See if an invoicing software is necessary for your business

Invoicing is another task on a freelancer’s lengthy to-do list, but there are ways to streamline the process. 

One great option is using invoicing software, but many cost money so you must decide if it’s a necessary and worthwhile investment for your freelancing business. Before we dig into these options, we are going to run a quick analysis to see if it’s the right decision for you.

Assess your invoicing process

In your workbook review your invoicing process by first seeing the steps involved. It probably looks something like this:

Sign contract  ➡️ Do work  ➡️ Submit  ➡️ Revise  ➡️ Send invoice  ➡️ Get paid

Now consider if you have any frustrations throughout that process. They might include:

• Keeping track of your invoices.

• An overwhelming invoice process.

• A time-consuming invoice process.

• A confusing, unclear invoice process.

• Multiple bank accounts for different types of clients.

• Getting paid late because you forget to send an invoice.

• Getting paid the wrong amount because you forget to send an invoice.

• Having to follow up with clients multiple times.

• Clients say they’re unclear about the payment due date.

• Clients say they’re unclear about how to pay you.

If two or more of those frustrations resonate with you, a software may be the right decision. You’re going to use the following two formulas to understand how much time you spend invoicing and compare that to your hourly rate.

Formula Part 1

Time spent on each invoice (in hours or fractions of hours)

X 

Number of invoices sent per month

=

Total time spent invoicing

Formula Part 2

Total time spent invoicing

X

Hourly rate

=

Billable rate used up for invoicing

Here’s an example of how it works:

Kui spends 30 minutes (0.5 hours) on each invoice and sends 4 invoices a week, or 12 per month. He spends 8 hours a month on invoicing and his hourly rate is $50. It is costing him $400 a month to invoice, plus the time he could instead use to complete productive income-generating work. Given the options, he can afford a more premium invoicing software such as Quickbooks or Bonsai.

Using the below formula, compare your billable rate used for invoicing to the cost of different software options to see which options work for you.

Now, you can sift through real-world invoicing software options with some understanding of what you can afford while maintaining a positive return on investment (ROI).

Invoicing software options

The right invoicing system can make sending invoices and getting paid as simple as clicking a button. This means:

• Less manual work on your end.

• Less delay in the money landing in your account.

As we said above, most of these options cost money. But since we just figured out how much your time is worth and how much time you spend invoicing, you can use this data to see if the software is a worthwhile investment and whether the cost is justified.

FYI: Some software integrates with your bank account so the client won’t need to add the bank account information to their system and wire the payment. Clients can conveniently pay directly via the invoice and you can protect your financial information.

Recap 

• Reviewed your invoicing process and the value of the time you spend on it.

• Assessed the costs and benefits of different software invoicing options.

• Decided (or started thinking about) if you’re ready for invoicing software, plus which option fits you best and why.