How to keep track of invoices and payments efficiently

One of the best parts of running your own business is getting paid. But creating an invoice, sending it to your client, and keeping track of it throughout the process can become complicated, especially when working with multiple customers on different billing cadences. From chasing down a late payment to realizing you invoiced the wrong client, you may feel like you can’t catch a break.

Fortunately, you don’t have to be an accounting expert to develop a convenient, headache-free invoice tracking system. Whether you choose to rely on a simple invoice tracking spreadsheet or prefer the advantages of automated accounting software with invoice tracking capabilities, there’s a digital solution for nearly every type of business.

Tracking invoices

The best way to keep track of payments comes down to the type of business you run. For instance, the way freelance writers invoice their clients (after the submission of an article) can be quite different from how interior designers bill theirs (such as 50% upfront with the remaining balance due 30 days after completion).

No matter how you choose to keep track of accounts payable, it boils down to creating a uniform, reliable process that works best for your business. And if you choose the right accounting software and integration, you can send and track e-invoices and payments with ease. Compared to an Excel sheet, accounting software takes the manual process out of invoice tracking. Check out the accounting software PayPal integrates with.

How to track payments from clients

In the accounting world, money owed to your business from customers is known as accounts receivable. Here are tips for keeping track of outstanding invoices:

• Use the sameinvoice template. Choose an invoice template and stick with it. That way, your invoices will not only look the same but will also follow similar payment terms and conditions. (This is helpful when dealing with late or missed payments.)
• Consider thebenefits of electronic invoices. Compared to paper invoices, which can easily get misplaced or lost, electronic invoicing can be a faster and simpler way of billing clients and tracking invoices.
• Develop uniformpayment terms and conditions. Make sure clients follow the same payment terms to avoid a situation like the following: Client A’s invoice is marked late on day 31 whereas client B’s invoice is labeled late on day 61. This can result in unnecessary confusion when tracking.
• Create a process for payment follow-ups. It’s important to create a process for invoice follow-ups once payment is considered late or expired. That way, you lower your chances of losing track of unpaid invoices.
• Track all payments received. Keep meticulous records of every payment received by your business, either in your accounting software or via an Excel spreadsheet.
• Automate your invoicing process. With an invoicing software, you can automate the entire invoicing journey, from sending invoices to receiving payments.

How to keep track of accounts payable

On the other hand, the money you owe to vendors and expenses is called accounts payable. Similar to tracking outstanding invoices, it’s just as critical to keep tabs on how much you owe.

• Categorize payments by type. Break down who you owe by payment types, such as vendors, credit cards, and more.
• Use an outgoing invoice tracker. This can help keep track of who hasn’t been paid yet. You can create one with Excel or accounting software.

Tracking invoices in an Excel spreadsheet

An easy way to create your own invoicing tracking template is by using an Excel spreadsheet. With an Excel spreadsheet, you can organize your billing in multiple ways. While a ledger is usually kept chronologically according to date, an online tracker can filter your invoices based on name, receivable, date, receipt number, and more. When creating your Excel invoice tracking template, it’s a good idea to start by including the following:

1 Invoice number

2 Customer

3 Invoice date

4 Due date

5 Amount

6 Amount paid

7 Outstanding amount

8 Status

Pro tip: If you want to automate your invoice tracker, PayPal Invoicing can do the heavy lifting for you. The PayPal invoice tracker updates automatically to include each new bill and track its payment status. You’ll see the status of each invoice and have the ability to record payments, send reminders, and more, using a convenient drop-down menu.

Customizing your invoice tracker

Once you’ve got the basics covered, you can think about customizing your invoice tracker to meet your specific needs. Does it make sense for your billing to include additional information about the customer? Do you have employees who made the sale or provided the service? When tailoring your invoice tracker template, you may consider including the following details:

1 Customer contact information

2 Point of contact

3 Employee

4 Reminder

5 Late fees

6 Past due age

How to use PayPal’s invoice tracker

With PayPal Invoicing, you'll have a dashboard where you can view the complete history of an invoice, accept payments from 200+ markets around the globe, and more. Even better, PayPal Invoicing can help you get paid fast by giving your customers an easy way to pay – even if they don’t have an account with PayPal.

No matter what kind of invoice tracker you use, organization is key. You’d hate to leave money on the table because of a messy ledger. PayPal Invoicing can help you stay organized, save time, and get paid fast.

With PayPal, creating an invoice can be more than two times faster – and includes real-time previews, guidance, and easy options to add common line items such as tax and shipping. 1

Here’s a quick guide on how to use PayPal for Invoicing:

1. Sign up for a PayPal account, or log in if you already have one.
2. Create and send an invoice from the PayPal website or mobile app.
3. PayPal shares a link to the invoice with your client via email, or you can share a link on your own.
4. Customers can make a payment. We’ll notify you when the money lands in your PayPal account.

How to find your PayPal Invoice ID

Your PayPal Invoice ID, also known as your PayPal invoice number, is a unique reference number for each transaction you make with PayPal. When you complete a transaction, PayPal sends a confirmation email that includes the Invoice ID.

Additionally, you can find the Invoice ID directly in your PayPal account by following these steps:

1. Log into your PayPal account.

1. Click on the "Invoices" tab.

1. Look at the “Invoice no.” column to find your PayPal Invoice ID.