How to Implement Digital Invoicing: A Step-by-Step Guide for Business Owners

Show:

June 26, 2023 Business

Digital invoicing, e-invoicing, online invoicing—the names may differ, but essentially, they all refer to the same thing. They all infer that you’ve gone completely digital in your invoicing system and removed any paper or handwritten elements.

This includes all aspects of invoicing:

The invoice itself
The sending out of the invoice to customers
Following up on payments
Tracking payments
Linking to your accounting system

To better understand how to implement a digital invoicing system and what it entails, we’ve compiled this guide to ensure your business experiences an easy transition.

Why Digital Invoicing is the Way to Go

If you’re wondering why your business should be moving into the digital invoicing sphere, these are just some of the many positive benefits:

The system will cut down on time spent manually creating and sending invoices.
You’ll reduce human error as the calculations are done automatically for you.
It’s more eco-friendly as there is no paper or postage involved.
You get greater transparency in your accounting and invoicing tracking.
Your billing cycle can be almost completely automated.
Working with VAT and tax becomes simpler.
It’s easier to spot problems like non-payment, wrong payments, and fraud.

4 Steps for Setting Up Your Digital Invoicing System

Now, let’s take a look at how you go about setting up your system if you’re moving from a paper-based system:

1. Identify A Suitable System Required for Your Business

The scope of the system you’ll need will depend on a variety of factors. These include the size of your business, the number of sales you make, the industry you work in, your tax situation, and any other factors that influence your financials and invoicing.

A larger company or one that makes a lot of sales will need a more robust system. On the other hand, a small company that only needs to create a handful of invoices each month won’t need to invest in a big infrastructure.

You can opt for an invoicing solution—software that creates and tracks your invoices for you. These often link to accounting software and provide an all-in-one solution for a business. You can get entry-level packages for smaller businesses all the way through to enterprise-level options. Going this route is ideal if you’re planning to scale your business up in the coming years.

The other option is to set up a system using spreadsheets. Your invoice system will still be digital, but there will be a manual component to generate invoices and track them. However, this is often more cost-effective for smaller companies that don’t need or have the budget to pay for additional software. Spreadsheets will still give you many of the same benefits—you’ll save time and reduce human error. They’re just not as viable for businesses that send out a large number of invoices each month.

2. Create A Guide for Your New System

Once you’ve settled on a system for digital invoicing, you need to ensure that everyone in your business who needs to use it is trained correctly. The crossover period while you move from your manual system to your digital one will always have teething problems. However, you can mitigate these problems with proper training and an onboarding process.

If you’re using software that you’ve bought or subscribed to for your invoices, the developers should supply training manuals or how-to videos for onboarding. Make sure you have access to those and spend some time with your employees learning how to use all the elements of the software.

If you’ve gone with a spreadsheet system, it’ll be up to you to create the training guide. As you set everything up, go through each phase of the process and make notes of what you want done and how it should be done. Include everything from creating your printable invoice template through to following up on late payments.

3. Inform Customers of the Change Over

The next step is to let your customers know that you’re making the move to digital invoicing and that your processes may change.

Not only do customers need to know that they can now expect a different type of invoice, but you also need to ensure you have the correct point of contact to send your digital invoice to. This is especially important if customers were accustomed to getting handwritten invoices at the time of sale or service or posted to them in the mail. If you’re switching to digital invoices sent via email, this will change how they receive and process your bills on their side.

It’s best to give as much warning as possible and chat with your regular customers about any foreseeable problems that might occur. Change can so often create problems that you didn’t account for. It’s best to keep an open line of communication with your customers so that both sides are ready for any issues.

4. Ensure Legacy Accounts Aren’t Forgotten About

It’s highly unlikely that you’ll have the “perfect time” to switch from manual to digital. There will likely always be invoices outstanding from your old system that need to be dealt with in the new system. It’s vital that you don’t lose sight of those invoices or payments.

This could mean manually adding those invoices to the new system after the fact to ensure they’re tracked. Or you may have to keep your old ledger or invoice book around for a few months and track both systems at the same time. It’ll depend on how you sent out invoices before going digital and on the digital system that you’re using. However, within a few months, you’ll have completed the transition.

Keep Moving Forward with Digital Solutions

Moving your business to digital invoicing is just one step in the process of embracing modern technology to streamline your operations.

Even if you have to purchase software for your system, you’ll likely find that in the long run, you save time and money when you switch to digital. These solutions are designed to make your business more efficient, which allows you to spend more time making sales or creating products