Invoicing software for small businesses: A guide to get started

Invoicing
Invoicing

Stripe Invoicing is a global invoicing software platform built to save you time and get you paid faster. Create an invoice and send it to your customers in minutes—no code required.

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  1. Introduction
  2. What is invoicing software for small businesses?
  3. What are the important features of invoicing software for small businesses?
  4. How Stripe Invoicing works for small businesses
  5. How invoicing software can improve cash flow for small businesses
  6. How much does invoicing software cost for small businesses?
  7. How does invoicing software integrate with accounting and inventory systems?
    1. Maintaining unified financial data
    2. Automating bookkeeping
    3. Managing inventory
    4. Tracking sales and expenses
    5. Simplifying tax calculations
    6. Generating comprehensive financial reports

Invoicing is an important task for small businesses, but it can also be time-consuming and prone to human error when done manually. Invoicing software is designed to automate this process. It helps small businesses create, send, and manage invoices—saving them valuable time and reducing the risk of costly mistakes.

As more and more businesses make the switch to invoicing software, the global market for electronic invoicing is expected to expand at a compound annual growth rate of 22.4% until 2031. If you’re a small business owner and want to improve invoicing, the right software can be transformative. Below, we’ll discuss the features of invoicing software, and how it can make a difference in your daily operations.

What’s in this article?

  • What is invoicing software for small businesses?
  • What are the important features of invoicing software for small businesses?
  • How Stripe Invoicing works for small businesses
  • How invoicing software can improve cash flow for small businesses
  • How much does invoicing software cost for small businesses?
  • How does invoicing software integrate with accounting and inventory systems?

What is invoicing software for small businesses?

Invoicing software for small businesses helps create, send, and manage invoices. It automates many aspects of the invoicing process to save time, reduce errors, and ensure timely payment. Here are some of the benefits for small businesses:

  • Accuracy and fewer errors: Manual invoicing leaves room for error, whether through a miscalculation, a typo, or missing information. Invoicing software can automatically calculate taxes, apply discounts, and handle currency conversion—helping companies improve accuracy and avoid disputes.

  • Tracking of payments and overdue invoices: Invoicing software tracks payments automatically, and it allows businesses to set payment reminders to notify clients when invoices are due or overdue. This monitoring can reduce the time spent chasing late payments.

  • Financial insight and reporting: Invoicing software often offers reporting tools that provide valuable insight into a business’s financial health. The business can quickly identify which invoices are outstanding, track its revenue, and better understand trends in cash flow.

What are the important features of invoicing software for small businesses?

When you run a small business, you aren’t likely to have the time for administrative tasks such as invoicing. Invoicing software can make these tasks easier. Here are the features to look for in invoicing software:

  • Creating invoices: The invoicing software should be able to easily generate custom invoices with your logo, business details, and client information. Many options offer templates, making it simple to create polished documents.

  • Tracking payments: It can automatically track which invoices are paid and which are still pending to help you manage outstanding payments.

  • Automating reminders: The software can enable automatic reminders to notify clients when their payments are due or overdue, reducing manual follow-ups.

  • Accepting payments: Many invoicing tools integrate with payment processors, allowing clients to pay directly through the invoice using credit cards, bank transfers, or digital wallets. This accessibility simplifies the payment process and speeds up billing cycles.

  • Recurring invoices: If your business runs on a subscription-based or retainer model, look for software that can accommodate recurring billing. Set your billing schedule (e.g., weekly, monthly, annually), and the software will automatically invoice your clients.

  • Expense tracking: Some invoicing tools also include features for tracking expenses, which can help you manage finances more effectively. You can log expenses directly in the system; some tools can also categorize them for easier tax reporting.

  • Reporting: Invoicing software can generate reports that offer insight into your cash flow, outstanding payments, and revenue—helping you make data-driven decisions.

How Stripe Invoicing works for small businesses

Stripe Invoicing is ideal for small businesses that want a simple, automated invoicing solution. With Stripe, you can accept payments online, track invoices, establish recurring billing, and keep your finances organized.

To implement Stripe Invoicing, you’ll need a Stripe account, which you can create online. Once you sign up, you can use Stripe’s built-in invoicing features directly through the Stripe Dashboard. Stripe can also integrate with your existing accounting tools such as QuickBooks or Xero via apps from the Stripe App Marketplace.

How invoicing software can improve cash flow for small businesses

For small businesses seeking to improve their cash flow, automating invoice creation can reduce errors, give clients more payment flexibility, and provide real-time insight—all of which contribute to a healthier, more predictable cash flow.

Invoicing software can also speed up the payment process. Traditional invoicing methods—such as paper invoices and emails with manual payment instructions—can leave room for delays. With invoicing software, you can add features such as “Pay Now” buttons, so clients can pay directly from the invoice with one click.

Invoicing software can also provide up-to-date data for projecting cash flow, including outstanding invoices, revenue, and other metrics of financial health. By knowing the status of every invoice you send and when you can expect payment, you can make better-informed decisions about spending, hiring, or investing in growth.

How much does invoicing software cost for small businesses?

The cost of invoicing software varies depending on the features your small business might need, your business’s size, and its provider. As your business expands, you might want to consider flexibility in choosing your software. Here are the possible costs:

  • Free options: Using the free version of invoicing software can work for very small businesses or freelancers who are just getting started.

  • Subscription models: Invoicing software can charge subscription fees that typically range from $10 to over $100 per month, depending on the features and size of your business.

  • Transaction-based models: Other services charge at a per-transaction rate of about 0.4%–0.5%. This model is generally best for businesses with fluctuating invoice volumes.

  • One-time payment: Some software options charge about $100–$500 for a lifetime license, but this might not include cloud-based features or regular updates.

How does invoicing software integrate with accounting and inventory systems?

Invoicing software can integrate with accounting and inventory systems to sync your financial records with your invoices and other records. Here’s how this typically works and why it’s beneficial for a small business.

Maintaining unified financial data

By integrating your invoicing software with your accounting systems, all your financial data—from invoices to payments—is automatically recorded in the accounting ledger.

  • How it works: When you create an invoice, the invoicing software sends the data (e.g., the amount, taxes, discounts, payment status) directly to the accounting software. As payments are made, the accounting software automatically records them and updates your accounting system in real time—reducing manual entry and unifying your financial data into one place.

Automating bookkeeping

One of the biggest advantages of integrating invoicing software with accounting systems is automated bookkeeping. The software can automatically post income entries into your accounting software when an invoice is paid, with any outstanding invoices included in the accounting reports.

  • How it works: Let’s say you use QuickBooks for accounting and Stripe for invoicing, and you sync the two via an app from the App Marketplace. Every time you issue an invoice through Stripe and a payment is processed, that data flows directly into QuickBooks. This automation saves you the effort of reconciling payment discrepancies between two systems.

Managing inventory

If your business sells products, integrating your invoicing software with inventory management systems (e.g., NetSuite, QuickBooks Enterprise) enables you to automatically track stock levels as products are sold.

  • How it works: When an invoice is issued for a product, the invoicing software communicates with your inventory system to reduce the quantity of that product in stock. If a payment is processed, it will also update the sale status in your inventory system so you know what’s available at any given time.

Tracking sales and expenses

Integrating invoicing software with accounting and inventory systems can make it easier to track sales and expenses all in one place. This also allows you to see how each invoice affects your cash flow, expenses, and overall profitability.

  • How it works: Your invoicing software can track the price and deduct the cost of goods sold (COGS) from your inventory system. The accounting software then uses this data to track your profit margins, clarifying both your revenue and expenses.

Simplifying tax calculations

When your invoicing software is integrated with accounting tools, you can calculate taxes automatically. This is particularly helpful if you’re required to charge sales or value-added tax (VAT), which vary by region and can be complex to manage.

  • How it works: If your invoicing software has tax rate rules established, it calculates the correct tax on the invoice and passes that information to your accounting software. Some systems also enable different tax rates, depending on the country or state.

Generating comprehensive financial reports

By connecting invoicing and accounting software, businesses can generate comprehensive financial reports that show income, expenses, cash flow, inventory, and profitability—all in a single dashboard.

  • How it works: When invoices are created and payments are processed, your accounting system reflects that information automatically. This integration gives you immediate reports on revenue, expenses, outstanding invoices, and inventory for a holistic view of your finances.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.

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