Invoicing Software vs. Excel

When starting a business, many people wonder why they should use invoicing software when they can easily create their own custom invoices with Excel. There’s an abundance of different software available that can help you issue professional invoices, and it can be overwhelming to find the right one for your business.

This article explores the advantages and disadvantages of using Excel and invoicing software and how to find the ideal solution for your business.

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Invoice requirements and localization

Invoices are a legally binding request for payment, and there are mandatory invoice fields that must be included for them to be considered valid. 

Since Excel is not specifically designed for creating invoices, you’ll need to make sure that the mandatory information is input correctly. If any of the data is missing or incorrect, it can take you twice as long to rectify. In addition, you will need to keep track of any changes to your local invoicing regulations and tax rates. 

On the other hand, invoicing software is used specifically for creating compliant and professional invoices. The software will ensure that all of the mandatory information is included in your invoice before you issue it to your customer. In addition, most invoicing software is localized for each market and is updated regularly to reflect any changes to regulations or tax rates. 

Automated invoices

With Excel, you can add some automation with the use of formulas. However, you may still need to manually type out (or copy and paste) your customer and product details. Invoicing software eliminates this manual work and the possibility of mistakes or typos. You can upload customer and product information for quick selection when creating an invoice. 

Each invoice will also need to include a unique invoice number, in which your numbering sequence cannot contain gaps or repeated numbers. 

With Excel, you will need to check each invoice number to make sure that it’s compliant. If you repeat or skip an invoice number, you will need to cancel the invoice with a credit memo and create a new invoice from scratch. 

However, invoicing software will generate your invoice numbers and numbering sequence automatically. In addition, the invoice date, due date, and payment terms are also automatically entered for you. 

Sales tax

If your business is registered for sales tax, you will need to issue tax invoices for your sales. Tax invoices require additional information than non-tax invoices, and if your business is on a tax scheme, there may also be a different invoice format that you must use.

Sales tax and tax schemes are different in each state, so you should check with your local government to verify that you are invoicing correctly. Miscalculating tax on a single invoice can affect your tax return and may be very costly to fix. You may also incur fines if you incorrectly report your taxes.

Excel allows you to input formulas to automatically calculate your tax and totals. However, we recommend that you always double-check your calculations prior to sending the invoice to your customer. 

With invoicing software, the tax is calculated automatically, and you can select the different tax rates accordingly. The totals are calculated for you, and some software will even automatically create your sales tax report based on the invoices and expenses you record.

Invoice customization

Customizing your sales documents is a great way to get your brand recognized, and set you apart from your competitors. Both Excel and invoicing software allow you to customize your invoices. 

Most invoicing software includes an invoice designer, in which you can select a premade template, color schemes, logo, fonts, and images. Excel is a little more difficult because everything will need to be placed manually and formulas would need to be input correctly.

Invoicing to foreign customers

If your business sells products or services in foreign countries, it would be beneficial to localize your invoices for your customers. 

Invoicing software allows you to change the language and currency of an invoice in just a few clicks, ensuring that it’s compliant and correct. 

Unfortunately, Excel does not offer this feature. If you wish to invoice a customer in their local currency, you will need to look up the current exchange rate and calculate the totals yourself. If you would like to go the extra step and change the language of an invoice, you should find a qualified translator because online translations cannot always be trusted.

Offering invoices in your customer’s local language and currency provides some benefits. It shows that you’re willing to go the extra mile and minimizes the confusion between yourself and the customer. The customer may also pay the invoice faster.

Recurring invoices

If your business offers a recurring service, and issues the same invoice to the same customer on a regular basis, this is where invoicing software outperforms Excel.

Invoicing software allows you to set up automatic recurring invoices with a schedule of your choice. Once set up, your recurring invoices will be created and sent to the customer automatically without you having to lift a finger. If you’d prefer to check the invoice before having it sent to the customer, most software will allow you to do this as well. 

Excel does not offer a feature for recurring invoices. Each recurring invoice will need to be created and sent manually.

Keeping records of your sales

In the US, the IRS requires businesses to keep a record of their business documents for at least 3 years from the end of the tax year they relate to. However, the IRS can investigate your business taxes up to 7 years after. Therefore, it is recommended to keep a record of your sales and tax returns for 7 years.

If you create invoices with Excel, you need to download the invoice to your device and issue it to your customer via email or by mail. Since your invoices are saved to your computer hard drive, you run the risk of losing your data if your computer crashes. Therefore, we recommend uploading your important data to cloud-based software on a regular basis.

With online invoicing software, all of your invoices and sales documents are automatically saved to the cloud and can be accessed from any device with an internet connection. You can rest assured that your important data will never be lost, even if your computer crashes.

Customer support

Most invoicing software offers free customer support or tutorials, blogs, and help articles. The majority of customer support advisors are knowledgeable not only about the invoicing software but also about invoicing regulations and accounting. Using these resources can help you get any questions you have answered quickly and accurately. 

Additional sales documentation

Invoices are just one part of a larger sales process. There are many other documents that you may issue to your customers, including quotations, proforma invoices, payment receipts, and delivery notes.

Because Excel is not designed for creating sales documents, each document will need to be manually created and designed by you. 

On the other hand, invoicing software can help you to create all of the different documents quickly, from initial quotes to payment receipts. Invoicing software can also convert your documents, for instance, converting an accepted quote into an invoice. 

Invoicing and accounting integration

Invoicing and accounting go hand in hand. Most invoicing software also includes accounting features, such as accounting reports like the balance sheet, bank reconciliation, and expense management. 

Using invoicing software with built-in accounting features will help you to reconcile your accounts and complete your tax returns.

Summary - Excel vs. invoicing software

Excel is a program that most professionals know how to use. For that reason, it can be a useful tool if you only issue the occasional invoice. However, invoicing software offers many benefits and can help you save time and money in the long run. Therefore, invoicing software would benefit your business if you issue more than a couple of invoices per month. 

SumUp Invoices is free invoicing software that can help you create and issue professional invoices in less than 1 minute. You can customize your invoices with your business details, issue invoices in foreign languages, and contact our free customer support team if you have any questions. 

Your invoices and payments are centralized and each invoice will automatically include a payment link. Your customers can pay the invoice instantly and securely online.

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