Invoicing is an activity where a company bills customers for goods and services. Often, the services will be sold on credit. For this reason, invoices have to be reconciled to make sure everything has been paid.
Common elements that appear on the invoices are:
1. Date issued
2. Date payment is due
3. Number of the invoice
4. Issuing company address and contact information
5. Description of items purchased
6. Quantity of items purchased
7. Sale price of each item purchased
8. Subtotal of all purchases
During reconciliation, a payment in the bank should be matched with the invoice.
Common reports generated is receivables aging. In this report, amounts outstanding will be added together and shown in buckets by days overdue. This report is useful to asses collections efficiency.
When payments hit the bank accounts where other transactions are happening, it can be challenging to reconcile invoices. For this reason, small and large business alike use software solutions to issue and reconcile invoices.
While there are several good options available for automated invoicing, we recommend FreshBooks. It does not require a payment to start using.
FreshBooks will allow you to create customer for which you will be able to track invoices automatically.
Custom settings can be selected to bill periodically, bill in different currencies and charge custom late fees. Further customization, like changing a language of correspondence, is also available.
Once a customer and inventory is set up, the invoices can be further customized by setting different due dates and custom layouts.
Because invoices are digital. A customer will have an option to pay right on the spot. This is an advantage because easy methods of payments increase the likelihood of collecting on the invoice. The software will automatically match the payment to an invoice and record a transaction in the GL. There are fees for this option which are outlined below:
Further customization is available to charge and reconcile late invoices: