As many small businesses decide to step up their invoicing process, decisions would be made based on the advantages and disadvantages of invoice tools at their disposal.
To make it easier for you, we have put this article together to help you as a guide. An Invoicing tool is software that helps businesses generate invoices with ease.
Invoice tools help small businesses generate invoice templates, send reminders, track records of transactions and avoid duplication of repetitive tasks.
Invoicing tools have replaced the traditional mode of invoicing which is otherwise known as manual invoice, or paper invoice.
The manual invoice has a lot of disadvantages that make a business make many mistakes that could be as spelling mistakes, missing information about the company, and many more mistakes.
These mistakes are costly that may lead to litigation, breach of trust, and fraud which speculate unprofessionalism of your company.
Despite the pleasure derived, and advantages of using this Invoicing tool by many business owners, it is not exempted from disadvantages.
Some of the advantages of using Invoicing tools are Precision in inputting data and processing information, providing templates for invoicing, and helping in tracking transactions.
While some of the cons of using invoicing tools are: unavailability of the internet, limited access and cost of subscription, and the appearance of invoices in the junk.
Advantages and Disadvantages of Invoice Tools
Advantages of Using an Invoicing Tool
Invoicing tools have drastically changed the traditional way of invoicing which has many flaws, prone to errors, and shows unprofessionalism of your business.
There are many pros and benefits to using invoicing tools but a few of these pros are:
- Providing templates for invoicing,
- Precision in inputting data,
- Processing information,
- Help in tracking transactions.
There are many more pros of using invoicing tools but few mentioned will be explained.
1. Providing Templates for Invoicing
Using Invoicing tools provides invoicing generation templates, these templates handle the complexity of repetitive tasks, automatically generate invoice reference numbers, and avoid duplicate invoicing.
As the customization of invoices helps you to make your invoice template look unique.
2. Precision in Inputting Data and Processing Information
In preparing an invoice, you need to ensure it is error-free, as any error may lead to a failed transaction, litigation, and delay in payment.
That is why invoicing tools are important because any form of error will be reduced to a minimum.
Errors encountered with paper invoicing are enormous, which is why the invoicing tool gives you assurance from errors, some of this precision of input data and processing information includes: avoiding missing information about the company, stopping calculation errors, stopping the risk of fraud, and avoiding payment delays. Here are some errors invoice tools help you avoid.
i. Avoid Missing Information About the Company
Every company has what distinguishes it from another company, which gives the company uniqueness as a legal entity, however, complications may arise when any of this information is missing.
This is risky and may make the company lose the trust of clients. Using Invoicing tools helps you rectify such errors.
ii. Stop Calculation Errors
Errors from mistakes in putting numeric values incorrectly may lead to delays of payment or shortages.
That is why using invoicing tools helps you automate the process of calculation, and also helps you clarify the input and output of numeric values involved in the calculation.
iii. Stop the Risk of Fraud
Paper invoices can easily be manipulated by employees of your company, the customers, and a third party which may lead to litigation and lack of trust, invoicing tools are used to avert this dangerous action that may tarnish the image of your company.
iv. Avoid Delays in Payment
Many Invoicing tools have reminders integrated into them. These reminders help to boost the cash flow of your company as well as cause delays in payment.
These reminders help you send messages as an admonition to clients to attend to their invoices to avoid overdue payments.
3. Help in Tracking Transactions
Invoicing tool is automated to track transactions and other financial documents, including the exact products involved in transactions.
This helps you to know the status of your business, especially for the purpose of inventory control, proper cash flow, and tax payment, financial forecasting.
The software integrated into the invoicing tool is capable of performing all these tasks within a short period of time.
Unlike the paper invoice which is prone to errors and can easily be damaged and lacks digital backup.
As stated earlier in this article, we are taking a look at the advantages and disadvantages of invoice tools and the write up wont be complete without also considering the cons.
These are just a few pros of using an Invoicing tool, as there are many of them because invoicing tools have many advantages that streamline the finance of a company.
Disadvantages of Using Invoicing Tool
Invoicing tools play a huge part in the evolution of the financial sector, by helping small businesses, middle-scale businesses, and large business organizations to function without using manual systems of Invoicing.
Using Invoicing tools comes with disadvantages that can be gone unnoticed, despite the fact that the advantages outshine the disadvantages. These cons of using an Invoicing tool include:
- Unavailability of the internet.
- limited access and cost of the subscription.
- The appearance of invoices in the junk folder.
1. Unavailability of the Internet
Gaining access to the internet is pivotal while dealing with invoicing tools. Without internet connectivity, many items will appear offline with outdated information.
For a business to start using an Invoicing tool, it is better to consider the business location, if the business location does not have access to the internet, because some locations are partially or totally out of coverage.
Also, the customer has to get full access to the internet to get updated with the latest invoice from a certain business, because lack of this activity may cause the customer to always appear offline.
2. limited Access and Cost of Subscription
Some of the invoicing tools have limited access to some features because some of these invoicing tools offer trial options.
Some of these invoicing tools require you to subscribe to a premium service in order to have full access and start using the software properly.
3. Appearance of Invoice in Junk Folder
The invoice may be sent by your company to a client, only to land in the Junk folder of your customer, if care is not taken, this may lead to confusion from your end and from the customer.
If an invoice is sent to a customer, it is very important to let them know that they should be checking their junk folder frequently, to avoid overdue payments that may hinder cash flow.
Final Thoughts
It is clear that the advantages of using an Invoicing tool outweigh the disadvantages. As time goes by, improvements are introduced to the invoicing tool to create room for improvement.
If the cons of using an Invoicing tool will be considered, no business entity will use an Invoicing tool, so it is important to take notes of the cons of using invoicing tool and try to provide possible solutions to it.
