Best Invoicing Software for Small Business in 2024

Invoicing software for small business typically come with a wide variety of features to meet the needs of different verticals. Through these platforms, small businesses get various options for sending invoices, collecting payments, and processing delayed payments. Whether businesses bill by the hour or after project completion, business invoicing software ensures that companies can get started with automated invoicing without much hassle. This also helps streamline invoicing workflows, improving productivity and profitability. This buyer’s guide aims to help you choose the best invoicing software for small business.

It’s always a good idea to sign up for a few free trials of invoicing software for small business. In this way, you can compare different platforms’ features and capabilities without having to make a significant investment. Testing various invoicing software also helps you gain a better understanding of what is invoicing software and how to use it for your business’ needs. Some top-ranked invoicing software you can try for free include Melio, QuickBooks Online, FreshBooks, Salesforce CPQ, and Sage Business Cloud Accounting.

Buyers of invoicing software for small business typically fall into one of three types:

• Standalone buyers – Many small business owners need invoicing software that offers a higher degree of customization. These buyers are often interested in standalone software that focus on invoicing features that can meet their particular needs.

• Buyers of integrated systems – Other small business owners look for invoicing capabilities that are integrated into a bigger, more comprehensive platform. These platforms often come with invoicing features that are automated, so users don’t have to manually create invoices for their clients. Examples of such software include CRM systems, sales software, and business management tools that can automatically pull client details from databases and track payment status.

• Unique buyers – In some cases, small business owners also need specific invoicing tools that can meet the specific needs of their industry. As such, many of these buyers are looking for highly flexible or customizable invoicing solutions.

• FreshBooks – A popular invoicing software with features that can help small businesses get paid faster. Through the app, users can create invoices with a few clicks, set due dates, and track invoice interactions.
• Salesforce CPQ – A well-known software for small business for streamlining sales and invoicing workflows. Invoices can also be created from sales orders to eliminate manual entry and ensure accuracy.
• QuickBooks Online – A platform that simplifies accounting processes for small businesses and freelancers. This online solution lets users manage invoices on any device and activate advanced features such as progress invoicing.
• Sage Business Cloud Accounting – An invoicing platform made for small businesses, with features for converting quotes or estimates into invoices. Mobile apps for iOS and Android also allow users to create invoices on the go.
• Melio – Specifically designed for small businesses, it allows business owners to track invoices from creation to payment. The platform also offers automatic reconciliation and online payment capabilities to streamline accounts receivable workflows.

Small business owners have various types of invoicing software to choose from, including free, basic invoicing tools to comprehensive invoicing and payment management systems with multiple pricing plans. These software can also be categorized by the features they offer. Users can also choose invoicing software based on deployment, which include:

• On-premise invoicing tools– These tools typically come with a single-use license and are installed or hosted on the user’s server. On-premise software is usually more expensive and these may require complicated installation processes or even hardware setup.

• Software-as-a-Service (SaaS) invoice software – These invoicing software usually come with paid plans that charge users a monthly or annual fee. Unlike on-premise tools, SaaS software is hosted on the vendor’s server. As such, the software lets small business owners save money on updates and maintenance.

• Cloud-hosted invoicing platforms – These systems are similar to SaaS but, instead of the vendor, the user hosts the system in the cloud. The user typically buys a system license, which can be on a one-time or monthly basis. Like with SaaS software, these platforms eliminate the costs of updating and maintenance, which is helpful to small businesses looking to make the most of their investment.

Below are common features and capabilities shared by invoicing solutions on the market:

• Invoice creation and management– Through invoicing tools, small business owners can create invoices in a matter of minutes. This is possible through pre-made, customizable templates, which the software can automatically fill in with client details and relevant project information. Most of these software also keep track of all invoices users create and send, minimizing errors such as invoice duplication.

• Invoice status tracking – Aside from helping users create and manage invoices, the software typically tracks the status of each invoice created in the system. Through this feature, users can quickly be updated on the status of invoices that have yet to be paid by clients. Many of these tools also come with built-in follow-up capabilities, so you can send notifications to clients right from the software.

• Client records – Most invoicing tools allow users to create and maintain client records in a searchable database. This feature can come in handy for small businesses with a growing list of clients. Advanced invoice software pull client information from these records and automatically use the relevant information in invoices. This eliminates the errors caused by manual data entry.

• Flexible payment processing – The best invoicing software also helps business owners accept a wide variety of payment options. In this way, clients get the choice to pay their invoices through options such as credit cards or online payment gateways like PayPal. Some invoicing systems also allow recurring billing and auto-billing. These features help ensure that business owners are paid on time.

• Integrations – Many of these platforms seamlessly integrate with third-party software for accounting, sales, CRM, and similar functions. These integrations ensure that data can be quickly moved between these systems when needed. For instance, by integrating with your CRM system, an invoicing system can import client records to its native database.

• Reporting and analytics – Like many business software today, most invoicing software offer features for generating accurate reports on businesses’ financial activities. These reports come in handy not only for tracking a business’ financial health but also for auditing and tax reporting purposes.

With all their features, invoicing software can bring the following benefits to small businesses:

• Get paid on time – By using the right invoicing software, business owners can streamline their invoicing workflows so they can send invoices and get paid on time. Automatic follow-up notifications also help remind clients of unpaid invoices.

• Avoid skipped payments – Invoicing tools can help business owners keep better track of their accounts receivable processes. The software organizes client data and information from timesheets and projects to help users easily create invoices and follow an invoicing schedule. Invoice tracking features also help users keep an eye on the status of each invoice.

• Paperless transactions – By automating the invoicing process, small businesses can avoid dealing with stacks of paper-based invoices and client records. These documents can be difficult to store properly and track, especially as they pile up. With an invoicing software, business owners can enjoy the benefits of paperless transactions.

• Maintain professionalism – With invoicing software, business owners can also project a professional image to their clients. This is particularly helpful to businesses that are just starting out. Most invoicing tools allow users to create professional-looking invoices, which can be customized with logos as well.

• Lower overhead costs – By automating the invoicing process, small business owners can cut down overhead costs. Since the software can manage invoices and client records on its own, fewer people are needed to manually handle invoice creation and manage client data. As such, business owners can save on manpower and labor costs.

• Improve financial transparency – Using invoicing systems makes it easier for business owners to manage company finances as well. Many of these platforms can generate reports and forecasts based on invoice status, sent invoices, and other metrics. These accessible reports help improve a business’ financial transparency, which is crucial to small businesses looking to expand.

Despite their usefulness, invoicing software continues to have potential limitations and issues. Some of these issues are easy enough to resolve, while others may require more time and effort in resolving underlying issues.

• Limited view of client relationships – The software is useful for tracking clients and their payments, but these tools don’t provide a holistic view of client relationships. To see the big picture of client relationships, business owners must also take into account factors such as client loyalty, account activation and renewal, and purchase frequency. After all, client relationships are defined by more than just on-time payments.
• Limited integrations – Depending on the software’s features, these may offer limited integrations. This is especially true in cases where small business owners want to automate the entire account management process. In such cases, it’s a matter of looking for an invoicing system that is designed for comprehensive integrations with a wide variety of third-party software.

The COVID-19 pandemic has caused disruptions across nearly all industries, forcing businesses everywhere to lean even more on technology to adapt. Automating invoicing and other financial processes remains to be crucial in maintaining profitability and ensuring business success.

• Comprehensive invoicing and billing suites for large organizations and enterprises – Though many invoicing software are geared towards SMBs, freelancers, and solopreneurs, there’s a trend towards highly advanced, comprehensive invoicing software that can meet the complicated needs of large enterprises. In some cases, these tools are integrated into a more holistic software suite designed for organizing financial processes.
• More versatile payment options – Consumers today expect companies to be more flexible and versatile, especially when it comes to payment processing options. As such, clients will soon be likely to pay invoices not only through credit and debit cards but through options such as PayPal, Apple Pay, and even cryptocurrencies.