How To Keep Track Of Invoices and Payments
- Proper invoice and payment tracking is essential for managing a business's cash flow and ensuring timely payments from clients.
- To streamline the invoicing and payment tracking process, businesses should establish clear payment policies and procedures, communicate them to clients, and regularly review their payment records to identify any outstanding invoices or payment issues.
- This article suggests several tools and methods for tracking invoices and payments, including accounting software, spreadsheets, payment gateways, and automated reminders.
Keeping track of invoices and payments is a task anyone has on their daily to-do list. Luckily, there are ways to make everything related to client invoicing easier.
Regardless if you’re a freelancer or agency owner, you have to keep track of payments and make sure invoices are paid on time. Maintaining accurate invoice details is crucial for understanding outstanding payments and supporting better cash flow. Some companies manage everything via Excel spreadsheets, others have an app that triggers reminders.
Let’s look at a few ways you can handle your invoice management and reduce the amount of work you have to do manually, especially when clients are not paying invoices.
What is invoice tracking?
Invoice tracking is the process of monitoring and managing the status of invoices from the moment they are sent to the moment they are paid. This involves keeping a close eye on invoice data, such as payment status, due dates, and outstanding balances. By doing so, businesses can ensure timely payments and maintain a healthy cash flow.
Effective invoice tracking helps in identifying overdue payments quickly, allowing businesses to take necessary actions to follow up with clients and avoid cash flow disruptions.
Why invoice tracking important is
Manual invoice tracking doesn’t only burden your team, it’s also a sheer impossible task to fulfill error free. Sooner or later, managing invoices and payments manually will lead to issues, and therefore, lost revenue.
With an invoice and payment management system, you not only have a better overview of your financial data, you can also chase unpaid invoices sooner.
How to track invoices and payments (5 methods)
In order to keep your cash flow pumping, you should do more than just creating invoices and hoping they get paid. Implementing an effective invoice tracking process is crucial to streamline accounts payable and improve cash flow. Tracking invoices is an essential part of your business. But which method should you use?
Let’s look at the five best ways to keep track of invoices and payments.
1. With Service Provider Pro
Service Provider Pro is a client portal software and client payment tracker. Not only does it allow you to create recurring invoices with (and one time ones), it can also track payments. For late invoices, it sends an email reminder to the client, so you don’t have to start chasing clients for payment.
The best thing is that recurring payments are automatically processed via your preferred payment processor. This means less work for you as you don’t have to worry about payment collection.
2. Using invoice tracking software
QuickBooks and Xero are two of many available invoice software solutions that you can use to not only generate invoices, but also track them. Pretty much any modern invoicing software has an option to send automated reminders as long as an invoice hasn’t been paid.
With that said, you should look for a tool that not only allows you to create and send invoices, but also integrates with payment processors such as Stripe and PayPal. Only then will you have less work to do because the payments are tracked automatically.
3. Manually with Excel sheets
In a world of customized software and sophisticated automations, Excel is still alive and kicking. And yes, you can use it as an invoice tracker, albeit it has a few downsides. The good news is that there are templates such as this one you can make use of, so you don’t have to start from scratch.
Depending on the nature of your business, keeping tracking of tens or hundreds of invoices every month in a spreadsheet can become cumbersome. The biggest disadvantage is that your invoices are saved somewhere else, and you have to manually track payments, then enter the paid at date into your sheet.
4. Delegating it to a VA
As a business owner, keeping track of payments and invoices isn’t the best use of your time. You should be focusing on growing your company and scaling it up.
A good way to free up your time is by employing a virtual assistant who helps you with smaller tasks, such as tracking payments manually and following up with clients who haven’t paid invoices.
5. With automation software
Cloud-based software such as Zapier and Make.com allow you to build powerful automations by connecting with the tools you’re already using. You could, for instance, check a row in a Google sheet and as long as a paid date is missing, send an unpaid invoice reminder.
If you want to go the extra mile with your automation, hook it up via an API to your bank account, and check if you’ve received a payment that matches the invoice amount and number.
Choosing a method to track payments and invoices
A lot of business owners think that it’s not that much work to manually invoice and track payments. However, depending on your business activities, things can quickly spiral out of control.
So, when you’re deciding on a method to keep an eye on everything, keep the following in mind:
Your business can change overnight and require a lot more invoicing and payment tracking.
It’s easier than ever to have automatic payment processing coupled with invoice generation.
Automation can be a helping hand when you decide to stick to the good old spreadsheets.
Invoicing software and client portals make invoice processing mostly automatic.
In the end, there are very few reasons to handle invoices manually and stay on top of unpaid ones. The tools you need to automate this process require a minimum investment that will pay off in the long run.
Keep track of invoices and payments FAQ
How to keep track of invoices and payments in Excel template?
Excel templates usually have a special column where you can add the invoice paid at date. If it’s missing, then you need to manually follow up regarding the unpaid invoice.
How to track invoices and payments?
The best way to track invoices and payments is via a client portal that has built-in invoicing and payment tracking capabilities. Regular invoicing software also allows you to keep track of unpaid invoices, and sometimes incoming payments.
Summary
If you’re an agency owner, you simply have to keep track of invoices. While a freelancer might be able to use a spreadsheet because they don't have that many invoices in a month, agencies will quickly realize that there are just too many disadvantages in tracking invoices manually.
Invoicing should be easy and not require manual tasks. It should integrate with your accounting software, there should be a way to display a report, and an option to send payment reminders. This can only be achieved with a modern software program such as Service Provider Pro. It will also shield you from clients disputing invoices because you made an invoicing error.
