For businesses of all sizes, managing invoices can become challenging when dealing with numerous clients and suppliers. If you're spending hours on administrative tasks like invoicing, it can be tough to stay on top of your financial game. Plus, there's always the possibility of making costly mistakes.
That's where consolidated invoicing steps in. On this page, we'll explain consolidated invoicing, how it works, and how it can boost your revenue. We’ll also explore how Checkout.com can help your business manage invoices and recurring payments.
Consolidated invoicing is the process of combining multiple invoices into one comprehensive invoice, saving time and making it easier to track revenue. Freelancers and subscription-based businesses typically use consolidated invoicing to allow their clients and customers to make a single, recurring payment rather than individual, smaller payments.
You’ll find consolidated invoices especially beneficial if you’re regularly in these scenarios:
In a regular invoicing setup, an invoice is generated for each individual purchase made by the customer, no matter when it happens. Each subscription is handled as its own distinct purchase. However, a consolidated invoice is created only once within a specific period by combining all the client's purchases made during that time frame.
Invoice consolidation is straightforward. It’s even easier when you use payment services for subscription-based businesses, like Checkout.com. Below, we’ll explain the basic steps of the consolidation process.
When dealing with repeat clients or lengthy, ongoing projects, it's crucial to establish the billing cycle for your consolidated invoices in advance. This offers clarity for your clients regarding payment expectations and prevents long waits for your payments.
The chosen billing cycles should be logical and convenient for both you and your clients, aligning with the needs of your business. Monthly and 30-day cycles are the most common and are straightforward for tracking. We recommend avoiding excessively long cycles to maintain a consistent revenue stream for your business.
When creating consolidated invoices, it’s vital to maintain comprehensive records of both sent invoices and received payments. For example, you could track hours in one spreadsheet and your received payments in another.
This practice not only guarantees accuracy in calculating expenses but also offers an added layer of security in the event of any discrepancies post-payment.
When keeping records, be sure to include the following details:
After gathering all essential information and concluding a billing cycle, you should then input your time, services, and products into an invoice, and promptly dispatch it to your client.
Remember to include the following details:
Imagine you're running a company that offers three different products called A, B, and C.
Now, there's a customer who buys product A on February 10th, and they've set it up to renew every month on the 10th. Then on February 15th and 17th, they decided to also buy products B and C.
When it comes time to send them an invoice in March, you can put all three of these products together on one invoice. That’s because the combined cost is the same for the customer, no matter whether they pay for each individual product or as a whole.
However, in this scenario you have to adjust the prices slightly in a process known as prorating, which accounts for each product having a different renewal date. This prorating continues until the first renewal. After that, you can invoice all the products on the same day.
Consolidated invoices can help you save time and money, but here are the key benefits in more detail.
Instead of dealing with multiple invoices for different products and services, you just handle one, which saves time and effort. This frees up time that you can spend on growing your business in other ways.
And if you ever need to find a specific invoice, you'll have fewer documents to sift through, making retrieval easier. By combining consolidated invoicing with tools like automated invoice processing, your admin tasks are made a whole lot easier.
With fewer invoice-related tasks come fewer labor costs. Just think – it's cheaper to manage one invoice than many, so you’ll save money on paperwork, mailing, and the time it takes to process everything.
You can see everything clearly in one place, meaning you don't have to flip through a bunch of papers or screens to figure out which invoices belong where.
With just one invoice, there's less chance of making mistakes. For example, you're less likely to mix up which clients owe what, or forget to chase up outstanding, smaller invoices.
This means you can keep track of your money more easily, you know when payments are coming in, and it's easier to plan for the future.
Your customers appreciate when things are clear and organized, proving you're on top of things. Consolidated invoices also make it easier for customers to view and manage their expenses, saving them time and effort. With just one billing date and a consistent cycle, it simplifies things for your customers and leaves a positive impression of working with your business.
Because consolidated invoices are quicker and easier than sending regular invoices, customers tend to pay on time. They understand what they owe and when it's due, keeping your cash flow steady.
Remember, consolidated invoices are like putting all your groceries into one bag. It's easier to carry, you're less likely to forget something, and you can see everything at a glance.
If you run a subscription business, consolidated invoices can save you time and money. That’s where Checkout.com can help. With our Subscription and Recurring Payments solution, you’ll get better data and business analytics, stronger security and lower compliance costs. You should also see more of your transactions getting approved.
As time goes on, having this kind of modern payment system can really boost your businesses’ financial health. Why? Simply because when a subscription doesn't go through, it means months or years of lost revenue. So, every successful payment is vital.
With our Subscription Payments tool, we’ll provide all the information you need about how well your subscriptions are doing, which can help you grow revenue further. We’ll also guide you on how to set prices and billing dates to increase your earnings.
Talk to our sales team to learn more about how Checkout.com can help you scale your subscription business today.