Why you need an invoicing software

Do you invoice your customers from an invoicing software or do you make your invoices yourself in Word or Excel?

If you don’t send too many invoices, it’s probably tempting to duck that monthly fee for a dedicated invoicing software, and instead just make your invoices in Word or Excel – applications you already know and love, and have installed. But invoicing applications have many advantages that you may not think of.

Different invoicing applications do things differently. Below we focus on the invoicing function you can usually find in traditional bookkeeping applications, such as Fortnox which we use at Account Factory.

Sending invoices

At the press of a button you can send invoices as PDF in an email directly from the software. You can also send invoices as electronic invoices (EDI), which more and more recipients require today. EDI invoices go directly from your invoicing application to the recipient’s accounting system, without going via a PDF that needs to be interpreted. Don’t confuse EDI invoices with the Swedish system for electronic invoices (e-faktura) to individuals, which are delivered to the individual’s internet bank.

Many invoicing applications can even automatically print paper invoices and snail-mail them to their recipients, if you should need this.

Get the details right

Manual invoices are often made from a template e.g. in Word or Excel, or based on a copy of the last invoice. If you manually adjust details like invoice numbers, invoice date, due date etc, something will sooner or later end up wrong. We see soooo many invoices with the wrong year, due dates that don’t exist (like April 31), or invoice number duplicates. This looks unprofessional towards the customer, can cause problems with payments and problems in your and your customer’s books, and worst case even cause problems with Skatteverket.

With an invoicing software you can create articles for goods or services that you often invoice for, so you always get the right price, article name and bookkeeping account.

Do you know what information that by law needs to be in an invoice? Especially the Swedish VAT act (in large parts based on EU regulations) is very specific in this area. An invoicing software helps you get this right.

Here is btw Skatteverket’s web page about invoicing rules (according to the VAT act).

Automatic bookkeeping

If you create an invoice manually you or your accountant also need to register it manually in your books. If you use the invoicing feature in your accounting software, the invoice is registered automatically in your books. Your revenue will then also be updated in more or less real-time.

With standard accounts and articles you can also make sure invoices are registered to the right accounts every time.

Information for tax returns

Of course everything should be in place in your books for each VAT return. But IF you have a chaotic month and don’t have time to register all your expenses in a VAT period, the most important thing is that at least revenue and VAT payable are in place. Which is done automatically if your customer invoices are already in your accounting software.

For the EU sales list for sales to companies in other EU countries (periodisk sammanställning), you only need revenue numbers and VAT numbers to your customers. If you invoice in your accounting software, the information is already there, regardless of whether you or your accountant has had the time to close your books or not. And your accounting software can produce the necessary information for the EU sales list automatically, so you don’t have to gather the information by hand.

Reminders, collection and factoring

Most invoicing applications have features that easily let you remind your customer of unpaid invoices. And they often offer you the possibility to buy reminder and collection services from a third party service provider who takes care of this for you. Often you can even sell your invoices, i.e. get paid for your invoices right away instead of waiting for the customer to pay.

De allra flesta faktureringsprogram har funktioner där du enkelt kan påminna kunder via email om obetalda fakturor. Eller möjligheten att köpa in påminnelse- och inkassotjänster från en leverantör som sköter det åt dig. Du kan ofta även sälja dina fakturor, dvs få betalt för dina fakturor direkt istället för att vänta in att kunden betalar.

Accounts receviable and registering payments

An invoicing software automatically creates the accounts receivable, i.e. a list of all sent invoices and their payment status. You can use this for customer statistics or just to see which invoices are paid and not. When you or your accountant closes your books for the year, the accounts receivable makes it very easy to reconcile this balance sheet item.

Payments are registered in your accounts receivable and are thereby automatically registered in your books. Fortnox and many other applications can nowadays import payment information from your bank and automatically match payments to invoices. The large majority of the 1000+ payments Account Factory receive every year, are handled automatically with any manual action from us whatsoever.

Conclusion

Let’s say an invoicing application costs 150 SEK/month or something like that. Sure, that’s money too. But considering all the advantages of an invoicing application, this is often well invested money.