What is invoicing? Everything you need to know

Invoicing is the process of creating and sending an invoice to a customer for products or services delivered. It’s a crucial part of your financial administration and directly impacts your cash flow.

In this article, we’ll walk you through how invoicing works, what to look out for, and how smart software like Payt can make your invoicing process easier and more efficient.

Table of contents:

1. What does the invoicing process look like?
2. What is e-invoicing?
3. Top 5 most common invoicing mistakes
4. How Payt simplifies invoicing
5. Frequently asked questions about invoicing

What does the invoicing process look like?

A well-structured invoicing process helps you stay organized, get paid faster, and avoid costly errors. Below are the typical steps in a standard invoicing process:

1. Collect the right details: Gather all necessary information like customer details, products or services delivered, tax rates, and payment terms.
2. Create the invoice: Make a clear invoice with the correct invoice number, date, payment information, and description of what was delivered.
3. Send the invoice: Email the invoice or use an e-invoicing system. Sending by post is still possible, but less efficient.
4. Track payment: Keep an eye on whether and when the invoice is paid. Offer convenient payment methods like direct debit or payment links.
5. Follow up if unpaid: If the payment doesn’t come in, send reminders or a dunning.
6. Record it in your bookkeeping: Make sure the payment is recorded properly and close the invoice in your system.

Tip: Set a fixed time weekly or monthly to handle your invoices. This keeps things organized and ensures nothing gets overlooked. Many companies align this with their tax filing or reporting schedule.

What is e-invoicing?

E-invoicing means sending invoices in a structured digital format (like UBL) that can be automatically processed by accounting software. This is not the same as emailing a PDF.

The table below clearly highlights the differences between traditional invoicing and e-invoicing.

Important: Peppol e-invoicing is becoming mandatory in more and more countries—especially for transactions involving governments or public sector entities. Want to make sure you’re ready? Visit our Peppol compliance page to learn how to future-proof your invoicing.

Top 5 most common invoicing mistakes

A mistake in your invoicing process can delay payments or even create legal issues. These are the five most common invoicing errors—and how to avoid them:

1. Missing invoice numbers: Makes tracking and reconciling invoices difficult.
2. Incomplete invoice details: Missing customer data or unclear descriptions can cause delays.
3. Incorrect tax rates: May result in fines, rework, or wrong tax filings.
4. Sending invoices too late: The later you invoice, the later you get paid.
5. No follow-up on unpaid invoices: Without reminders, invoices can slip through the cracks.

Solution: Use credit management software like Payt that helps you automate and prevent these mistakes.

How Payt simplifies invoicing

Payt automates your full invoicing process—from sending invoices to following up on overdue payments. Our software helps you get paid faster and saves time on admin work.

Benefits of invoicing with Payt:

• Automatically send invoices with attachments and payment links
• Follow up instantly with automated reminders and dunning emails
• Seamless integration with your accounting software
• Full visibility into the status of outstanding invoices

Want to see how Payt can streamline your invoicing process? Schedule your free demo and discover how we help you get paid faster with less effort.

Frequently asked questions about invoicing

How does automated invoicing work?

Automated invoicing uses smart software to handle the entire billing process for you—from creating and sending invoices to tracking payments and sending reminders. Once you set up your invoice templates and customer data, the system takes care of the rest. This not only saves time but also reduces human error and helps you get paid faster.

What is invoicing software?

Invoicing software is a digital tool that helps businesses create, send, and manage invoices. It streamlines the billing process, tracks payment statuses, sends follow-up reminders, and often integrates with accounting tools. With the right solution, like Payt, you can fully automate your invoicing and keep full control over your cash flow.

Is billing and invoicing the same thing?

They’re closely related, but not exactly the same. Invoicing refers to the process of creating and sending an invoice to a customer. Billing is broader—it can include invoicing, but also refers to the entire process of charging a customer, including collecting payments and handling disputes. In business, the terms are often used interchangeably.

Is invoicing accounts payable or receivable?

Invoicing is part of accounts receivable. When you issue an invoice, you’re expecting to receive payment—so it’s recorded as money owed to your business. Accounts payable, on the other hand, refers to invoices you need to pay to your suppliers.