Remote work is here to stay. Before COVID-19, 47% of U.S. employees never worked from home. But now, a similar percentage (44%) work remotely five or more days a week. Now that employers and workers alike have grown used to this model, its popularity will likely persist.
Working from home has many benefits, but remote invoicing can be challenging if you’ve never done it before. Whether you’re billing clients or setting up worker payroll, managing remote work payments comes with new considerations. As working from home becomes the norm, business owners must understand these perhaps unfamiliar situations.
These seven digital invoicing best practices will help you handle remote work payments in the future.
Digital Invoicing Best Practice #1. Review Worker Classifications
The first thing you need to do when setting up remote payroll is reviewing your worker classifications. In the work-from-home model, it’s far more likely that you’ll rely more heavily on freelancers than in traditional models. Since independent contractors and employees carry different tax implications, you should ensure you understand your workforce.
Contractors are an ideal fit for a remote workforce. These workers handle their own taxes, so you don’t have to do any potentially complicated paperwork to know what to withhold. If you’ve recently switched to a work-from-home model, though, you may have more employees than contractors. Take the time to review which your workers are so you can prepare accordingly.
Digital Invoicing Best Practice #2. Implement Time-Tracking Software
One of the challenges of remote work is that employers and clients have less oversight. To make up for this, you can use time-tracking software, either for yourself or your employees. These tools provide a source of truth that can serve as the basis of your invoicing, preventing complications and errors.
If you’re invoicing a client, this software gives them proof that you worked as long as you claim. This transparency will help avoid disputes and build trust. If you’re using this software to monitor employees, it ensures you don’t overpay or underpay your workers. Many solutions also generate reports and timesheets automatically, helping you with taxes and reporting.
Digital Invoicing Best Practice #3. Integrate All Payroll Factors
As you’re looking for software solutions for time-tracking and other payroll factors, look for compatibility. Since remote work invoicing comes with so many unique considerations, it’s easy to accumulate multiple solutions. For instance, you can power invoicing software with document rendering capabilities. It will automatically generate neat PDF invoices ready for online or offline delivery.
It’s critical that you integrate as many factors as possible into a single system. You may not be able to find one software solution that handles everything, but you can find a few compatible options or use an API integration. When your time-tracking, payroll, document rendering, point of sale, benefits, and accounting systems all work together, you’ll save time and avoid confusion.
Digital Invoicing Best Practice #4. Consider an Employer of Record
As you expand your remote workforce, you may hire workers from multiple states or even countries. Since each area has its own laws regarding taxes, worker compensation, and data governance, managing payroll can quickly become complicated. Using an employer of record (EOR) can help account for these varied considerations.
An EOR is 100% responsible for international administration and compliance. This will enable you to focus on day-to-day operations and manage employees as they handle potentially complicated payroll considerations. You may not need an EOR, but it’s worth considering if you have multiple remote international workers.
Digital Invoicing Best Practice #5. Automate as Much as Possible
Remote invoicing is complicated and often time-consuming, and mistakes can be costly. Considering these challenges, it’s an ideal application for automation. While it may be tempting to handle everything manually, automation saves time and is often more accurate, preventing costly errors.
You can automate most, if not all, of the payroll and invoicing process. Many available time-tracking, accounting, and payment solutions today come with automation features, and you should take advantage of these. In particular, automating PDF invoice or payment report generation, record-keeping, contact details validation, and trigger-based invoice delivery will greatly reduce your manual workload, reduce the risk of errors, and help with your compliance. If you’re new to remote work, automating is even more valuable. The time you save through automation will help you adapt to your new working environment.
Digital Invoicing Best Practice #6. Keep Security in Mind
Payroll cybersecurity is easy to overlook since traditional models are less prone to attacks. When you’re sending financial information over the internet, though, hackers are a more pressing concern. Identity theft affects millions of people annually, so you need to do all you can to protect yourself and your workers.
Whether you’re paying employees or requesting payments from clients, ensure you’re using a secure payment service. Direct deposit is generally the safest method. If you’re using a peer-to-peer platform like PayPal, make sure it encrypts all data. If you collect or store any financial data, host it on a separate server than other information to minimize hackers’ entry points.
Digital Invoicing Best Practice #7. Communicate Methods and Expectations Early
Finally, remember to communicate your payroll and invoicing policies and expectations upfront. You should also validate delivery details to make sure the documents reach the destination. Remote work can make communication slow and more challenging, so being specific and conclusive early is a must. Settling details upfront will prevent confusion, manage expectations, and establish trust.
You don’t need to bill clients before performing work, but you should provide a quote or describe your billing methods. Clients will appreciate the transparency, and you’ll avoid any potentially lengthy and complicated disputes after invoicing. Similarly, informing workers of remote payment methods when they start will help them work with confidence.
Handle Remote Work Invoicing with Confidence
Remote work is new to many organizations, but it may become the norm before long. Following these digital invoicing best practices will help you capitalize on remote work to its fullest extent. If you take care with digital invoicing and payroll, you can avoid pitfalls and improve client and worker satisfaction.