# 5 Key Features of Billing and Invoicing Software | Capterra > Trying to figure out the key features of billing and invoicing software? Check out the five features users rate as the most important. Source: https://www.capterra.com/resources/key-features-of-billing-and-invoicing-software --- Accounting BasicsFinance & Accounting # 5 Key Features of Billing and Invoicing Software and Top Products That Offer Them Written by: Barkha Bali Barkha BaliAuthor Senior Writer Experience I’ve been writing for Capterra since August 2021, providing expert insights to help small and midsize businesses (SMBs) find the rig... [See bio & all articles](https://www.capterra.com/resources/author/bbali/) Published April 11, 2024 7 min read Table of Contents - [1\. Invoice creation](#1-invoice-creation) - [2\. Invoice processing](#2-invoice-processing) - [3\. Invoice history](#3-invoice-history) - [4\. Payment processing](#4-payment-processing) - [5\. Contact database](#5-contact-database) Manually creating customer or client invoices is time-consuming and prone to human error. A [billing and invoicing system](https://www.capterra.com/billing-and-invoicing-software/) ensures accuracy, speed, and reliability in generating invoices and managing billing cycles. It automates the process to reduce the risk of errors, expedite payment collection, and improve cash flow management. From invoice management and reporting to expense tracking and client communication, billing and invoicing tools offer a comprehensive suite of capabilities to meet the diverse needs of dynamic workplaces. However, understanding the most critical software features is crucial for businesses to shortlist a product that meets their needs. This article highlights five key features of billing and invoicing software based on the ratings given by verified software users. We’ve also included the highest-rated billing and invoicing software products for each feature. ## 1\. Invoice creation The invoice creation feature of a billing and invoicing tool lets businesses generate invoices for products or services delivered to customers. It automates processes such as adding item details, calculating totals, applying taxes, and formatting the invoice layout. Users can customize the invoice template to reflect their branding, including their company logo, color schemes, and layout preferences. This feature also includes a built-in calculator to automatically compute subtotals, taxes, and discounts based on the itemized entries and predefined settings. ### What business problem does invoice creation solve? Manually creating invoices can be time-consuming and prone to errors, especially for businesses with large volumes of sales transactions or recurring billing cycles. The invoice creation feature automates this process, saving time and reducing the risk of incorrect data entries or calculation errors. Moreover, the software automatically sends the invoices to clients, leading to quicker payment processing. This helps improve cash flow by reducing the time between product or service delivery and payment receival. ### Ideal users of the invoice creation feature Billing, accounting, and finance departments can use this feature to generate invoices based on sales agreements or contracts. They can bill clients for the services rendered or products sold. Additionally, administrative professionals or office managers responsible for invoicing-related tasks can use this feature to ensure timely billing and maintain accurate records. ### Top 3 products with the highest ratings for invoice creation _Analysis performed March 2024_ #### Trial/Free Version - Free Trial - Free Version #### Invoice creation feature rating 4.92/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Invoice creation feature rating 4.91/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Invoice creation feature rating 4.85/5 #### Device Compatibilty ## 2\. Invoice processing The invoice processing feature of a billing and invoicing tool automates invoice creation, tracking, and processing. It also automates repetitive tasks such as recurring invoice generation, sending reminders for overdue payments, and applying late fees. Users can track the status of invoices, whether they have been sent, viewed, paid, or are overdue, enabling proactive accounts receivable management. This feature often supports various payment methods, such as credit cards, bank transfers, and online payment gateways. ### What business problem does invoice processing solve? A disorganized or manual billing system can lead to inefficiencies such as payment delays, amount miscalculations, high processing time, and scalability issues. The invoice processing feature addresses these bottlenecks by automatically fetching and populating invoice data from other integrated systems, such as inventory management software. It also establishes validation checks to minimize errors in quantities, rates, and calculations. Moreover, it centralizes billing information, making it easier to create, track, and manage invoices in one place. ### Ideal users of the invoice processing feature Accounts and finance departments can use this feature to process, send, and track invoices for timely customer payments. They can issue reminders for outstanding payments from within the software, improving client communication and reducing administrative burden. ### Top 3 products with the highest ratings for invoice processing _Analysis performed March 2024_ #### Trial/Free Version - Free Trial - Free Version #### Invoice processing feature rating 4.91/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Invoice processing feature rating 4.82/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Invoice processing feature rating 4.80/5 #### Device Compatibilty ## 3\. Invoice history The invoice history feature of a billing and invoicing solution enables businesses to record and track all historical invoices generated within the system. Users can track the invoice number, payment date, invoice amount, or any associated notes or comments. They can also use filters such as the client name, invoice number, or date range to search for specific invoice entries. ### What business problem does invoice history solve? Maintaining a record of past invoices is essential for businesses to track financial transactions. The invoice history feature eliminates manual record-keeping by providing a centralized repository to store all invoice data, preventing the need for paper-based filing systems or scattered digital documents. Additionally, by referencing past invoices, businesses can provide evidence of agreed-upon terms and quickly address discrepancies such as incorrect product quantities, prices, or taxes. ### Ideal users of the invoice history feature Accounting and finance teams can use the invoice history feature to track and manage all past invoices, reconcile accounts, generate financial reports, and facilitate audits. This feature also helps them monitor revenue trends, track customer payment behaviors, and analyze the effectiveness of billing strategies. ### Top 3 products with the highest ratings for invoice history _Analysis performed March 2024_ #### Trial/Free Version - Free Trial - Free Version #### Invoice history feature rating 4.90/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Invoice history feature rating 4.84/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Invoice history feature rating 4.81/5 #### Device Compatibilty ## 4\. Payment processing The payment processing feature of a billing and invoicing solution enables businesses to collect customer payments securely. It supports various payment methods, including credit and debit cards, bank transfers, electronic wallets, and sometimes alternative payment options such as PayPal and cryptocurrencies. Additionally, this feature secures financial transactions by using measures such as encryption and transaction authorization to identify suspicious security patterns and protect sensitive payment information. ### What business problem does payment processing solve? Financial transactions involve the risk of fraud or data breaches. The payment processing feature incorporates robust security measures, such as encryption and tokenization, to safeguard sensitive payment information and protect against unauthorized access. This feature offers a secure and convenient way for businesses to collect payments online, saving time and increasing efficiency. Customers also appreciate the ease and convenience of paying online, leading to faster payments and increased satisfaction. ### Ideal users of the payment processing feature Accounting and finance teams can use this feature to provide customers with different payment options, such as credit and debit cards, bank transfers, and electronic wallets, improving customer satisfaction and increasing the likelihood of timely payments. This feature helps expedite payment collection, automate subscription billing, and manage recurring payments. ### Top 3 products with the highest ratings for payment processing _Analysis performed March 2024_ #### Trial/Free Version - Free Trial - Free Version #### Payment processing feature rating 4.84/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Payment processing feature rating 4.82/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Payment processing feature rating 4.8/5 #### Device Compatibilty ## 5\. Contact database The contact database feature of billing and invoicing software lets businesses store and manage information about their clients, customers, vendors, and other contacts. It helps store details such as their names, addresses, phone numbers, email addresses, billing cycles, and plan details. This feature organizes contacts in a structured manner, allowing businesses to categorize them into different groups or segments based on criteria such as customer type, location, industry, or any custom parameter. A contact database typically includes security features, such as role-based access, encryption, and data backup measures, to safeguard contact details from unauthorized access or loss. The contact database feature typically integrates with customer relationship management (CRM) software, allowing businesses to track individual contacts’ interactions, preferences, and histories. This integration helps tailor communication and services to meet each customer’s needs, improving customer satisfaction and loyalty. ### What business problem does contact database solve? Without a centralized contact database, there’s a risk of using outdated or inconsistent contact information, leading to communication errors, payment delays, and misunderstandings with clients or suppliers. By maintaining a single source of truth for contact information, the database helps ensure information is accurate and up to date. ### Ideal users of the contact database feature Customer account managers can leverage the contact database to access client information during sales interactions. They can use it to track client communications, check the status of invoices sent by the finance team, and maintain up-to-date contact records. This feature also helps them personalize sales pitches and identify cross-selling or upselling opportunities. ### Top 3 products with the highest ratings for contact database _Analysis performed March 2024_ #### Trial/Free Version - Free Trial - Free Version #### Contact database feature rating 4.76/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Contact database feature rating 4.67/5 #### Device Compatibilty #### Trial/Free Version - Free Trial - Free Version #### Contact database feature rating 4.55/5 #### Device Compatibilty ## Capterra's 2026 Software Buying Trends Report ### Download our 2026 Software Buying Trends Report to see how successful software adopters avoid disappointment and how your business can, too. * * * Looking for Billing and Invoicing software?Check out Capterra's list of the [best Billing and Invoicing software](https://www.capterra.com/billing-and-invoicing-software/) solutions. ### Was this article helpful? * * * ## About the Author [### Barkha Bali](https://www.capterra.com/resources/author/bbali/) Barkha Bali is a writer at Capterra. She provides insights to help small and midsize businesses identify the right software for their needs by analyzing more than 550,000 Capterra user reviews and nearly 48,000 interactions between Capterra software advisors and buyers. ### RELATED READING - [Help Desk Software for IT Support: Features and Benefits 1,300+ Users Value](https://www.capterra.com/resources/it-help-desk-software-features-benefits/) - [AI in Talent Management Software: The Bridge Between Recruiting and Retention](https://www.capterra.com/resources/ai-talent-management-software/) - [Switching Accounting Software: Common Risks to Avoid in 2026](https://www.capterra.com/resources/switching-accounting-software-problems-risks/) - [Why Projects Fail, and What Actually Helps Teams Fix Them](https://www.capterra.com/resources/4-steps-to-completely-recover-from-project-failure/) - [Checklist for SMBs: How to Choose the Right Customer Service Help Desk Software for Your Business Size](https://www.capterra.com/resources/choosing-customer-support-help-desk-software/) - [E‑Filing Taxes as a Small Business: Where Software Adds Value and When It’s Necessary](https://www.capterra.com/resources/efile-tax-software-small-business-guidelines/) - [How To Choose a Manufacturing Software With Confidence: Insights From Real Buyers](https://www.capterra.com/resources/manufacturing-software-buyer-insights-report/) - [What is CRM Software and What Does a CRM System Do?](https://www.capterra.com/resources/what-is-crm-software/) - [Payroll Software vs. HR Software: What’s the Difference](https://www.capterra.com/resources/payroll-vs-hr-software-difference/) **Key features**: To identify the key features of this article, we asked users to rate, on a scale of “low importance” to “critical,” how important different features are for billing and invoicing software. The features showcased are those that the highest percentage of reviewers rated as “highly important” or “critical” over the past two years (as of March 22, 2024). **Feature eligibility**: To be included in the set of features considered, a given feature had to have at least 200 user ratings within the past two years (as of March 22, 2024), of which at least 20% must indicate the feature is “critical.” Eligible features were determined from two sources:  1. Our research team’s review of public information about billing and invoicing software usage, definitions, and associated features. 2. Reviewers’ indication of the features they use for billing and invoicing software. **Product selection**: To identify the top-rated products per feature, we evaluated user ratings for products that offer each feature. For a given product, reviewers rate each feature on a scale of one to five stars. A given product had to have at least 20 user ratings (between March 2022-24) for the feature in question to be considered.