How to streamline your invoice process

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An invoice is a bill that you send to customers to let them know how much they owe you for your products or services, when to pay, and how to make the payment.

There are plenty of benefits to sending invoices—they help your business look more professional, they act as a concrete record of any goods or services you’ve provided, and they improve your company’s cash flow by encouraging customers to pay you promptly.

As your small business grows, so will your customer base, and consequently, the number of invoices you send. To keep things organised and ensure that you get paid on time, you need to have a proper invoicing process in place.

In this article, we’ll outline an easy-to-follow invoicing process to help you streamline your bills and payments and improve your company’s cash flow.

Top Tip: Before exploring the ins and outs of how to streamline your invoicing process, you first need to understand the fundamentals of what invoices are and why they are so important to your business operation. This includes what information you must add to an invoice, what an invoice address is, and strategies to avoid common invoicing mistakes. To learn more, read our detailed guide to invoices 💡.

Table of contents:

Step 1: Put together a standard outline

One of the most effective ways to streamline your invoicing process is to standardise the information you’re going to include in your invoices.

Putting together a standard invoice outline will help you save hours of work by eliminating the time-consuming process of creating each invoice from scratch.

Start by jotting down the necessary information that should be included in every single invoice you create.

Here are some things you might want to include in your outline:

  • Invoice reference number
  • Date of invoice generation
  • Client details
  • Your company details
  • Description of the items or services provided
  • Total amount due
  • Payment due date
  • Payment terms
  • Shipping terms

While the information above is included on most invoices, what you choose to add depends entirely on the nature of your business, products or services, and clients.

For example, you might find that in your specific workflow there’s no need to add shipping terms to your invoice if you only provide services. Or, you might need to add a new field if you’re going to charge your clients late fees for late payments, such as ‘additional payment due after deadline’.

Another advantage of creating a basic outline is it ensures you don’t leave out any important information when sending invoices to clients.

Top Tip: If you are a VAT registered business owner, you’ll need to send VAT invoices. VAT invoices include all of the standard invoice information plus more specific details depending on the type of VAT invoice you choose to use. As properly calculated and recorded invoices can influence whether or not you are eligible for a VAT refund, as well as whether you will be charged a penalty by HMRC, maintaining accurate VAT invoices is a must. To learn more, read our guide to what information you must include on your VAT invoice 🔎.

Step 2: Determine how to create your invoice

Once you have a standardised outline for your invoice, it’s time to decide how to create one.

Here are two common ways that small businesses often create invoices:

1. Spreadsheet software

Creating invoices using spreadsheet software, such as Google Sheets or Microsoft Excel, is a great way to send error-free invoices.

The biggest benefit of using a software is you can add formulae to do most of the invoice calculation for you. It’s also easy to save your standardised outline as a template that you can simply edit each time you need to create a new invoice.

You can choose to create your own template or download one from the internet. There are hundreds of free and customisable spreadsheet templates available online.

If you prefer using a ready-made invoice template, make sure you choose one that’s relevant to your business. This will save you plenty of time as you won’t have to add or remove too many fields.

To make things easier for you, we’ve created a free invoice template that you can get started with right away.

A screenshot of a sample Tide Invoice Template

You can customise the colours, fonts and other design elements of this spreadsheet invoice to fit your brand guidelines. Include your logo at the top to add a professional flair.

2. Invoicing tools and software

Spreadsheets are not the only software you can use to create invoices. There are tons of dedicated apps and invoicing software tools designed especially for this purpose.

Invoicing software helps you to save tons of hours otherwise spent on manually creating, managing and tracking multiple invoices at once. As 50,000 small businesses in the UK fail each year due to late payments, advanced software that automates and simplifies invoicing tasks can literally help you to stay in business.

If you’re using Tide Invoicing, for example, you can quickly create invoices by accessing saved customer details. The app also offers features like automatic VAT calculation to help you create more accurate invoices, as well as the ability to tie the invoice to a specific category to keep your accounts organised.

Many popular accounting software platforms, such as Xero, Intuit QuickBooks, FreeAgent and Kashflow also come with built-in invoicing tools.

Using an invoicing tool will help you save time, create professional invoices, minimise human error and avoid invoice bottlenecks. Most of these tools are fairly easy to use, which means you don’t necessarily need an accountant to make one for you.

Another advantage of using invoicing tools is they help you send automatic reminders to customers to ensure they pay you in a timely fashion.

Top Tip: If you’re a Tide customer, you’ll be pleased to know that we have integrations with many accounting software platforms. These integrations make it easy for you to feed transactions from your Tide account to your preferred accounting software every day, reducing the need for manual uploads and saving you tons of undue stress. To learn more, head over to our accounting integrations page so that you can seamlessly connect your Tide account to your accounting software today 🎉.

Step 3: Set an invoicing schedule

An invoicing schedule is basically a timeline that dictates when and how frequently you’re going to be sending invoices to your customers.

A predetermined invoicing schedule will help both your business and your customers. The more promptly you send invoices, the more likely your customers will be to pay you promptly.

The schedule you choose will depend on various factors, such as the type of product or service you’re selling. In some cases, the schedule may even be directed by industry standards.

Businesses may opt to send invoices at the start of the week, end of the week, bi-weekly, beginning of each month, or end of each month.

If you offer multiple short-term services, it’s a good idea to bill your clients weekly or as soon as a job has been completed. This prevents your accounts receivable from getting backlogged and helps maintain a healthy cash flow.

Plus, for customers, it’s often easier to make smaller payments more frequently than to pay a large sum at the end of the month.

Top Tip: If you didn’t already know, accounts receivable reflects future revenue that has been billed but not yet received, and accounts payable shows future debts that have been charged but not yet paid. It’s critical to understand the fundamentals of accounting in order to maintain a healthy cash flow and sturdy business financials. Curious to learn more or run a sense-check that you do in fact grasp accounting basics? If so, read our complete guide to accounting for startups 📣.

Step 4: Set your payment methods

If you want to get paid on time, you need to communicate clearly to customers when and how they can pay you.

Sometimes, the reason why clients are unable to pay you on time is that it’s inconvenient for them. For example, if you only accept cash in exchange for your services, clients who are not local might not be able to make their payment on time.

This is why it’s usually a good idea to offer multiple payment methods to clients so it’s as easy as possible for them to pay you.

Along with cash and cheque options, most small businesses also let customers make online payments, such as with their credit card, via a bank transfer or through an online platform like PayPal or Transferwise.

Online paperless payments are fast, secure, and usually trackable. Since there’s no hassle of travelling involved, customers are more likely to pay you on time, regardless of where they are located.

Step 5: Maintain a record of past invoices

It’s always good practice to store a backup of all your invoices, regardless of when you send them and who you send them to.

This may sound unnecessary, but it’s one of the best things you can do to streamline your invoicing process. Also keep in mind that if you are a VAT registered business, maintaining a detailed record of your invoices is required.

Having a record of past invoices helps you to double-check any errors, confirm details about past payments or bills, settle disputes, and create accurate cash flow forecasts, which includes estimated sales, income and general business expenses.

For example, let’s say you sent a bill of £2,500 to a client. Two months later, they send you a payment of only £1,500 and claim they don’t owe you anything else.

In this situation, you can simply pull up a backup of your invoice and show it to your client as evidence of the money they actually owe you. If you don’t have a copy of your invoice, it will be difficult for you to prove what services you provided, when you provided them, and how much the client actually owes you.

Another situation might be that you made a mistake in your invoice, and the client has requested some changes. In that case, having a backup copy of the invoice will help you identify exactly where you made the mistake, and will save you time as you won’t need to create everything from scratch.

In the case of referring to stored invoices to make future cash flow predictions, you can look at your accounts receivables (cash inflows) and accounts payables (cash outflows) to predict surges or shortages in cash flow.

This will help you to make better business decisions, such as whether you need to plan for a business loan or line of credit, or whether or not you have the capital to hire a new employee or expand a product line.

Top Tip: Maintaining detailed invoice records is a key part of recording your overall business expenses. Keeping track of all of your expenses, including operating expenses, non-operating expenses, and capital expenses, will help you to save money and improve your bottom line. To learn more, read our guide to how to keep track of expenses 💸.

Step 6: Regularly follow up with clients

Regardless of how great your invoicing process is, your business is going to come across clients who are simply not good with deadlines.

This is why you shouldn’t just sit back after you hit the send button on that invoice. Make sure you proactively follow up after every few days or weeks to train your customers to pay you on time.

Following up with clients acts as both a reminder and a subtle warning, especially if you’ve added a penalty to late payments. For example, you can email your clients two days after sending them an invoice to confirm if they’ve successfully received your invoice.

This nudge is both polite and professional, and from their response, you’ll be able to know for sure if the invoice has gotten through or is lost in the ether. Plus, it’s a smart way to prevent any client from making the excuse of “not receiving your invoice on time.”

If a client has been unresponsive or hasn’t been able to pay on time, you can follow up with them to ask if they’re facing any issues with your invoice.

For example, they might be having difficulties with the payment methods you’ve authorised. Or, they might have a good reason for not making the payment, such as problems in their own business.

In that case, it’s always important to communicate so you can find an appropriate solution or make any adjustments as needed.

Top Tip: While it may sound simple, there’s a strategic method to following up with clients so that you can get paid quickly without damaging any client or vendor relationships. This method involves setting appropriate expectations and charging interest, sending friendly reminders X days after an invoice due date is missed, and seeking legal advice and mediation if need be. To learn more and to read our four email templates that you can use when reaching out and chasing late payments, read our guide to how to chase an overdue invoice (the right way) ⏰.

Step 7: Hire professional help for invoice processing

If you’ve just started your small business, you’re likely handling most, if not all, tasks on your own—including sending and keeping track of invoices.

While it’s ideal to manage as much as you can on your own in the beginning to save costs, you’ll eventually need to hire a professional to help you out.

As your small business grows, you’ll need to invest more time in strategising, planning for the future, and making important business decisions. This becomes easier when a bookkeeper or accountant is handling invoices and other administrative tasks for you.

You can choose to hire professional help with accounting or bookkeeping tasks either on a full-time or contract basis. The right choice for you depends entirely on the size and nature of your business, your budget, and your own comfort level.

If your business deals with confidential, high-risk information, it may not be a good idea to hire a freelance or online accountant or bookkeeper. Conversely, if you’re running a very small business with a tight budget, hiring a full-time bookkeeper might be too expensive and a freelance or online accountant may in fact be the right choice.

Top Tip: Bookkeepers are generally responsible for recording financial transactions while accountants are trained to analyse and create detailed reports for such recordings. To learn more about these differences and whether or not you should hire a professional to help you with your business finances, read our complete guide to the difference between an accountant and a bookkeeper 📊.

Step 8: Automate your invoicing process

A great alternative to hiring a professional bookkeeper is to use specialised software that automates the most repetitive parts of your invoicing process. Automation is much cheaper, easier to manage, and minimises the risk of human error.

Tide, for example, comes with several built-in features that help streamline your invoicing process. One of those features is the ability to create and send invoices on the go using either a mobile app or a desktop web app if you prefer.

Tide also automatically saves your invoices so you always have an up-to-date record of the bills you’ve sent out to clients in the past. You can easily match invoices with payments, and mark invoices as paid invoices so that you know that you no longer need to follow up with reminders.

A screenshot of Tide web application Invoice Module user interface

If you’re a limited company, you can protect your Tide invoices with Hokodo invoice insurance, which insures 90% of the total amount against non-payment by a customer.

A screenshot of Tide web application's Invoice Details user interface

Wrapping up

Streamlining your invoicing process is one of the best things you can do to improve your company’s cash flow and overall financial health.

Start by creating a standardised invoice outline, and then choose how to create the invoice. The next steps include setting a schedule, selecting payment methods, maintaining a backup of past invoices and regularly following up with clients.

To save time and minimise errors, you can also choose to hire a professional accountant or bookkeeper or sign up with Tide and use reliable invoicing software for free 🎉.

Photo by Adam Winger, published on Unsplash

Shahree Zin

Partnerships Manager and small business accounting advocate

Tide Team

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