Even entrepreneurs that aren’t particularly tech-savvy are turning to invoicing software. Why? Because it’s quick, simple and helps you get paid faster. All while staying on top of your business accounts.
But before making the choice from all the invoice software options available out there, you should take a couple of things into consideration in order to ensure that you select the best software for your company.
Choosing a software shouldn't be based on the flip of a coin or roll of the dice. There are six elements in particular that every good invoicing & accounting software should offer in order to meet the needs of a growing business:
1. Accrual or cash accounting
Good invoicing software will give you the option to manage your accounts your way. This means that you can select either an accrual accounting method or cash accounting approach. The difference, of course, is how you enter your income and expenses.
Accrual accounting: This approach means that you record financial events as soon as they occur, regardless of whether you’ve received or made any payments.
Cash accounting: This approach means that financial events are recorded only once cash has actually changed hands.
The approach you choose will undoubtedly impact how you pay tax, but both are viable for SMEs under a certain turnover, so choose software that gives you the option to make the decision for your business.
2. A professional invoice template
It might seem obvious, but any software you choose should offer a professional invoice template. This means more than just a basic invoice template that allows you to customise. It also means an invoice template that meets all the legal requirements for your country, is updated accordingly, and offers a variety of options for additional customisation.
This includes: Not VAT invoice
If your business is not registered for VAT, your invoice software should allow for this to be turned off, which means that it will not appear in your invoice templates. You should also be able to add the required ‘This is not a VAT invoice’.
VAT adjustments
If your business is VAT registered and operates in products or services that are VAT exempt or fall under a certain VAT scheme, your invoice template should allow you to easily adjust for these specifications.
Intra-EU reverse charge
If you regularly (or even occasionally) invoice companies or individuals outside the UK but within the EU, your invoice template should recognise that the reverse charge VAT should be applied to any intra-community transactions.
3. Invoice status tracking
It might not seem like a required feature, but it’s one that will certainly make your life a lot less stressful. It’s important that the software you choose be able to update the status of your invoices to help you stay on top of things. This means you should be able to see at a glance:
...that your customer received the invoice ...when your customer viewed the invoice ...whether the invoice has been paid ...or whether payment is overdue
Allowing you to keep an eye on your invoices and track their status with just a glance.
4. Automatic bank reconciliation
It’s a task that most entrepreneurs (and accountants alike!) find tedious but necessary. Payment matching. Good invoicing software will have an accounting component that allows you to upload a bank statement and match corresponding payments and invoices, changing the status of your invoice to ‘Paid’.
Better invoicing software will also make this process as painless as possible, for example an automated programme that matches each payment to the corresponding invoice and all it takes from you is a couple of clicks. Automatic bank reconciliation saves you endless hours of scrolling and matching.
5. Expense option
Invoicing is inevitably linked to your business finances. Clearly, because it’s how your business gets paid. So good software should include the other side of that as well by allowing you to register your business expenses.
To be more specific, the expense side of things should allow you to select the proper category to your expense, apply the proper VAT rate (if applicable), and also allow you to mark an expense as an asset and track depreciation.
6. Financial reports
If you’ve diligently invoiced and recorded your expenses, it’s nice to be able to see the results at the end of the quarter for tax, or even just to gain a better understanding of the financial health of your business.
Good invoicing & accounting software gives you the option of generating financial reports at any time. These can include:
- The profit & loss report
- Your VAT report
- The balance sheet
Having these reports at your fingertips will keep you well armed when it comes to making the right decisions for your business, and help you in continuing to help your business thrive.
Invoicing & accounting software
Debitoor invoicing software provides freelancers and SMEs with the tools they need to invoice and manage their business finances simply, without a background in accounting. Debitoor is intuitive, beautiful and is designed to grow with your business.
