Much as it makes my FreshBooks peers scoff, I never realized there was anything wrong with using Word and Excel to manage my business. I was proud of my fastidious tracking system, my invoice naming conventions and folder structure, my weekly and monthly financial rituals.
Truth is, the familiarity of Word and Excel makes it an easy and automatic decision for many freelancers and small business owners. Because of this, we inhibit the pesky signs that it’s the wrong way to manage your business. And we don’t notice just how much time it’s all taking.
Here are 5 signs you should reconsider using Word and Excel:
It’s a cinch, right? You pull up last month’s invoice for your client, hit “save as” and update the information. It feels like no big deal when you’re doing it. You just save the new copy and send the invoice on its merry way.
But then you get an email from your client (or their A/P department): You forgot to rename the invoice number. Or update the dateline. Or – even worse – your math was wonky. You have to get back to your computer to edit the original, check everything and send it off again.
If you’ve used Word / Excel for invoicing for a while, odds are this has happened. If it hasn’t, I guarantee it will. In the grand scheme of things, it’s no big deal. But details matter and, when an error does happen, it’s a time suck that’s completely unnecessary.
Instead, look for a solution that automatically updates invoice numbers and dates. Put away your calculator and let good software do the math for you.
I was a perfectionist about my invoice naming conventions and the folder structure I used to keep records. Until I wasn’t.
The first time it happened, I was probably multi-tasking a bit too much (the bane of a small business owner’s life). But occasionally I’d discover a gap in my invoicing history.
Thankfully, all was not lost: I could go through the sent emails until I tracked down the appropriate invoice. But that didn’t feel great: I felt like I wasn’t in control of my paperwork.
The familiarity of Word and Excel makes it an easy and automatic decision for many freelancers and small business owners. Because of this, we inhibit the pesky signs that it’s the wrong way to manage your business.
It’s easy to put down these mistakes down to human error. I too was good at recovering my composure once I had tracked down the missing invoice. I’d simply resolve not to let it happen again.
What I should have realized is that it would happen again. What I needed wasn’t a better regime, but a better tool. We tend to be hard on ourselves when we make mistakes; but instead of taking the failure out on yourself, question your tools.
If your knife doesn’t cut steak, you get a better knife. If your invoicing system fails you, don’t think “oh, I’m no good at accounting”, consider if there’s a better solution.
Just last night I was making a spreadsheet and I discovered a sum range that was missing a cell I had later added.
I’m not going to lie: Excel is great. If you’re my age, it revolutionized accounting for personal and business finances. But it’s also far from perfect. Your spreadsheets have to be built, populated and updated manually – that means mistakes.
Most likely, Excel is also compartmentalized from your invoices and your expense receipts. That means there’s a whole bunch of manual reconciliation needed. And that increases the possibility of errors.
Again: Don’t think this means you’re bad at accounting. I’ve discovered errors in spreadsheets of real accountants (and they definitely know way more about money-management than I do!) Instead, consider your tool.
What if your invoices, expenses and reports could be handled by the same tool that automatically pulled everything together? Then you’d only have to enter the right information once and it would all carry through.
And in the case where you did make a mistake, you’d only have to fix it one place. No more going through files and folders to update all the affected docs and spreadsheets. Sounds better, right?
Cash flow is just one of those concerns that comes with being a freelancer or small business owner, right?
If you’re checking the mailbox daily for checks, it’s time to level up your payment system. While to some extent, you’re always beholden to your clients’ system and schedule, more and more people want to pay online with credit cards.
If you’re checking the mailbox daily for checks, it’s time to level up your payment system.
For more than 15 years, I’ve had freelancers working for me. Back in the day, it was the norm to receive a Word invoice and flip it over to the accounts department with my approval. They’d process invoices bi-weekly and send out checks on a scheduled run.
It meant we guaranteed payment within 30 days, which is a long time to wait. And that assuming the check made it through the mail in a timely fashion (when it didn’t, we had an elaborate cancel / reissue process).
Now, I have freelancers who invoice me online. I pay them the very same day they invoice me. Moreover, I have no preference for how frequently they invoice me (some invoice after they file a single story, others stick to a monthly cadence).
This immediacy makes it easy for me as a client and for them as a freelancer. What’s more: I don’t give a second thought to where I’m being invoiced from. I have freelancers in South Africa, Australia, Canada and the US, to name a few.
So, if you’re struggling to get paid, or limiting yourself to where you can work because of the payment / cash flow implications, consider a tool that enables online payment. Your clients and your wallet will thank you.
Does evening or weekend bookkeeping sound familiar? I used to carve out some of my leisure time to get my invoices out and my spreadsheets updated. It always felt like something I needed a good run at, so I time-blocked it.
This makes invoicing feel like a more significant chore than it need be.
It also meant I was sending invoices in wee hours, when my clients weren’t working. So, if there are issues, there was a lag time hearing back from them.
But the biggest problem this caused was that I maintained this idea that there are two modes to running your small business: Doing the work and managing the business. (I definitely thought this – and I was definitely more comfortable with one than the other.)
If you choose a tool that makes invoicing and expense-management a series of small tasks you can manage on-the-go, it’s easier to integrate accounting into your working life.
No need to wait to get back to your desk and take on the chore of paperwork… instead, you’ve reduced it to a series of small micro-tasks that integrate with your day. And no more leisure-time lost to paperwork.
I don’t freelance much anymore. But if I were to return to the freelancing world today, I would no longer reach for Word when it came time to invoice a client.
My eyes have been opened by working at FreshBooks: There’s a better way. Managing your finances can be seamlessly integrated with your working life with the right tools.
Of course, FreshBooks is far from the only tool on the market so do your own due diligence. It’s important to find the right tool for your small business. So, consider your options and even try some of those options out (FreshBooks has a free 30-day trial, so you can play with it, risk-free).
Wherever you land, I hope you leave Word and Excel in your rear-view mirror!