faster. Here’s what to include on every invoice:

• Your contact information and company logo. Makes your invoice look professional and provides methods for clients to resolve payment issues.
• The invoice amount. Broken down by what product or service you’re charging for.
• A due date or payment interval dates. Reiterates transaction agreement and removes plausible deniability from late payments.
• A clickable payment link or QR code. Makes payment easy for your client. Offer multiple payment options—such as ACH, wire transfer, credit card, debit card, and check—to reduce barriers to timely payments.

Did you know?

With Bluevine Business Checking, you can easily manage your invoicing and incoming payments, checking balances, and outgoing bill payments in one intuitive platform—no need to juggle multiple banking apps.

4. How to automate late payment reminders

If you’ve followed the steps above and your invoice still hasn’t been paid by the due date, you’ll need to follow up with your clients. Your automated invoicing software should include the option to schedule automatic reminder emails as due dates approach or pass. Consider attaching a personal note to reminder emails sent after the due date has passed, including a friendly reminder that you haven’t received payment for the completed work.

If your client still isn’t responding to emails, call them or your contact at their company. If you don’t hear back from them, contact their payroll manager (if they have one). Your automated invoicing platform should include payment tracking, so always double-check that your invoice was received and opened before escalating.

5. Planning ahead for missed payments

Missed payments will happen, but it’s important not to let them become a drain on your business. Similarly, if a client misses a payment, there are steps you can take to prevent future late payments:

• To prepare for missed payments, diversify cash flow streams and maintain an emergency cash reserve
• If your client has missed a payment, request upfront deposits on future purchases or impose late payment penalties

To plan ahead for outstanding invoices, establish a late payments policy in writing when onboarding new clients, and seek legal counsel if a client continues to avoid payment without responding.

Small business invoicing FAQs

Why is invoicing important for small businesses?

A crucial part of cash flow management, invoice management helps small business owners to track income, simplify tax filing, and establish trust with customers. Use an invoicing software to automate billing and reminders, and track payments—this reduces manual work, eliminates invoicing delays, and helps keep your finances organized.

What information should I include on an invoice?

Small business owners and freelancers should always include the following when sending an invoice:

• Invoice date
• Invoice number
• Payment terms (amount, due date, intervals, etc.)
• Your business logo
• Your business information
• Customer’s information
• Itemized list of goods sold or services rendered
• Any notes for the recipient