Invoice Reconciliation is essential to a business in tracking who has paid you and which bills you still owe. Find out how you can automate this with...
How to Keep Track of Invoices and Payments
Organizing invoices and payments can be a daunting task if done manually. Find out how to keep track of invoices and payments through automation today!
It can also be tough to find a solution for organising invoices and receipts that can help you save time. Fortunately for you, digital transformation has revolutionised productivity and convenience for many business owners.
This article outlines the best ways to organise and keep track of invoices and payments efficiently. After reading this article, you’ll find yourself breezing through the task of managing the invoices for your business.
Follow Best Practices for Invoicing
There are programs available online that can help streamline your payment process. One way to organise your invoices is through accounting software.
Accounting software provides templates to generate invoices. The program is helpful because it creates a new invoice number for you. It can also remind you when payments are due.
However, even if using an accounting program can streamline the workflow, you should still make sure to always input accurate information into the fields provided. Although this step may not seem important when creating the invoice, these details could be worth noting if an invoice goes unpaid.
When filling out the fields provided on an invoice, remember the following tips:
- Provide a detailed description.
It would be best if you were specific when writing an invoice. Avoid writing generic reports or simply providing the client’s purchase order number.
Remember that you and your client should easily understand an invoice a day or a year from the transaction date.
- Double-check the due date.
Your accounting program can automatically determine the due date for customer payment but, don’t rely on the software. Double-check the due date to avoid any late fees.
- Provide your contact details accurately.
If you have been using the program for a long time, you may forget to update certain presets. Ensure your program has updated information, like your address or phone number.
Doing so can help speed up your payment and reduce confusion on the client or accounting department.
Run Reports Regularly
Using accounting software is not enough to completely organise your invoices. After getting the software, you can maximise the benefits it can bring by running regular reports.
A profit and loss report sums invoices to date regardless of whether an invoice has been paid or unpaid. This report also deducts your expenses to the total to give you an idea of your net profit and help you prepare for potential financial issues even before they occur.
Take this example to understand the importance of a profit and loss report. A new restaurant has been open for six months. The owner runs the business by themselves. They also handle the finances and use accounting software to streamline the process.
According to the monthly report, their gross income is $180,000, and their expenses are $120,000, resulting in a net profit of $60,000. Based on the report, the owner realises that they should cut back on a few expenses to maximise profit.
How To Follow Up on Account Receivables
You need accounting software that will notify you when a payment is late. Some programs can generate and send reminder emails to clients who need to make their payments soon.
To avoid this problem, try to make a courtesy phone call or send a follow-up email to the client to inquire about the invoice payout. You should attach the original invoice when sending the follow-up email. The client will appreciate that you provided the invoice and won’t have to search for it.
Attaching the invoice also means the client has all the information they need to check on the payment status of your invoice with their accounting department. Below is a template of a follow-up email. You can use this to intervene in chasing a client payment manually.
Subject line: Overdue invoice for (service provided) due (date)
We’re yet to receive your payment for (service), which was due on (date). The invoice for the transaction is attached. Please let us know when we can receive payment in business days.
Don’t hesitate to reach out if you have any questions or concerns.
How to Keep Track of Invoices and Payments
|Document and categorize||Use your accounting software to identify the payments you owe. Keep track of your outgoing online payments on a different spreadsheet for a more organised and convenient payment process.|
|Choose a PSP that emphasizes visibility||Use payment service providers (PSPs) that provide real-time payment updates for more transparency and visibility.|
|Use an invoice management system||Manage invoices from your business suppliers and vendors.|
Things to Consider When Choosing Accounting and Payments Software
Without accounting software, you have to create invoices and track your payments manually. These are long, drawn-out tasks and, if done incorrectly, they can cause problems for small businesses.
You may face overdue payments and misplace invoices. These problems can hinder proper cash flow.
Setting up an organised system with all your invoices and receipts in one place can be cost-effective and ensure seamless expense claims.
Luckily, you can use software programs to organise invoices and receipts fast, preventing you from misplacing paper invoices in manual filing systems.
When you’re selecting a software platform, you should determine if it has the following features:
A cloud-based software program allows you to stay updated with your invoices anywhere. This feature provides access to essential invoice data to promote convenient and organised payments.
Several programs offer payment applications for businesses accessible from Android and iOS devices.
Reliable invoicing and payment software options work with various mobile payment and payment processing apps, such as Cash App and Google Pay. These apps are today’s most common payment methods among digital-savvy customers. Meanwhile, others have digital card readers for physical and contactless payments with credit and debit cards.
Multiple User Accounts
You need to choose software that enables multiple user accounts.
While accounts receivable may be the most common use of invoicing software, we recommend giving access to other staff members. This way, they can independently manage expense claims and collect payments from clients.
Having an invoice software feature can automate your invoicing. This can make payments more manageable by automatically creating professional invoices and setting reminders for your clients.
This feature offers time-saving email templates, so you don’t have to write long emails every time you need to remind clients of payments.
Profit and Loss Reports
It would help if you had an accounting software package with regular profit and loss reports.
Reporting functions can automatically sum up your invoices to date, regardless of whether they have been paid for or not. This gives you an idea of how much your business’s net profit total is within a specific time frame.
This feature can help you determine if your business expenses are too high — an important feature that can help owners of small businesses.
Added Security and Convenience
Security is one important feature to consider when looking for an accounting software package. You want to be sure that the software you’ll use can protect critical business information to prevent fraud.
Look for a software package that creates professional-looking invoices and accepts payments instantly. It should provide real-time notifications and send invoices via phone apps for convenience.
Find invoicing software that automatically reconciles invoices to your accounting software so you can spend time doing other accounting tasks faster and more efficiently.
As an alternative, Google sheets has an invoice tracker template to keep track of payments. This free invoice template allows users to enter payments made by customers. The tool will automatically calculate any outstanding balances.
Excel also has an invoice tracker feature that is easy and simple to use. The tools have filtering and sorting features that allow you to organise invoices by date and display invoices of a particular client.
Excel also highlights the due date or overdue invoices for easier tracking. Paid clients are in colour grey to help you identify clients who still need to pay.
While Microsoft Excel and Google Sheets are great cost-efficient alternatives, tedious programming and setup are required to automate the tracking process.
Get In Touch with the Experts from Spenmo
Call Spenmo today if you want a convenient solution to your invoice and payment tracking problems.
We can help you automate local and overseas invoice payments. Visit our website or send an email to email@example.com and manage all your business payments today!
Frequently Asked Questions
Is there software that keeps track of invoices and payments?
Today, there are various accounting solutions that can help businesses monitor invoices and payments. One of these solutions is Excel, which offers a tracker feature that allows users to organize invoices by date and display invoices.
What is the best way to keep track of invoices online?
The best way to keep track of your invoices is by using accounting software packages. Manually keeping track of invoices leaves room for human error and takes up time.
How to Keep Track of Invoices and Payments
To keep track of invoices and payments, you will need reliable accounting software. You should also follow the best practices for invoicing.
Regular profit and loss reports can also provide important financial insights that can help your business. You can also look for spending and accounting automation services to help you organize your invoices.