Choosing the Best Invoice Software for Your Business: An In-Depth Guide

We’ll cut right to the chase: if you’re a business that relies on billing your clients or customers, having an efficient invoicing system is critical for collecting payments and proper accounting records.

The traditional approach is to generate paper invoices for each transaction and send them to customers. But this method can be very time-consuming and inefficient. Research shows that paper invoicing takes 15 steps on average to complete and any manual invoicing error costs $54 on average to fix.

Invoicing software helps to solve this problem. It automates the entire process and enables you to instantly generate accurate invoices and send them out to customers. Many invoicing software tools also include accounting, timekeeping, and project management features.

In this article, we will show the best invoicing software solutions on the market and how you can select the right invoicing software for your business.

What can you do with invoice software?

Invoice software tools are powerful and packed full of different functionalities. Other than automating the process of generating and sending invoices, they track your invoices and keep you informed on when to request payment from your customers.

Most invoice software will also integrate with your other business software tools like your accounting software and CRM (Customer Relationship Management) software.

Each software solution is optimized for a specific user base with features that are unique to it. However, a good invoice software will have all of the following functionalities:

  • It lets you create, customize, and send different types of invoices
  • It lets you generate and send invoices in multiple formats (MS Word, PDF, and others)
  • It lets you send invoices through multiple channels (electronic, email, SMS, mobile, and paper)
  • It supports multiple payment methods (checks, credit cards, ACH, and so on)
  • It integrates seamlessly with your accounting and payment processing software solutions
  • It includes notifications for each transaction including payments received
  • It lets you generate insight ful financial reports

Why should you use invoice software?

Below are some of the many benefits of invoice software for small businesses:

It eliminates human error

Invoice software eliminates the risk of human error that is associated with paper invoicing. The software takes care of the entire process and everything can be automated with a few clicks.

It helps you generate error-free financial reports for accounting purposes. It also tracks all transactions and ensures you can sail through the tax season without any worries.

It gives you access to in-built analytical tools

It lets you leverage the vast data on your transaction history to gain valuable insights. You can identify where the bulk of your revenues are coming from, your most loyal customers, the customers that pay on time, and the products with the most demand.

You can use all these insights to improve your business operations to focus on customers and products that generate the most revenue.

It’s available anywhere you need it

Whether you work from a traditional office or you work remotely, a modern invoice tool lets you generate and customize invoices wherever you are.

This is because most invoice software solutions are now cloud-based, eliminating the need for you to be attached to traditional software rooted in static computers and local servers. You create and edit your invoice on your laptop or mobile device anywhere.

How to choose the right invoicing software for your business

The needs of a small business that employs multiple employees will be different from that of a freelancer that works alone. Each type of business will require the right invoicing tool for its needs.

You also need to consider your budget, customization options, and integration with existing in-house software. Below are the questions small businesses must ask before selecting an invoicing software:

What are your business needs?

Do you need all-in-one accounting and invoicing software? Do you need to track time and bill customers hourly? Do you need a solution that includes project management features?

You need to review your business operations and identify what you need from your invoicing software. Consider the payment options your invoicing tool must support and evaluate the need for mobile invoicing.

Think about the people that will require access to the software, and the company controls systems that will be required. Use this information to list your requirements for the ideal invoice software for your business.

What is your budget?

You must consider the amount you are willing to spend on regular subscription payments for your invoice software. The needs of your business will largely shape the type of invoicing tool you choose.

There are robust invoicing software solutions that offer a full range of features, there are solutions that only offer features for specific tasks, and there are free tools that offer adequate but limited functionalities.

Robust solutions are typically more expensive, while specialized tools are cheaper. Small businesses with a small client base, limited accounting, and invoicing needs can opt for a free invoice tool or sign up for a freemium subscription.

What are your software integration requirements?

It’s likely your office already has multiple business software systems and online tools that you use for accounting, HR, CRM, marketing, and so on. These disparate tools must communicate with each other and collate all the data you need about your business on one dashboard.

List your existing software tools, and look for the right invoicing software that integrates seamlessly with your portfolio of tools. Google search each software solution ( “[Software Name] [integrations]” to see if it supports your in-house tools

The 7 best invoice software solutions for small businesses

There is an abundance of invoicing tools on the market, and we have tested and reviewed most of them to arrive at a list of 7 excellent invoicing tools you can choose from.

To help you choose the best option for your business needs, we have highlighted the core strength of each invoice software.

1. Freshbooks [All-in-one accounting and invoicing software]

Freshbooks is one of the most popular and well-rounded invoicing and accounting software tools on the market. It works perfectly for both small businesses and freelancers. Its range of features is unmatched by other robust invoice software tools.

Freshbooks supports invoicing, expense tracking, online payments, double-entry accounting, inventory management, time tracking, mileage tracking, and project management. It also lets you generate and analyze detailed financial reports.

If you need a comprehensive and capable invoicing tool, Freshbooks is an excellent choice for your business.

Notable features

  • Estimates and proposals: easily create proposals and custom estimates and send them in your preferred currency.
  • Double-entry Accounting: it supports double-entry accounting, automated bank reconciliation, account payables, transaction monitoring, and much more
  • Project management and team collaboration: it provides users with a centralized file storage functionality, project status tracking, file sharing features, and client collaboration tools.

Pros

  • Excellent user experience
  • Full-featured online invoicing app
  • Ensures seamless collaboration with clients

Cons

  • Too expensive for businesses that don’t require its extensive toolset
  • Minimal onboarding help for new users

Pricing

There is a free 30-day trial, and the popular Plus plan starts at $12 per month. Custom pricing is available for businesses with more complex needs.

2. Xero [Strong account reconciliation and security features]

Xero is another robust accounting and invoicing software solution. It offers all the invoicing features you expect from an excellent invoicing tool along with a strong account reconciliation functionality.

It lets you match bank statement lines from your business account against transactions on Xero. The bank feed is automatic and this ensures you can stay on top of your business by keeping track of money coming in and going out.

Xero also provides top-notch security features along with excellent customer service.

Notable features

  • Account Reconciliation: align Xero transactions with your bank account statement lines to track the inflow of and outflow of cash in your business.
  • Contacts and smart lists: generate customer and supplier details to view contact details and analyze the history of sales, interactions, payments, and invoices.
  • Multi-currency accounting: Xero supports over 160 currencies with real-time exchange rates and instant currency conversions.

Pros

  • Improved onboarding experience
  • Exceptional online customer support
  • Interactive features make it easy to use

Cons

  • The mobile app is not comprehensive
  • Limited reporting options

Pricing

It is free for 30 days and the popular Standard plan costs $30 per month. The premium plan costs $40 per month. The Standard plan gives you access to all functionality you need as a small business owner.

3. QuickBooks [Automated invoicing]

Quickbooks is another popular invoicing tool that provides businesses with all the functionality they need including customizable invoices, basic bookkeeping, tax estimating, sales tax management, mileage tracking, and more.

Quickbooks outshines its competitors in the area of automated reporting and automated invoicing. You can customize report templates and schedule when generated reports will be sent to stakeholders. You can automate your invoicing process by setting up recurring invoices.

Quickbooks also integrates with Stax by Fattmerchant. Stax helps businesses process their credit card payments at affordable interchange-plus processing rates. It offers your business some of the lowest costs of accepting credit cards because you are only charged at the true cost of interchange fees without the additional costs from the company.

Notable Features

  • Automated invoicing: you can easily set up recurring invoices for your established clients and automatic invoice reminders for any customer with an approaching due date.
  • Quickbooks Online Map: the online map stores all your data on the cloud in real-time and syncs across your devices.
  • Integration with Stax by Fattmerchant: Quickbooks integrates with Stax to provide you with the most affordable payment processing platform on the market.
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Pros

  • Excellent automation tools
  • Solid automated mileage tracking tools
  • Good support resources

Cons

  • No templates for estimates or quotes
  • Customer support is good but can be better

Pricing

There is a free 30-day trial, and the popular Essentials plan starts from $12 per month. The plus plan with all the features starts from $17 per month.

4. Hiveage [Best for Freelancers]

If you don’t have any need for the extensive features offered by the software solutions listed above, Hiveage may just be the perfect invoicing tool for you.

It is a simple cloud-based invoice software with a dashboard that is easy to navigate and it integrates with all the popular accounting and project management software tools. It provides time, expense, and mileage tracking. It also works in 140 countries.

Hiveage has an excellent mobile app that lets you log time and track expenses from your iPhone or Android phone.

Notable features

  • Time, expense, and mileage tracking: it lets you log in hours as your work on client projects, record relevant expenses, track your business trips, and use invoice templates to convert them into beautiful invoices with a few clicks.
  • Recurring and subscription billing: you can set up recurring invoices or charge subscriptions with ease.
    Payment gateways: it supports more than a dozen payment gateways including PayPal, Stripe, Braintree, and others. You can also accept partial payments and offline payments when necessary.

Pros

  • Simple and intuitive user interface
  • Lets you charge subscriptions and set up recurring invoices
  • Supports multiple payment gateways and allows partial payments

Cons

  • Customer support is not as robust as that of competitors
  • It is not suitable for growing businesses that will eventually need additional features related to payroll processing, bookkeeping, and so on.

Pricing

There is a 14-day free trial that gets you the full version of the Pro plan. The Free plan lets you serve five clients, while the Basic plan costs $16 per month. The Plus plan is $42 per month for 1000 clients.

5. Harvest [Best for hourly invoicing]

Harvest is a time tracking and billing software that lets you automatically track billable time and expenses. Its simplicity is its strength.

You can use it as an independent freelancer to automate your workflow or as a small business owner to track the activities of a team of remote employees. It lets each team member track time and mileage with ease. Users can also upload receipts to track expenses.

Tracked time can be easily converted to invoices, and sent to clients with a few clicks.

Notable features

  • Time tracking and billing: it lets you track your time as you work or fill the timesheet at the end of the day. Invoice is generated automatically from tracked time and expenses.
  • Budget management: track internal costs with live visual reports and stay on top of your budget. Use past project data to generate estimates and plan future projects.
  • PayPal and Stripe integration: clients can pay quickly with the integrated payment gateways. Recurring invoices can also be settled automatically.

Pros

  • It’s lightweight with an intuitive UX design
  • Advanced time-tracking features
  • Automatic payment reminders for clients
  • Excellent project management tools

Cons

  • Free users can’t use customizable templates
  • The price point is fixed which is a minus for users that want a more flexible pricing plan

Pricing

There is a 30 day free trial. The full-featured software is available for free to single users. It costs $12 per month for teams.

6. Invoice2go [Affordable Invoicing]

It is an affordable, simple, and easy-to-use invoicing software that offers all the functionalities a contractor, freelancer, or small business will need.

Users can log time, track expenses, send invoices, accept payments, and generate business reports. It also lets you create instant websites and publish your profile to service marketplaces.

Notable features

  • Ease of use: it has a simple interface and you get all the functionality you need to track time and expenses. You can create invoices in seconds and accept payments.
  • Instant website creation and online marketing: there is an in-built website builder for setting up and customizing your business website. You can also promote your business by using the platform’s marketing tools to showcase your profile, reviews, and business photos online.
  • Business reports: the overview dashboard lets you monitor your cash flow with easy-to-use charts and analytical tools.

Pros

  • It is affordable
  • It is easy to use and understand
  • It is packed with online marketing tools

Cons

  • Features are limited for the cheapest plans
  • It is not optimized for non-US users

Pricing

There is a 30 day trial with no credit card required. The Starter plan costs $5.99 per month, and the Premium plan costs $9.99 per month.

7. Wave [Best Free Invoice Software]

Wave is powerful invoicing software that lets you log time, track expenses, accept payments, and automate your bookkeeping all in one place. It is also completely free.

It is perfect for independent freelancers or businesses with less than 10 employees. It offers unlimited credit card options, unlimited partners, unlimited invoices, and robust reporting. It also includes a free receipt scanning service. Zoho Invoice is the only other invoicing tool that offers this range of features for free and they are not this extensive.

Notable features

  • Free to use: you get unlimited invoicing, unlimited expense tracking, and robust reporting for free.
    Automated bookkeeping: all your data and payment information syncs automatically with the Wave Accounting software to generate your bookkeeping records in real-time.
  • Instant notifications: it ensures you are alerted anytime an invoice is viewed, becomes due, or gets paid.
  • Invoice reminders are also sent automatically to your clients.

Pros

  • It is free
  • It lets you send unlimited invoices
  • It provides you a massive library of customizable templates

Cons

  • Some features require a paid subscription for other Wave tools
  • Instant electronic payments cost extra

Conclusion

The article above has shown you the best invoicing software tools for small businesses and the criteria for evaluating your options. If you are budget conscious, you can go for free or affordable software. You can consider QuickBooks or Freshbooks if you want full-featured software, and freelancers will be happy with simple invoicing tools like Hiveage and Harvest.

Use the knowledge you have gained from this article to list your requirements and select the invoicing tool that best meets those requirements.

To learn more about how the Stax all-in-one platform can help your business, fill out the form below to request a savings estimate today.

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