Late payments cost small businesses billions every year. The right invoicing software can cut your average collection time in half — but with dozens of options on the market, choosing the right tool is harder than it should be.
This guide breaks down what to look for in invoicing software, compares six of the best platforms for SMEs, and explains how embedded payment links are changing the way businesses get paid.
What to Look for in Invoicing Software
Not all invoicing tools are created equal. Before comparing platforms, it helps to know which features actually move the needle for small businesses. Here are the capabilities that matter most.
Automation is the single biggest time-saver. Look for software that handles recurring invoices, automatic payment reminders, and overdue notifications without manual intervention. A business sending 50 invoices a month can save 10+ hours by automating these tasks alone.
Payment integration is equally critical. Invoices that include a direct pay-now link get settled significantly faster than those requiring manual bank transfers. The best invoicing platforms either integrate with payment gateways natively or support embedded payment links that let customers pay by card, bank transfer, or digital wallet directly from the invoice.
Multi-currency support matters if you trade internationally. Even small businesses increasingly work with overseas clients, and sending invoices in the recipient's local currency reduces friction and speeds up payment.
Tax compliance features — automatic VAT/GST calculations, Making Tax Digital (MTD) compatibility, and tax report generation — save you from manual spreadsheet work and reduce the risk of errors at filing time.
Finally, consider reporting and analytics. Knowing your average days-to-payment, outstanding receivables, and top-paying clients helps you make better cash flow decisions.
Best Invoicing Software for SMEs
We've compared six invoicing platforms that are popular with small and medium-sized businesses. Each has different strengths depending on your size, budget, and how you collect payments.
QuickBooks Online
QuickBooks is the most widely used accounting and invoicing platform for small businesses. It offers customisable invoice templates, automatic payment reminders, recurring invoices, and built-in payment acceptance through QuickBooks Payments.
Pros: Extensive third-party integrations, strong reporting, payroll add-on, MTD-compatible. Cons: Gets expensive as you add users and features; the interface can feel cluttered for businesses that only need invoicing.
If you're already using QuickBooks, our QuickBooks guide to accepting online payments walks through the setup step by step.
Xero
Xero is a strong alternative to QuickBooks, particularly popular in the UK, Australia, and New Zealand. Its invoicing features include automatic reminders, multi-currency invoicing, bank reconciliation, and a clean, modern interface that's easier to navigate than some competitors.
Pros: Unlimited users on all plans, excellent bank feeds, strong app marketplace. Cons: Limited reporting on lower-tier plans; payment processing requires third-party integration (Stripe or GoCardless).
FreshBooks
FreshBooks is purpose-built for freelancers and small service businesses. It's the simplest tool on this list to get started with, and its invoicing workflow is fast — you can create and send a professional invoice in under two minutes.
Pros: Excellent time tracking and project management, intuitive interface, built-in payment acceptance. Cons: Limited inventory management; not ideal for product-based businesses or those needing advanced accounting.
Wave
Wave offers genuinely free invoicing and accounting software, making it a compelling option for sole traders and micro-businesses. There are no monthly fees for the core invoicing and accounting features — Wave monetises through optional payment processing and payroll services.
Pros: Free core product, unlimited invoices, simple interface. Cons: No multi-currency invoicing, limited integrations, payment processing only available in the US and Canada.
Zoho Invoice
Zoho Invoice is a free, standalone invoicing tool that's part of the broader Zoho ecosystem. If you already use Zoho CRM, Zoho Books, or other Zoho products, Invoice integrates seamlessly. It supports automated payment reminders, time tracking, multi-currency invoicing, and a customer portal.
Pros: Completely free (no paid tiers), strong automation, excellent if you're in the Zoho ecosystem. Cons: Limited standalone reporting; fewer payment gateway integrations than QuickBooks or Xero.
Sage Business Cloud Accounting
Sage has been a staple of UK small business accounting for decades. The cloud version offers invoicing, bank reconciliation, tax calculations, and cash flow forecasting. It's a solid choice for businesses that want a traditional, well-supported platform.
Pros: Strong UK tax compliance, established brand with extensive support, good for businesses transitioning from desktop Sage. Cons: Interface feels dated compared to Xero and FreshBooks; fewer modern integrations.
Free vs Paid Invoicing Software
Free invoicing tools like Wave and Zoho Invoice are genuinely useful for businesses with straightforward needs — sole traders, freelancers, and micro-businesses sending fewer than 100 invoices per month.
However, free tools typically come with trade-offs. You'll usually find limited integrations, basic reporting, fewer payment options, and restricted multi-currency support. As your business grows, these limitations start costing you more in time than a paid subscription would.
Paid platforms like QuickBooks, Xero, and FreshBooks offer deeper automation, richer integrations, better reporting, and more payment acceptance options. If you're sending more than 50 invoices a month, managing multiple currencies, or need tight integration with your accounting workflow, the investment typically pays for itself through faster collections and less manual work.
The key question isn't 'free or paid?' — it's whether your current invoicing process is costing you more in late payments and admin time than the monthly fee of a better tool.
Adding Payment Links to Invoices
The fastest way to reduce days sales outstanding (DSO) is to make it as easy as possible for customers to pay. Payment links — clickable URLs that take the payer directly to a hosted checkout page — are one of the most effective ways to do this.
When you embed a payment link in an invoice, the customer clicks the link, enters their card details (or selects a saved payment method), and the payment is processed immediately. No logging into a portal. No copying bank account numbers. No waiting for a manual transfer to clear.
For a deeper look at how this works in practice, read our guide on payment links on invoices.
Most invoicing platforms now support payment links natively or through third-party payment providers. If your current software doesn't support embedded payments, you can generate standalone payment links through a payment infrastructure provider and paste them into your invoices manually.
For invoicing platforms and SaaS products that want to offer payment links as a built-in feature for their users, embedded payment infrastructure makes this possible without building payment processing from scratch. Shuttle's payment links, for example, can be white-labelled and embedded directly into any invoicing workflow via API.
Invoicing Automation Tips for Faster Payments
Choosing the right software is only half the battle. How you configure your invoicing workflow determines how fast you actually get paid. Here are proven automation strategies that reduce manual chasing.
Set up recurring invoices. If you bill the same clients monthly, configure recurring invoices that send automatically. This eliminates the risk of forgetting to send an invoice — a surprisingly common cause of late payments.
Enable automatic payment reminders. Schedule reminders at 3 days before due date, on the due date, and at 7 and 14 days overdue. Most invoicing platforms support this natively, and it removes the awkwardness of manually chasing clients.
Offer multiple payment methods. Don't limit customers to a single payment option. Accepting cards, bank transfers, and digital wallets increases the likelihood that a customer pays immediately rather than putting it off.
Invoice immediately after delivery. Businesses that send invoices the same day they deliver a product or service get paid an average of 10 days faster than those that wait a week.
Shorten your payment terms. Net-30 is traditional, but many SMEs have shifted to Net-14 or even Net-7. Shorter terms set clearer expectations and reduce the cash flow gap.
For more strategies on reducing late payments, see our guide on streamlining your accounts receivable process.
How Invoicing Platforms Can Embed Payments
If you build or operate an invoicing platform — whether it's a standalone SaaS product, part of an ERP system, or a vertical-specific tool — your users expect payment collection to work out of the box.
The challenge is that building payment processing in-house is complex, expensive, and comes with PCI compliance obligations. Most invoicing platforms solve this by integrating with a payment infrastructure provider that handles the processing, compliance, and settlement.
Shuttle provides embedded payment infrastructure for platforms, including white-label payment links that can be generated via API and embedded into any invoice template. This means your users can collect card payments, bank transfers, and alternative payment methods without leaving your platform.
If you're exploring how to add payments to your invoicing product, book a discovery call to discuss your integration requirements.
Giving Customers Easier Ways to Pay
One of the most overlooked reasons invoices go unpaid isn't that customers don't want to pay — it's that paying is inconvenient. Every extra step in the payment process increases the chance an invoice sits in someone's inbox for days.
Modern invoicing software addresses this by offering multiple payment channels directly from the invoice. Card payments, direct debit, Apple Pay, Google Pay, and even buy-now-pay-later options all reduce friction.
Our article on giving customers easier ways to pay invoices explores how shifting from chasing payments to offering choice fundamentally changes collection rates. The principle is simple: the more ways a customer can pay, the faster they will.
Frequently Asked Questions
What is the best free invoicing software for small businesses?
Wave and Zoho Invoice are the two strongest free options. Wave offers free invoicing and accounting with no monthly fees, though payment processing is a paid add-on. Zoho Invoice is completely free with strong automation features, but works best if you're already in the Zoho ecosystem. For UK-based businesses, Wave's lack of multi-currency support may be a dealbreaker, making Zoho the better choice.
How do payment links on invoices work?
A payment link is a unique URL embedded in an invoice that directs the payer to a hosted checkout page. The customer clicks the link, enters their payment details, and the transaction is processed immediately. The invoice amount, reference, and merchant details are pre-populated, so there's no room for error. Payment links can be generated by your invoicing software, your payment provider, or through a payment infrastructure API.
What features should invoicing software have for UK businesses?
UK businesses should prioritise Making Tax Digital (MTD) compatibility, automatic VAT calculations, GBP and multi-currency support, Open Banking payment options, and bank feed integration with UK banks. QuickBooks, Xero, and Sage all offer strong UK-specific compliance features. If you trade internationally, multi-currency invoicing and automatic exchange rate lookups are essential.
Can I add payment collection to my own invoicing software?
Yes. If you operate an invoicing platform or SaaS product, you can embed payment collection using a payment infrastructure provider like Shuttle. This typically involves API integration to generate payment links or embed a checkout flow directly into your invoice templates. The provider handles PCI compliance, payment processing, and settlement, so you don't need to build or maintain payment infrastructure yourself.
Choosing the Right Invoicing Software
The best invoicing software for your business depends on three things: your volume, your budget, and how important fast payment collection is to your cash flow.
For freelancers and sole traders, Wave or Zoho Invoice provide a solid free starting point. For growing SMEs that need deeper automation, multi-currency support, and integrated payments, QuickBooks, Xero, or FreshBooks are worth the investment. And for businesses where payment speed is critical, make sure your chosen platform supports payment links — they're the single most effective way to reduce time-to-payment.
Whatever tool you choose, the principles are the same: automate everything you can, make it easy for customers to pay, and track your receivables closely. The difference between 45-day and 14-day average payment terms often comes down to software and process, not customer intent.