Imagine a business accepting payment in the form of an “IOU” written on a piece of paper. Their cash register is a shoebox full of these notes.
If you aren’t closely tracking your invoices, this scenario isn’t too far from the truth. Putting a system in place for improving your invoicing is crucial to helping your business make more money and achieve growth.
Understand Your Cash Flow and Get Your Money Faster
Without tracking your invoices, you can’t immediately see when payments are due, who owes you money, and how much you’re owed. Getting a clear and accurate picture of your business’s cash flow is tough. You could end up making late payments or coming up short on bills because you assumed you had more money coming in when you didn’t.
Late invoices could also end up disrupting your business’s cash flow. If you can’t filter through your invoices quickly to view unpaid and overdue invoices, it’s harder to send out timely payment reminders, which means you’re less likely to get paid on time.
Ideally, you should be working with a program that automatically invoices your customers and allows them to pay directly with a credit card or a payment system like PayPal. You can often set up recurring schedules so you don’t have to send invoices manually. Then, you can automatically filter through paid, unpaid, and overdue invoices to get a sense of where your accounts receivable stand. All of this together will ensure that you get paid faster.
Use Invoice Tracking to Monitor and Spur Growth
By keeping consistent records of your invoices, you’ll be able to see how much money your company is generating at any given moment. You’ll also have an accurate picture of how much money your company generated last week, last month, and last year.
Being able to map your revenue growth in real time allows you to set more realistic goals and track your progress more accurately. It also lets you adjust your goals more frequently.
For example, if you set a goal to hit $50,000 in revenue for the month of March and notice you’re already close to it by the middle of the month, you can adjust your goal to a higher number, motivating your business to achieve its full potential.
How to Track Your Invoices
The key to tracking your invoices closely is working with the right program. A variety of options exists, but the main features you want to consider when looking at different bookkeeping solutions are:
- Price: Is there a free plan available? What does the premium plan offer, and how much does it cost?
- Capacity: How many clients can you invoice at each plan level? Does it offer unlimited invoices and transactions?
- Cloud vs. desktop: Is the program web-based or do you have to download software onto your computer? Is your data stored in the cloud or on your server?
- Payment support: Can clients pay directly through the program? If so, what payment methods are supported?
- Interface: Do you find the interface easy to use? Does the program organize and track your invoices in a way that makes sense to you?
These invoicing features are the most basic, but a good accounting app should also include options like cash flow management tools, the ability to run monthly financial reports, and even tax assistance. Some programs even offer dedicated bookkeepers at certain subscription levels. It’s best to go with a program that can do all of this together rather than relying on several different systems to handle your business’s financials.
Because most accounting apps allow you to create an account for free, you can sign up for several to get a feel for the way each one works before making a decision. Every program has its pros and cons, so look for accounting software that’s best for your business. The easier it is for you to use, the more likely you’ll stick with it.
It makes more sense to work on a task little-by-little rather than letting it add up over time until you’re overwhelmed. Whether you track your invoices as they’re sent out or go back through them during tax season, you’re going to have to do it eventually. By getting on top of them as they go out, you save your business time and money in the long run.