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Every small-business owner knows that invoices are the backbone of successfully running a business. An invoice is an itemized list that records the product or service provided to the customer, the total cost being paid, and the payment method. Once a transaction is completed, the business will keep a record and offer the customer a copy of the receipt.
Spending habits have dramatically changed thanks to the evolution of time and population growth. As a result, the total number of invoices generated each day has taken enormous leaps.
In 1989, the Federal Reserve processed an average of three million Automated Clearinghouse (ACH) payments each day for about $15.5 billion. In 2021, the average transaction amount increased by 2,266% to 71 million daily for around $146.8 billion.
The amount of paper receipts generated daily in the United States is enough to fill several libraries. Depending on the nature of your business, it would be impractical only to keep physical records of your transaction. That’s where the concept of invoicing and billing software comes into play.
Which invoicing and billing software is the best in 2023?
Using software to help you with online invoicing and billing has several crucial benefits.
Automating the process will significantly reduce the number of human errors and save a considerable amount of time. You can track multiple projects, create estimates, and ensure that everything gets paid on time. Having a bunch of unpaid invoices is one of the fastest ways to land in financial trouble.
To avoid running into this trouble, here are the eight best invoicing tools and billing software options available:
QuickBooks, not to be confused with QuickBooks Online, is a widely popular invoicing solution with a wide variety of payment pricing options that can range from $25 a month to $180. On top of the subscription fee, you’ll need to pay 25 cents for each transaction (alongside a price ranging from 2.4% to 3.4%) and 1% on all bank transfers (up to $10).
The main benefits of using QuickBooks include:
- Advanced accounting and bookkeeping software.
- The ability to create, send and track customizable and unlimited invoices from your digital device.
- Inventory management.
- Bank reconciliation.
- Time-tracking tools.
- In-person payment options.
- Tax features that allow you to manage contractor 1099s.
- Cash flow management and forecasting.
- The opportunity to connect to your bank account and check daily transactions.
- All types of payments are accepted.
The main issue with using QuickBooks is that no free plan is available. The best features, such as time tracking, multi-currency support, and inventory tracking, are only available with more expensive plans.
Another potential problem is that there is no built-in client portal, but several third party apps can easily integrate with QuickBooks to give your clients access to invoice and project information.
2. Zoho Invoice
Zoho Invoice is free-to-use software, arguably the best free invoicing software and business accounting solution. Still, you will have to pay standard transaction fees any time you can get paid through an invoice. The total limit of invoices that you can create each year is capped at 1,000, so it might not be a good fit for bigger businesses.
Some of the key features of using Zoho include:
- The ability to create highly customizable invoices.
- Automated email reminders to inform customers when payments are late.
- The option to include estimates, expenses, and task hours in invoices.
- A password-protected portal that keeps payment histories, assessments, and receipts protected.
- Seamless integration with several essential software programs, including QuickBooks, Slack, Office 365, G Suite, and Stripe.
- A built-in client portal.
- Time, expense, and invoice tracking.
- The ability to record offline payments.
- Permits customers to pay with a credit card, debit card, or bank transfer.
- Tools can calculate taxes, expense reports, forecast revenue, and generate SKUs.
- Multi-Currency support and invoicing in 14 different languages.
The main issues with Zoho are a one-user-per-account limit, no inventory tracking feature, and you can’t edit automatically generated invoices. Another problem is that the integrations could be better. It can work with other software but works best when using Zoho Books and Zoho CRM, which aren’t as possible as other options.
FreshBooks is an invoicing solution offering three pricing plans based on the number of billable clients.
- For $15 a month, you can bill up to five clients.
- For $25 a month, you can bill up to 50 clients.
- For $50 a month, you can bill an unlimited number of clients. You’ll have the option to save 10% if you subscribe annually instead of paying the monthly fee.
- On top of these prices, you’ll need to pay 30 cents plus 2.9% for online transactions.
A FreshBooks subscription includes the following features:
- A free trial.
- Bookkeeping and accounting features that include double-entry accounting reports.
- Smooth integration with dozens of payroll, inventory, and e-commerce software.
- Tracks overdue invoices and sends automated late payment reminders.
- Automated recurring invoices.
- User-friendly client portal.
- Checkout links.
- The ability to add discounts and taxes to invoices and late payment fees.
- Automatic updates when invoices are viewed or paid.
- More than 100 integrations.
- Support for 14 languages.
The main issue with FreshBooks is that there is no free option. It can be hard to justify the cost if you only need software for billing and invoicing, making it exceptionally unreasonable for self-employed people or freelancers.
FreshBooks does offer project management and collaboration add-ons that can be beneficial for meeting your business needs. However, adding additional team members will cost $10 per person per month and add up fast. Other issues include limited payment gateways and a lack of support for multiple businesses.
4. Square Invoices
Square Invoices pricing plans range from free to $20 a month. The paid plan has a few additional invoicing features, including customizable fields for invoices and the ability to set up milestone-based invoices for long-term projects.
Both plans will also include a fee that will vary based on the payment processing method (Paypal, card payments, or other methods). Online transactions cost 30 cents plus 2.9%, in-person payments cost 10 cents plus 2.6%, phone payments cost 15 cents plus 3.5%, and online bank transfers cost 1%.
Some of the best functionalities of Square Invoices include:
- An unlimited number of invoices and estimates.
- Recurring invoices.
- A mobile app that lets you track paid and unpaid invoices.
- Automatic payment reminders.
- Receipts are available through email and text.
- Real-time invoice tracking.
- More than 100 integrations, including inventory management software and point of sale software.
The biggest downside to Square Invoices is that the best feature requires a paid subscription. Automation customization and project tracking aren’t available with the free plan. Other issues include a lack of multi-currency support, customer service delays, and the first set of payments being withheld pending business verification.
5. Invoice Ninja
Invoice Ninja comes with a free option that includes unlimited invoices for up to 20 clients. It also offers the Ninja Pro package for $10 a month, and the Enterprise plan ranges from $14 to $44 a month. Unlimited quotes and invoices are available with the free plan, but you’ll need to select one of the paid plans for unlimited clients.
These are a few of the additional features that come with using Invoice Ninja:
- 10 invoice and quote templates.
- Create, quote, and track task hours that can be converted into invoices.
- Integration with more than 45 payment gateways, including credit cards, foreign currency, and cryptocurrency.
- Automatic currency conversion.
- User-friendly client portal.
- Automatic billing, recurring invoices, and status alerts.
- Deposits and partial payments are accepted.
- Cloud-based and open-based storage options.
- Available in more than 30 different languages.
The most considerable downside of Invoice Ninja is that it doesn’t have seamless integration with bookkeeping software. It can work with QuickBooks or Xero, but you’ll likely need to use Zapier and manually set up the integration.
Zapier’s free plan only allows limited automation, so you might have to purchase a paid subscription with them. Additionally, there are no inventory features, and the reporting is limited compared to other options.
Xero offers a few pricing plans to their customers. The least expensive one costs $12 a month and allows you to send 20 invoices and quotes to an unlimited number of clients. The most expensive plan is $65 a month, giving you access to project and expense tracking features and unlimited invoices.
Some of the key benefits of using Xero include:
- A free trial.
- Highly customizable invoices.
- Accounting software comes with all plans, bank reconciliation, and inventory tracking.
- Accounts payable and payment processor options.
- Automated payment reminders and recurring billing options.
- Cash flow and financial analytics.
- Integration with dozens of other software options.
The main issue with Xero is that there is no free option and the cheaper plans have limitations. Customer service is less than ideal, and can take a while to resolve complaints, and it’s difficult to cancel a subscription. There are limited reporting options, and digital payment solutions require a more expensive plan.
Wave is free to use, but you’ll have to pay industry-standard transaction fees whenever you receive payment.
Some of the best features that come with using Wave include:
- Unlimited invoices.
- The ability to track payments, bills, invoices, and expenses.
- Professional invoice templates.
- Invoices can be created and sent within seconds.
- Recurring billing and mobile app reminders.
- Tax calculations and cash flow insights.
- Online payments are accepted.
- Easily view customer transaction history.
The biggest problem with using Wave is that invoicing, accounting, and business banking options are only in the U.S. for sole proprietorships. All other types of business structures aren’t currently eligible to use Wave. An extra fee for electronic payments is also a bit pricey.
Invoice2go has pricing plans that range from $5.99 to $39.99 per month. The lowest price plans come with limits as to how many invoices you can send every month.
Some of the key features of using Invoice2go include:
- Invoices can be transmitted through text, email, or messaging apps.
- A mobile app is available for all platforms.
- Automated payment reminder and status tracking.
- Online client approvals and deposits.
- Project and purchase order management.
- Time and expense tracking can be transferred to invoices.
- Automated payroll.
- Unlimited storage.
The most common complaint with Invoice2go is that it has higher-than-average charges on card processing and ACH transfer to business bank accounts.
Another issue is that it features limited integration with outside software. It does integrate well with QuickBooks, but it’s not viable with many other popular options. It’s also common to experience some data loss from time to time.
Should you use software to manage your invoices and bills?
There’s no good reason not to use software to help you manage your invoices and bills. The options on this list only scratch the surface of the possibilities available for you. The risks of keeping a physical record of your business transactions are not even close to the potential rewards. You could wind up owing or being owed a lot of money that can severely alter your finances.
The bottom line is that proper invoice and billing management is essential to keeping your business open. Failure to do so can result in you having to shut down your business and possibly end up in legal trouble. There’s no reason to risk such serious consequences when you can simply install software from one of the companies listed above. The software will work for you and help you keep your invoices on time and paid in full.