The present invoicing and billing technologies were developed to manage the payment processes for businesses. Paper invoicing remains a popular option for several companies in the United States. But the majority of them have shifted to electronic methods of billing and invoicing.

The country was lagging far behind to adopt the technological advancements in electronic invoicing compared to Europe and Latin America. However, the current trends have revolutionised electronic billing and invoicing for the past couple of years.

These advancements are responsible for the gaining popularity of the current invoicing and billing technologies. Let’s see how technology has shaped the way businesses in America send bills and invoices to their clients.

Automation of the Invoicing Process

The automation of the invoicing process has reduced the need for companies to track their financial transactions. Most companies in the United States have stopped using paper bills. Even those companies that have not automated their entire billing process prefer using blank invoice templates for service providers. 

Automation of the process enables organisations to get reminders for due dates and delays in receiving payment. It has also helped companies in the country stay on track with their billing and payment schedules.

Automating the manual responsibilities of creating and sending bills allows business owners and staff to focus on other essential tasks. Companies can also save money because they do not require additional staff to take care of these responsibilities.

Several companies have also adopted blockchain technology to streamline their billing and invoicing processes. It allows them to keep a record of all their financial transactions. It also eliminates the need for additional resources or third-party vendors.

Automating the manual responsibilities of creating and sending bills allows business owners and staff to focus on other essential tasks.

Blockchain technology has not only made financial management smoother but has also improvised the entire invoicing process. The technology prevents any manipulation or accidental deletion of invoices once they are recorded and sent to the client, thereby eliminating the risk of fraudulent activities.

With the gradual adoption of blockchain technology in American businesses, we have started noticing the decline in traditional invoicing systems.

AI and Machine Learning

The advancements in AI and machine learning technology have taken the automation of invoicing solutions up a notch. Most software providers can offer a holistic approach that features functionalities beyond the basic invoicing cycle.

The intervention of AI and machine learning unlocked humanly unimaginable software abilities. Companies can process hundreds of invoices in a short time while processing significant amounts of financial data.

It is also easier to identify or verify past transactions, which gives the business better control over their cost and supply chain. Using AI and machine learning technology can also spot anomalies and errors with the least amount of human intervention.

Cloud Invoicing

With the increase in the use of the Software as a Service (SaaS) model, most billing technologies have started operating from the cloud. They allow businesses to access financial records and data from a device connected to the Internet anywhere in the world.

Cloud-based invoicing also enables people to receive real-time business updates and take the required action. Business personnel can address any urgent issues with the payment in real-time to maintain their company’s reputation. Digital wallets have also become a part of cloud invoicing already.

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Most business owners and managers can access cloud invoicing through mobile apps these days, which has made the process extremely convenient. With the increase in remote working due to the COVID-19 pandemic, most companies have started relying on cloud-based software instead of traditional ones.

In the present times, any company that fails to provide mobile billing options is bound to lose valuable clients.

The Rise of Real-Time Global Payments

Gone are the days when companies had to wait for days or weeks to send invoices and receive payments. Every business expects real-time transactions these days. The COVID-19 pandemic affected the economy of the entire world, so businesses need their money in real-time.

That is why most companies rely on electronic billing and invoicing processes, as they tend to be faster and more accurate than the manual ways of raising a bill or sending an invoice.

Businesses of every size have started adopting electronic invoicing because they reduce the cost and increase efficiency. As we mentioned before, most countries in Europe and Latin America had already started using electronic invoicing before America. Therefore, to continue business relations with these countries, American companies have to adopt electronic billing and invoicing methods.

Modern billing and invoicing methods have enabled American companies to build better business relationships within the country and the world. With increased productivity, companies can save costs and time.

The present billing and invoicing technologies played a prime role in mitigating the challenges faced during the COVID-19 pandemic. We can expect the technology to progress further and increase productivity while reducing losses.

Little do they realise that a lot can be done to encourage clients to pay faster, in some cases even before the due date. Being diligent and following the invoicing tips mentioned in this post, businesses can get paid faster and maintain smooth cash flow. 

1. Send Timely Invoices

For businesses that don’t have formalised accounting departments, sending invoices in a timely manner might be a tough concept to grasp. But the fact of the matter is, the quicker you send your invoice the quicker it’s going to get paid. 

Ideally, you should be invoicing your clients as soon as the products/services have been delivered. Here are the reasons why you should do this:

• Setting expectations: You want to project a professional image of your business and sending invoices immediately shows you take money matters very seriously. This will build expectations with clients accordingly, and they’ll be inclined to pay you faster.
• Value of products/services: Another reason why you want to send invoices immediately is that the value of your services/products is still fresh in the client’s mind. 

Most business owners delay sending invoices because it’s usually a cumbersome process. But with a specialised invoicing software, it really isn't. Once you have the software set up to generate the kind of invoice you want, it’s only a matter of putting in data and pressing a couple of buttons, and you’ll have a professional invoice ready. 

2. Set Clear Due Dates

Don’t leave it up to the client to decide the due date of your invoice! Having clearly mentioned due dates for invoice payment will communicate that you want the cash by a certain time.

There’s some technical terminology for this. For example, writing “net 30” means that the invoice must be paid 30 days from the invoice date.

Novice business owners don’t even need to use this terminology. They can simply write “Payment due on DD/MM/YYYY” for absolute clarity. With this the client won’t have the excuse of not understanding the terminology as well.

It’s also recommended to write full month names to avoid ambiguity, such as “February 3, 2020”.

Don’t leave it up to the client to decide the due date of your invoice!

3. Avoid Extended Due Dates for Payments

It’s good to be flexible when it comes to payments. You don’t want to give your clients a two-day window to make payments. But you don’t want to give them too much time as well. 

Do not give your clients the freedom to pay late, as they’ll naturally gravitate towards this option. A balance must be struck here, with a payment term that’s short but relaxed enough that the client doesn’t feel flustered by it. 

4. Impose Late Payment Penalties

This may sound a bit harsh to some business owners, who often have cordial relations with their clients. But hey, this is the lifeline of your business we’re talking about.

Imposing some kind of penalty on late payments can be a great motivator for clients to pay on time. For example, you could add a certain amount of interest on the payment if it’s paid after the due date. 

In fact, having these terms means that the client will often make the payment much before the due date, out of caution. 

Don’t forget to communicate these late payment terms to your clients beforehand. 

You don’t want to appear brash about late payment penalties, so here’s the correct way to do it:

• Clearly include a section on late payment in your invoice.
• Communicate and agree on the late payment fees with your clients in advance (beginning of project).

Having a clearly stated policy on penalising lateness means that clients are far more likely to send payments early.

5. Incentivise Fast Payments

The goal of effective and efficient invoicing is to optimize the cash flow of a business. To get payments as fast as possible, you may want to incentivise clients who choose to pay you on time. 

For example, you could offer a small discount to clients who pay ahead of the due date. You could also offer them a gift card of some sort - you get the idea.

6. Break Down Larger Invoices

You may be working with businesses that just don’t like to pay large invoices, for a multitude of reasons. 

In this case, you can try breaking down invoices into several instalments. Instead of sending them an invoice for a large sum of money after 60 days, send them invoices after every 15 days, with smaller amounts. 

This will work well for both you and your client because:

• You’ll get regular cash inflow.
• The client will find it easy to process smaller invoices.

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7. Send Friendly Reminders

Have you heard how email follow ups can dramatically improve the reply rates of email campaigns? The same goes for invoicing as well. Your client may have received the invoice but simply forgot to pay it. 

This is why sending friendly reminders as the due date approaches is a good idea. You don’t have to demand that the client pay in these reminders, but rather make them aware of the fact that the due date is fast approaching. 

Some business owners even use these email reminders to open opportunities regarding upselling products or services to the client. Be creative!

8. Treat Your Customers Well

This is the most basic tip we can give, but also something that’s important. Delivering quality products or services to your clients is a great motivator for them to pay you on time.

These intermediates a source of funding that consents to pay the business of the value of an invoice after a deduction for commission and fees. The agent pays most of the invoiced value to the company directly and the surplus upon receipt of the balance of the invoiced company. There are three individuals directly included in a transaction: the Factor, who buys the invoice, the seller of said receivable, and the debtor, the company, or individual who must clear the debt attached to the invoice.

How these intermediaries or agents works

A factor enables a business to obtain direct capital based on the expected income attached to a particular sum due on a business invoice or an account receivable. Accounts receivable (AR) are a history of money clients owe for sales performed on credit. This permits other interested individuals to buy the funds payable at a reduced price in exchange for granting cash upfront. This whole process is referred to as factoring. An important thing to note is that it is not considered a loan, as the individuals neither issue, nor obtain debt as part of the action. The money provided to the firm in exchange for the accounts receivable is likewise not subjected to any limitations regarding their use. The requirements set by individual agencies may differ depending on their internal policies. Most of these transactions are done through a third-party financial institution, known as a factor. These brokers often free funds connected with newly acquired accounts receivable inside 24 hours. Repayment terms can differ depending on the cost involved. Besides, the portion of funds given for the particular invoice, this is referred to as the advance rate.

While there are numerous reasons why companies choose to use to sell their invoices as a business instrument. Here are some of the key advantages that most of these agencies firms provide:

Provide quick access to cash

When you render a product on credit, it is reasonable to wait more than 30 to 90 days on client payments. That process can lead to cash flow difficulties. Agents will offer an advance on any invoice, and this is often provided within a day. This immediately raises cash flow, enabling you to add workers, buy supplies, and meet other expenses that accommodate companies to meet demand.

Accelerated growth

Using the option of gaining finance by using your account should offer a firm the versatility and ability to grow at a more accelerated pace that is self-financed or dependant on loans. Additionally, using a factor is also a straightforward process to set up. But, instead of shopping for a conventional bank loan, you can start an account in days. Unlike standard banking terms, there is little limit to the amount of finance from one of these companies that has a robust capital structure.

Free up valuable time

Collecting cash from clients can be demanding on your company’s time and expenses. These businesses take over that position providing collections professionals who will attend to your clients until they pay the full amount owed. Many of these factors also offer online services that enable you to follow real-time customer repayments. Freeing up valuable time for you to continue to serve customers, seek out new business opportunities, and not have to worry about chasing money owed to you.

Fees and Terms

Before you enter into any agreement, you should pay close attention to all the terms and conditions of the contract. Unfortunately, these fees can vary considerably depending on the firm and the industry you are in. Some of these businesses only charge a straight fee, usually a percentage of the full value of the customer invoices. Other firms charge extra fees that cover capital transfers, transportation, insurance, and other expenses attached to doing business.

Experience in critical

It is essential that you find a business that has expertise in your industry and the capital necessary to continue to fund your company as it expands. Building a relationship with a factor could prove to be vital to the success of your company in the long term. Be careful not to choose a small firm, as they might not have the capital you need down the line to service your needs. Do your research before deciding.

Fund expansion

Most companies need to obtain finance to expand. But with a limited financial history, sometimes it is difficult to get the required financing. Unless you possess a reliable cash flow statement, most standard financial institutions will not even consider you for cash flow or asset-based finance. Most of these firms do not operate on the same terms; they will finance you primarily based on your company's credit history.

Find better customers

Over time, if you build a strong relationship with a factor, they have access to information on companies who may become your customers. They can tell you who to approach and, more importantly, who to avoid. This can save invaluable time and money.

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No debt incurred

Any agreement made with a factor is not a loan, you are merely financing your business through already accumulated invoices, any obligations are settled once your customers pay their debt in full. This is a huge advantage for smaller businesses who might already be overburdened with debt.

There are many more benefits to choosing to factor than just the ability to increase your company’s cash flow. The vast majority of factors will handle collections on your behalf, pursuing customers for their overdue invoices. Not only saving you both time and money as mentioned earlier, but it also gives you peace of mind.

One potential stumbling block will be the creditworthiness of your clients. A factor is more concerned with the ability of the invoiced parties to repay their debt than your company's finances. We understand that using a factor is not the most affordable form of financing, but it has proven an invaluable resource for many companies. Especially those who have chosen to operate in a field where clients are notoriously slow at concerting their receivables. Instead of waiting they focus on rapid expansion and using the increased profits to offset any expenses incurred.

A 2018 IDG Cloud Computing Study found that 73% of businesses have at least one application in the cloud. However, from spend analysis to invoicing, the spend management industry is often stuck utilising outdated, paper-based or on-premise processes that cause inefficiency and budgetary mishaps.

 In order to run the procure-to-pay process at maximum operational efficiency, it’s time for the spend management industry to migrate to the cloud. Stanton Jandrell, Fraxion’s CEO, discusses the four ways in which moving spend management to the cloud would benefit your business.

Improved efficiency and productivity

Research from the Tungsten Network found that businesses waste an average 6,500 man hours annually because of inefficient, paper-based payment processes. Unfortunately, many organisations still handle spend management with this traditional model leading millions of invoices to be written out by hand, sometimes even on simple notebook paper like the image below. With this system in place, invoices or other documents are more likely to get lost or misfiled – and even a small misfiling is costly. In fact, a misfiling rate of 0.5% in a four-drawer cabinet can lead to 1,000 misfiled documents.

Utilising a cloud solution for spend management boosts productivity by implementing simple automation that drives efficiency and removes the need for paperwork — for example, moving requisition requests to an automated form that submits the request and notifies appropriate approvers. According to a Harvard Business Review study, 74% of organisations reported that cloud services have given them a competitive advantage because of the ease and speed. As information is hosted in the cloud, this also makes remote access easier for stakeholders through mobile applications. This way, if an error occurs or a request must be handled immediately, employees can still access the system to provide a quick response.

With the heightened visibility of cybersecurity disasters over the past few years, many businesses assume that, once data is in the cloud, it’s more likely to fall into the wrong hands. And, when money is involved, this concern becomes even more prevalent.

Budget Visibility

Organisations that run manual processes have limited or no view of the budgetary impact that a requisition may have. Worse still is that the impact against the budget is typically only visible in a budget variance report that gets generated a few weeks after month end. At this point, intervention is impossible.

While a tremendous amount of effort goes into building a budget, if organisations aren't able to “operationalise” the budget insight into the approval process, the efforts are wasted.

Improved cash flow oversight

Cash flow can make or break a business. Often, businesses see budgetary discretions because of unapproved spend or overestimated funds. In reality, the overall lack of visibility into what the business is spending day to day can add up to 40% of the total spend. Spend management systems operating in the cloud provide greater control over cash flow through the automatic authorisation of suppliers, enforcement of budgets and recommendation of approval processes before any costs are incurred. Cloud-based systems provide a comprehensive audit trail and detailed view of the entire process, providing stakeholders with greater insight into each step. This helps create a more efficient and regulated spend management process — which is vital to business success, especially when you consider that companies lose 20 to 30%  in revenue every year due to inefficiencies and errors.

Detailed reporting and analytics

Leveraging a cloud system for spend forecasting allows businesses to shift from the ‘management’ of spend to the ‘enablement’ of smarter spending through improved visibility into needs, budgets and costs. Analytics and back-end insights are vital for the success of a cloud system – and CIOs are recognising this fact, with 66%  planning to invest more time in cloud-based analytics throughout 2019. As data is gathered with each requisition, approval and transaction, cloud systems have the ability to provide detailed analytics that can help identify spending trends and augment forecasting. The ability to effectively forecast leads to long-term bottom line savings through more effective management of the dollars in and out of the business.

When you move spend management to the cloud, data remains safe from damage or loss of physical storage like a mobile device, laptop or paper documentation.

Better security

One concern that often comes up in internal conversations about cloud migration is security and data protection. With the heightened visibility of cybersecurity disasters over the past few years, many businesses assume that, once data is in the cloud, it’s more likely to fall into the wrong hands. And, when money is involved, this concern becomes even more prevalent. However, this is not the case. In fact, paper-based or on-premise processes are much more likely to face security threats since there is not an established and visible trail of spend in place. On average, on-premise users experience 61.4 attacks while cloud systems only experience 27.8.

When you move spend management to the cloud, data remains safe from damage or loss of physical storage like a mobile device, laptop or paper documentation. This is because the cloud provides the opportunity for comprehensive data backups that can be recovered in case of an emergency.

Effective spend management is vital for the success of businesses across various industries. By utilising a cloud-based spend management system, businesses can see improved productivity, greater visibility into spend, more control over policies and procedures, improved forecasting and better data security. In order to maximise operational effectiveness, it’s time for businesses to move away from the outdated, paper-based processes of the past and dive into the future with a cloud platform.

Xero  today announced the integration of Apple Pay through Stripe, making it even faster and easier for customers to get paid. Xero’s 862,000 subscribers can now offer their customers the ability to view and pay an invoice using Apple Pay through Stripe.  Invoices paid with a payment service get paid almost 80 per cent faster than invoices that don’t offer a payment service. This new feature is available automatically to everyone on Xero using Stripe where Apple Pay is available.

Small business owners consistently point to delays in getting paid as one of their biggest pain points, which puts a strain on cash flow. Xero customers sent 15 million invoices globally in the last 30 days alone. And based on our current data, over 60 percent of those invoices will be paid late. Xero’s connection to the payment services of Stripe and Apple Pay will help address this concern for small businesses owners and help businesses get paid faster.

“Mobile payments are the way of the future,” said Craig Walker, Xero Chief Technology Officer. “Attaching a payment option to online invoices helps Xero customers get paid almost 80% faster than invoices that don’t use a payment service - so they spend less time chasing unpaid invoices for a more productive and cash healthy business.”

“By enabling these connections with payment services, small businesses are able to offer multiple payment options on an invoice, giving them and their customers choice of payment and also the ability to pay the invoice as soon as it arrives, ensuring they get paid faster,” Walker said.

Currently businesses that want to pay an invoice via credit card need to enter their credit card details to complete the payment. Credit card payments via Stripe mean that customers can confirm payment with Apple Pay using their fingerprint ID on their Apple device to confirm the payment quickly. Businesses who take payments via Stripe and Apple Pay also have an extra level of security. All payments made require a fingerprint or passcode, decreasing fraud, and with it, chargebacks.

"Almost a fifth of online commerce in the United States now happens on mobile devices,” said Cristina Cordova, Head of Business Development at Stripe. “We’re excited to work closely with Xero to help hundreds of thousands of businesses use Apple Pay to get their invoices paid with little more than a fingerprint.”

By connecting Xero users with Apple Pay transactions will be automatically entered and matched against invoices in Xero. Automating the invoicing reconciliation process makes accounting easier for small businesses.

"I advise my clients on the amazing ability Xero has of linking to online payment providers like Paypal and Stripe,” said Brad Sewitz,  Logicca Chartered Accountants. “These services have changed the way my clients operate their business, reducing the unnecessary burden of data capturing and positively impacting their cash flow, allowing them to focus solely on what they do best - running their business."

“The small businesses we work with get paid quicker and have greater visibility into their receivables by using Xero invoices with an online payment provider like Stripe and Paypal, Mike Castle at Bond, Andiola & Company.

 “With Xero, my clients reduce their dependency on paper checks and, in some cases, save themselves fees associated with having check scanners.”

(Source: Xero)