Billing and invoicing software: Is the check in the mail?
Cash flow is quite possibly the most vital part of your practice. And unless you bill your clients, or they are on a subscription basis where they are automatically billed and their bank account automatically debited, you’re not going to have the operating income necessary to run your practice. As much as your clients may value the relationship and services your practice provides, they aren’t likely to just send money without being asked — particularly in the current environment of crisis.
Accounts receivable is one of those applications that can be a stand-alone, just a system for sending out invoices and receiving payments, or part of a more complete practice management system. If you’ve selected a complete practice management system, you already have the ability to create and send invoices as well as track the status of payments (or overdue bills). But if all you need is those capabilities, a stand-alone billing/invoicing application may be sufficient for your purposes. To give you a better idea of whether a stand-alone billing system will do the job, or if a comprehensive practice management system is the way for your practice to go, we surveyed seven vendors that provide the capability to manage the invoicing and collection process.
What do you need?
When it comes to billing clients, not all practices have the same needs. Nor is there only one way to bill for services. Common methods include billing for time spent on various tasks, fixed-fee billing, as well as value pricing, progress billing, retainers, and subscription billing, among other “non-standard” billing methods. The core that billing is centered around is determined by the agreement that you have with the client. While a fixed-fee billing might include write-up, tax prep and possibly review, it might also include payroll and other services. It’s important that the billing solution you select is flexible enough to accommodate the types of agreements that you make with each and every client that you have.
Some vendors, like Zoho, have incorporated features that let you apply a wide variety of billing methods. According to Prashant Ganti, head of product marketing for Zoho Finance, “Zoho Books supports retainers, one-time and recurring billing. Zoho Subscriptions supports other non-standard/subscription-based
billing like tiered billing, volume-based billing, per-seat billing, checkout day billing, calendar billing, and consolidated billing. Both Zoho Books and Zoho Subscriptions are integrated.”
And, in these tough financial times, you might also need the ability to accept partial payments, and charge interest on the unpaid portion of the invoice. “At Bill.com, we have a way to set up recurring payments, and many of our accounting partners use this for all of their clients, especially when on a fixed value price agreement. Our system allows them to automatically send out the invoices and they can automatically pull the payments from the customer’s account via credit card or ACH,” client accounting services strategic advisor Pete Potsos told us. “We also allow for partial payments, so if a client can’t pay the full amount, they can log in and pay a partial payment. The invoice will still show as open and it will be available for the client to go in and make another payment as needed.”
Some of the vendors didn’t itemize their billing methods, simply stating, like ImagineTime’s CEO, Carl Coe, “This is a core feature and differentiator for us. We literally can handle any bill type along with recurring payments. ImagineTime software provides the ultimate in flexible billing formats: from basic timeslip invoices to flexible, reusable ‘super bills’ with several options for time clearance, including the ability to progress and final bill engagements.”
Several vendors, including Invoicely’s marketing executive, Sorana Gligor, noted that they may not handle every possible way of billing. “Invoicely does not have an explicit feature for everything, but since the platform has grown over the years, it has a very rich set of functions and most billing methods are possible. However, sometimes a workaround is required. In this case, you can reach out to Invoicely’s customer service team for assistance and they will find a way.” Gligor did point out that the company “offers so-called recurring invoices, which means you can send automated recurring invoices to your clients, based on a given time schedule. This type of bill is especially suitable for subscription-type services or products.”
A number of vendors, including Xero and AccountantsWorld, work through the vendors’ practice management applications or even a third-party offering.
“Xero’s open API and ecosystem of 800-plus connected apps allow firms of all sizes to use the tools that suit them for each task and collaborate across multiple locations, while enjoying the benefits of working on one ledger in the cloud,” said executive general manager of payments and billing solutions Craig Walker. “Connections to best-of-breed ecosystem applications allow our business customers to find vendors that serve their non-standard billing methods. For our accounting partners, our open API allows a robust integration with our practice management solution (Xero Practice Manager), which does allow for additional methods of billing.”
ImagineTime is a practice management system, rather than just invoicing/receivables, according to Coe. “ImagineTime has been developed over the past 20 years with exclusive focus on accounting practice management. Practice Management for ImagineTime includes secure file sharing, e-signature, time & billing, workflow/due dates, and reporting insights. … We serve about 1,500 accounting firms with over 10,000 users on our system.”
AccountantsWorld is another vendor that primarily provides invoicing functions through its practice management system, rather than as a stand-alone. “Accounting Power integrates with our own solution, Practice Relief, which helps accountants use any of the [most popular] billing methods,” said director of customer success Hitendra Patil.
Works well with others
The ability to integrate and work with other applications you might be using in your practice is another important feature. Some vendors’ software is integrated with other applications that the vendor offers. “Zoho Books, online accounting software, and Zoho Subscriptions, recurring billing and subscription management software, are stand-alone invoicing/billing applications that are part of a broader suite of Zoho’s integrated finance apps,” said Ganti. “Zoho’s finance apps cover different aspects of business finance, including invoicing, accounting, expense management, subscription management, inventory management, payroll management and payment collection. We have taken this approach to provide business owners with granular visibility and control over each area of their finance.”
Other vendors, like Bill.com, have designed their software to be easily integrated with other popular applications. “Bill.com currently integrates with QuickBooks, QuickBooks Online, QuickBooks Enterprise, Xero, Sage Intacct, and Oracle NetSuite. Others have built integrations through the API as well,” Potsos said.
Xero is another vendor with extensive integration features, according to Walker: “Our invoicing and billing works seamlessly with the rest of our platform, and especially well with other vendors. In fact, our platform has an open API and over 800 connected apps are featured in our App Marketplace, many of which integrate specifically with our invoicing and billing features. On the invoicing side, integrations include popular vendors like WorkflowMax, ServiceM8 and Practice Ignition. For billing, we have strong integrations with leaders in the space such as Bill.com and Hubdoc. Vendors like ApprovalMax integrate with both sides of the software.”
But not all vendors have this capability. Some of those we surveyed offer billing and nothing more. One such vendor is Invoicely. “At the moment, Invoicely is a stand-alone product, but we have plans to integrate our e-signature solution, Eversign, with it. Then you will, for example, be able to accept an offer/estimate with a legally binding signature,” said Gligor. “We’re also working on making our API public and as soon as this happens, it will be possible for everyone to interact with the platform.”
The check is in the internet
These days, paper checks seem so déclassé. It’s become very easy to transfer funds electronically, but not every client realizes this, and many clients still use credit cards if they don’t want to generate a paper check. Fortunately, many invoicing applications now provide a way for the client to pay by electronic transfer.
ACH (or Automated Clearing House) transfers have become a popular way to receive client payments electronically. They provide ease of use, and in many cases, payments are credited to your practice’s account the day after payment has been generated by the client.
Bank transfers and credit cards seem to be almost universally popular. Both are easy to set up for your practice. As Bill.com’s Potsos said, “With every invoice, we give the user’s customer the ability to connect through a secure portal where they can choose to pay via ACH or credit card. If the customer mails in a check, there are ways to then record it as paid in Bill.com and then be updated in their accounting software. Data in transit is encrypted using industry-standard Transport Layer Security.”
But ACH, while popular, is far from being the only way to get payments fast and electronically. “Xero offers customers online invoicing, providing a more secure and transparent way to generate invoices quickly and efficiently,” Walker told us. “Customers are emailed a link to a live invoice, which shows the most up-to-date details, including payment status, history and a ‘pay now’ button for taking online payments there and then. Xero shows when an invoice is received and opened, and can send automatic reminders on outstanding invoices. Our invoicing includes many built-in integrations, and allows credit card payments with Stripe and ACH with GoCardless. Other options, including payments via Paypal, are also possible. We also expanded our partnership with U.K.-based GoCardless to North America last year. Our integration with GoCardless makes it easier for business owners to accurately forecast their cash flow as ACH debit automatically collects payments as soon as they are due.”
And Invoicely allows the direct payment of the invoice by clicking on the desired payment method. The payment methods vary from credit card payments to bank transfers and include payment vendors such as PayPal, Stripe, PayLane and others. Invoicely also alerts you both when an invoice is opened, and when it is paid through in-invoice payment methods.
That’s a nice feature to have and several other vendors offer it. Bill.com’s Potsos explained their approach: “There is a status that the invoice has been viewed. In addition, Bill.com sends updates when the bill has been entered/scheduled for payment on their end and then another update when it’s been paid.”
“Xero allows users to easily see the status of all invoices created and sent out. It is easy to identify and track invoices that are in draft mode, awaiting approval or awaiting payment,” Walker said. “Once an email is sent out and awaiting payment, you can keep track of its status to see whether or not it has been opened and ultimately paid.”
And Zoho also incorporates notification of invoice status. Ganti explained: “When the client opens the invoice through the client portal, a notification will be sent to the practice within the app in real time. Additionally, even without the client portal, you can track the transaction emails (invoice, estimates, retainer invoices) sent to the customers, view the time and date on which the email was opened, and filter a list of all transactions emails that have been opened.”
Hey, that looks different
While there is no such thing as a “standard” invoice or process, some vendors mentioned features that they think are unique and/or innovative. “One unique feature within Bill.com is that in addition to sending an invoice, an attachment relating to that invoice can also be included,” Potsos said. “We did this to provide additional support to what the invoice is stating. This is available for viewing in the portal to help with accurate record-keeping. Additionally, notes about an invoice can be added back and forth in our messaging center in the event there are questions. All of this is documented at the invoice level within the portal so the Q&A around an invoice can be retained for record-keeping purposes.”
BQE’s Core also has some features that the company feels are unique. According to integrated marketing manager Kari Weinberger, “Firms can literally put invoicing on autopilot using our state-of-the-art Automatic Billing feature. Another most exciting out-of-the-ordinary billing feature that BQE Core offers is split billing. It allows the BQE Core user to split values being billed for a project among multiple clients based on a predefined percentage. We included this feature because it is commonly needed by many professional services firms. Core’s powerful Batch Billing feature allows our customers to generate and send hundreds of invoices in a matter of a few seconds.”
Regardless of which vendor’s application you select, it’s important that the billing/invoicing process fit your practice’s workflows, and not the other way around. A good choice in this important practice function will help keep the revenue flowing