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Let’s keep the coronavirus aside for a moment.
Automation of payments and invoicing is increasing in every sector. The use of online payment solutions has simplified the time-consuming, laborious task of managing payments and invoices.
Yet, many business owners were hanging in, trying to somehow delay the adoption of new technology.
But with COVID-19 crippling small and medium businesses (SME), online invoicing systems are acting as lifesavers.
Let’s take a look at how online invoicing software for businesses is helping retailers become operational amid COVID-19.
Effect Of COVID-19 On Small Businesses
An ITC survey found that one out of four small businesses in developing countries will permanently shut down due to the COVID-19 outbreak. Experts predicted a downward economic trend early on, but no one expected that the impact would be so massive.
According to the study, more than two-thirds of SMBs are at the risk of shutting down completely. And since small businesses make up more than 95% of all firms, accounting for around 50% of the value, the crippling of small businesses resulted in a global economic slowdown.
The shutting down of brick and mortar stores is one of the major challenges small businesses are facing during the crisis. Most stores have been forced to shut down, resulting in a complete cessation of sales and revenue. And businesses that lack online selling capabilities are the most vulnerable.
The Rise Of Online Payments
A report from Cox Business suggested that online selling capabilities are the key to revival for small businesses.
Digital payments have been growing over the past couple of years. Before the onset of the COVID-19 pandemic, online payments were merely an escape from the hassle of using cash and cards. But with social distancing becoming the new normal, online payments act as a safe and secure way to complete transactions.
A report by Statista anticipated that online transactions would reach $493 billion in 2020. Several factors are accelerating the acceptance of digital payments. These include:
1. Cash Is Losing Its Value
Currencies are a deadly carrier of the virus. Major economies like Canada and the USA are supporting online payments to alleviate the outbreak. There’s also a substantial increase in the number of downloads of online grocery apps, like Instacart and Walmart.
2. The Demand For e-Commerce
Since people can’t go out to shop, they’re opting for online shopping. Even in countries where the lockdown has been lifted, people prefer online shopping over in-store shopping.
A report from The Financial Brand indicated that 40% of customers shop online more than shopping in-store. As a result, many retailers are focusing on their online clients and customers.
3. An Extensive Perspective
It’s clear that the coronavirus is here to stay, and it’s not ending anytime soon. Subsequently, the number of online transactions has increased. But even when things get back to normal, the use of online payments will continue to rise.
What Should Businesses Do?
Before the pandemic, online payments were a choice. Many business owners were successfully running their businesses without any digital capabilities.
However, things have changed now.
Consumers have shifted more towards online payments, regardless of the business sector and type. And the day is not far when online payments will entirely replace cash and card transactions.
Therefore, businesses should work towards digitizing and automating their invoicing and payment operations. Online invoicing systems will now play a critical role in helping businesses keep up with the rising demand for online payments.
Though adopting the new technology might take some time, a client payment tracker app can automate the entire invoicing and payments process, thereby enhancing the overall operational efficiency.
How Can Invoicing Software Keep Your Business Operational?
The next question that arises is should a small business or startup invest in online invoicing technology?
Yes, you should!
Online invoicing software for businesses like Moon Invoice can help you generate paperless invoices with seamless reconciliation functionality.
Let’s delve into how digital invoicing technology can be a game-changer for SMEs during and after the pandemic.
1. Recurring Invoice
Online estimate and invoice software for enterprises allow you to create and send the same invoices periodically. Subscription-based service providers and freelancers need to go through the drudgery of preparing and sending the same invoices repeatedly.
With the demand for SaaS products and online services increasing, an online payment system can make your invoicing quick and efficient.
2. Payment Collection
Conventional door-to-door payment collection requires human contact. This elevates the risk of virus spread.
Besides, this method has other drawbacks. You’ll need to appoint employees specifically for collecting payments. Other issues like the absence of change and unavailability of customer are also prevalent.
A client payment tracker app allows you to create digital invoices with a payment link. It enables your customers to pay online, thereby eliminating human contact and leg work.
The customer also benefits from online payment as he or she can pay anytime and from anywhere.
3. Payment Reminders
In the conventional payment collection method, you had to continually remind customers of payments. Or worse, you had to jump right in front of them, which created inconvenience for both you and your customers.
Online invoicing software for businesses helps you solve this hurdle. It sends automatic payment reminders to customers, which ensures timely payments.
4. Reconciliation
Many small business owners rely on registers to maintain the invoicing process. These registers are used to identify active and inactive customers, received and pending invoices, and defaulters.
However, maintaining registers is tedious and time-consuming. These registers can also play a role in spreading the virus.
Online estimate and invoice software for enterprises reconcile all accounts, balances, and invoices to a centralized dashboard. It also notifies you of pending invoices and defaulters. Therefore, you can save time and resources that you were earlier spending on tallying invoices and collections.
5. Customer and Service Management
Identifying and managing customers is essential, especially during COVID-19 when businesses are struggling to acquire new customers. An invoicing platform creates a service list of all customers, along with the services offered and price billed. It eliminates any calculation errors and allows you to provide a seamless customer experience.
Wrapping Up: The Need For Online Invoicing
With human contact diminishing and the use of online payments increasing, online invoicing is a must-have for business owners.
However, businesses should not look at online invoicing software as a mere escape from the COVID-19 slowdown. It’s essential to have a long-term vision of how online invoicing can offer tangible benefits to small businesses.
Also, don’t forget to check out Moon Invoice for easy digital invoicing for SMEs, startups, and freelancers.
Recurring Payments Vs Recurring Invoices
| Recurring Payments | Recurring Invoices |
|---|---|
| Recurring payments charge the customer’s credit card account or debit card account on a predetermined schedule for the same amount as preapproved. | Send an invoice to your customer on a regular basis. The client receives the invoice but, money is not paid unless the customer approves. |
| A business that takes prepayment of money and sells a monthly subscription service and product. Subscription services are excellent examples of this. | A company that provides fixed services with billable hours is an excellent choice for recurring billing. For example law firms and consulting agencies. |
Pros and Cons of Recurring Invoices
| Pros | Cons |
|---|---|
 You eliminate the possibility of human error by automating the billing process. If you use a recurring invoice, you will not be concerned about forgetting to charge your customers for the things they ordered. |
 You must exercise caution while recurring billing to prevent issuing inaccurate pricing. This also holds for price changes that could take place right once an invoice is created. |
|
If you provide your customers with the option for recurring billing, they are more likely to buy products regularly. |
It could be difficult to cope with recurring invoices if a transaction fails for any reason. |
| Net 45 | Invoice is due in full within 45 days with no early payment discount offered |
| 2/10 net 45 terms | 2% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days |
| 1/15 net 45 terms | 1% discount if you pay within 15 days; otherwise full payment of the invoice is due in 45 days |
| 1/10 net 45 terms | 1% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days |
| 1/7 net 45 terms | 1% discount if you pay within 7 days; otherwise full payment of the invoice is due in 45 days |
| Category | Net Method vs. Gross Method | Explanation |
|---|---|---|
| Calculation Approach | - Applies tax credits first; reduces taxable income before computing tax liability. | - Doesn't apply tax credits; computes taxable income without considering tax credits. |
| Tax Credit Eligibility | - Allows for greater likelihood of tax credit eligibility due to reduced taxable income. | - Limits tax credit eligibility because taxable income hasn't been reduced yet. |
| Itemized Deduction Requirement | - Lowers threshold requirement for itemizing deductions due to decreased taxable income. | - Raises threshold requirement for itemizing deductions due to higher taxable income. |
| Advantages | - Leads to lower taxable income and increases chances of meeting qualifications for other tax benefits. | - Results in higher taxable income compared to net method. |
| Disadvantages | - May miss opportunity to reduce tax burden if taxpayer doesn't itemize deductions or take advantage of tax credits. | - Increases taxable income and may result in higher overall tax bill. |
Best Online Accounting Software for Small Businesses
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