Mar 11, 2023
Invoice to cash is the end-to-end process that a business follows after creating an invoice so they can collect payment from their customers. It involves the following steps:
- Invoice creation
- Accounts receivable management post invoice delivery
- Payment collection
- Payment processing
- Cash application
- Reconciliation of statements
Having an efficient invoice to cash process means you get paid faster by customers without multiple follow-ups and reminders from your accounts receivables team. It also reduces your DSO (Days Sales Outstanding) and helps you maintain a healthy cash flow to run your business. With the right process, you can also cut down time on invoice generation and payment reconciliation after collection.
An invoice to cash software streamlines this entire process by removing bottlenecks and automating manual steps like invoice processing, cash application, or reconciliation.
Benefits of invoice to cash software
1. Increased efficiency
An invoice to cash software can streamline your customer invoicing and payment collection process, reducing the time and effort required for manual tasks such as data entry and payment processing. This can lead to increased efficiency and productivity for the business.
2. Minimize late payments
Late payments have a detrimental impact on a business's cash flow. An invoice to cash software automates payment reminders and provides a clear view of outstanding invoices. This makes it easier for businesses to follow up with customers who are late with payments.
3. Improved cash flow
Improved cash flow is the most significant outcome of good invoice to cash software. The software reduces the time it takes to receive payment and minimizes late payments. Stronger cash flow gives more financial stability to the business and enables it to make strategic investments or pay bills on time.
4. Enhanced customer experience
In addition to improving your internal processes, invoice to cash software can provide your customers with a more streamlined and convenient payment experience. Through a customer portal, they can view their electronic invoices online and pay their bills online using different B2B payment methods like ACH and card payments. This improves customer satisfaction and improves your customer relationships.
5. Accurate record keeping
A good invoice to cash software enhances the quality and accuracy of your bookkeeping. It integrates with your ERP systems and automatically records all invoice and payment transactions against each customer. This can reduce the risk of errors and provide a clear audit trail for future reference.
6. Minimize fraud and enhanced security
An invoice to cash software can minimize the risk of fraud by providing secure payment processing and authentication measures. It can also provide a more secure platform for storing customer payment information, reducing the risk of data breaches and theft.
Overall, invoice to cash software can provide a range of benefits to businesses, from improved efficiency and cash flow to enhanced customer experience and security. By automating and streamlining the invoicing and payment collection process, businesses can save time and reduce the risk of errors, while providing a better payment experience for their customers.
Core features of invoice to cash software
1. Smart invoicing
When your business grows, manual invoicing can become the biggest bottleneck in your invoice to cash process.
Modern invoicing software can integrate with your ERP and automatically generate and send invoices to your customers once you have shipped the order or finished the service. The software can also enable you to customize your invoices with your company logo, branding, and payment terms.
Additionally, you can also track the status of each invoice and send automated reminders to customers for payment.
2. Payment processing
This feature enables your customers to make payments electronically through multiple B2B payment modes, such as credit cards, bank transfers, or PayPal. The software also integrates with payment gateways, such as Stripe or PayPal, to ensure secure transactions.
Once a payment is received, the software updates the invoice and marks it as paid automatically.
3. Cash application
Another feature of invoice to cash software is that it allows the automatic matching of payments to invoices.
The software can match payments based on the invoice number, amount, and payment method. This reduces errors and saves time compared to manually matching payments and invoices.
It updates your records to reflect the latest payments and does automatic invoice reconciliation. This reduces the manual workload on your collections team and ensures that you always have an accurate picture of pending invoices.
4. Reporting and analytics
A good invoice to cash software provides real-time notifications and visibility into the cash flow through superior reporting and analytics features. These include reports on metrics like payment status, invoice aging, and forecasting cash flow to give you insights into your invoicing and payment processes.
Software should also supports customizable reporting options and data visualization tools. They help you identify trends like late payments, customer payment history, or payment disputes so that you can take action on time.
Factors to consider before you choose an invoice to cash software solution
1. Business context
Consider the specific needs of your business and the industry you operate in.
For example, if you incur a high volume of transactions or have a complex billing process, you may need more advanced software that can handle those needs rather than invoice to cash software. Some providers might have an upper limit or different payment tiers based on the number of invoices you process in a month.
So you need to keep in mind your specific business needs and requirements before you decide to implement an invoice to cash software.
2. Safe and easy to use
The invoice to cash process is a critical business process involving your accounts receivables. So, you need to ensure that the software is safe and secure to use as it involves handling financial data and sensitive customer information.
The software should also be user-friendly and easy to navigate so that your team can quickly learn and adapt to the new system.
3. Integration with ERP and accounting
Integrated software is the cornerstone of the automated invoice to cash process. Choose a software solution that integrates with your existing ERP, CRM, and accounting systems.
This ensures that you can optimize your financial processes and avoid manual data entry which leads to accurate and updated financial data across all your systems.
4. AI & automation functionality
Many vendors in the invoice to cash SaaS market are moving towards offering differentiated solutions powered by artificial intelligence and automation. These solutions come with features like automated accounts receivables reminders, cash applications, and smart reporting enhanced by predictive intelligence.
These features can save time and reduce errors, and can also provide insights into your cash flow.
AI-powered reporting can leverage historical data and analyze customer payment patterns to help you identify customers that might be at risk of late payments. They can also help you with your B2B credit management by helping you modify the payment terms of a customer based on their payment history.
5. Customer support
Choose a software that offers reliable customer support, with quick response times and knowledgeable support staff. This ensures that any issues or questions are resolved promptly, minimizing downtime and disruption to your financial processes.
You can check out the top review sites like Capterra, G2, or Trustpilot for feedback on customer support and other features by existing users.
Best invoice to cash software 2023
1.Resolve
Resolve is an all-in-one net terms solution for credit checks, invoicing, payments, and AR automation. As the B2B spinout of Affirm, they offer capabilities and features that are similar to invoice to cash software. B2B businesses can use Resolve to send invoices to customers. Then, they can actually elect to receive an upfront cash advance on eligible net terms invoices of up to 90%. This helps the business receive the cash immediately rather than wait 30 to 90 days for payment. If the company does not choose to use the cash advance. Resolve’s “AR team on tap” will will on making sure the payment on any particular invoice is made by the due date. Resolve also offers also benefits such as credit checking, credit decisioning, payment process, and reconciliation to ERP systems.
Pricing: Starts at $499 per month.
2. Xero
Xero is an online accounting software that offers unlimited users and 24/7 support. It is known for its security and reliability while offering easy invoicing, automated payment reminders, and the ability to accept payments online. Xero also enables bulk invoicing which saves time.
Pricing: Starts from $20 per user/month.
3. Freshbooks
Freshbooks is an invoicing, time-tracking, and expense-tracking software designed for small businesses and freelancers. It offers customizable and automated recurring invoices, online payment acceptance, and simple reports and dashboards.
You can also see when the client has received, viewed, and paid an invoice making it easier to customize your communication with them. Freshbooks also lets you track time by project and collaborate with other teams.
Pricing: Starts from $15 per user/month.
4. Zoho Invoice
Zoho Invoice is another online accounting software that offers basic accounting features like invoicing, expense tracking, bank account syncing, and reports. It also provides inventory tracking and powerful accounting reports.
Zoho Invoice has a dashboard that offers real-time insights into the health of the business, making it unique. With Zoho, you can opt for advanced accounting tools as your business grows
Pricing: Starts from $10 per organization/month, with a free trial for 14 days.
5. Quickbooks Online
Quickbooks Online is a cloud accounting software that allows you to create and send custom online invoices from any device. It provides features such as recurring payments, sales and expense tracking, project profitability tracking, and the ability to transact in multiple currencies.
Quickbooks Online's mobile app automatically stores data in the cloud and syncs across devices, allowing you to manage your business on the go.
6. Sage
Sage 50c is accounting software that combines desktop-based product familiarity with cloud-based data accessibility. It has been a leading player in business management software and services for small and medium businesses.
It provides features like invoicing, cash flow tracking, professional quotes creation, powerful reporting, project tracking, and multi-currency support. Sage 50c also integrates with Microsoft Office 365.
Pricing: Starts from $192 per user/year, with a free trial for 60 days.
7. Bill.com
Bill.com offers online invoice payment, custom invoicing services, unlimited document storage, and workflow collaboration for small-to-medium businesses.
It provides customers with multiple payment options and sends automatic reminders for recurring invoices and overdue notices. Bill.com has a unique calendar feature that shows when deposits are coming in and when payments are due.
Pricing: Starts from $39 user/month.
Summing it up
Invoice to cash software can be a great investment for your business to help you streamline the invoicing and payment collection process. It reduces your time and effort required for manual tasks such as data entry, sending invoices, payment processing, and payment chasing.
This type of software can also minimize late payments, improve cash flow, enhance your customer’s buying experience, provide accurate record-keeping, minimize fraud, and enhance security. The benefits are wide and this is why many businesses use this type of software.
Remember, when choosing an invoice to cash software, consider your specific needs and requirements, such as business context, safety and ease of use, integration with ERP and accounting, and AI and automation functionality. Learn more about Resolve’s net terms and invoicing workflows that can help you get paid faster.
