What do you think of AI billing? In your opinion, what is the role of AI in billing?

In the past two years, each type of business software has embraced the title of “AI,” and that isn't an exception with the invoicing software. Unfortunately, when it comes to “AI-powered billing,” the market is awash with either a "chatbot added to the settings page," or a generic claim that doesn't specify what the software does that's different. Also, this “vagueness” makes it difficult to know what tools save actual time and which are just an additional interface to learn.

So, it's best to be exact. Recent Sage research revealed that half of small business CEOs and COOs spend about four hours per week on payment issues alone — anything from follow-up and correcting to chasing payment and so on that accumulates around the glaring of an invoice. Nearly a full day per week of repetitive work; but still requiring enough judgement for most owners not to have been happy to fully abandon them. That's where AI is really helpful in invoicing instead of replacing judgment—it takes the grunt work of first drafts off your hands and gets judgment to the point faster.

Let's say that translates into this.

The hardest part of making an invoice is not the invoice — it's turning those hodgepodge of notes you've made, relating to what you actually did, into a professional, clean, invoice showing quantities and rates. AI can actually write structured line items with suggested quantities and unit prices, based on a short description of the work (a project scope, a set of deliverables, a retainer breakdown), and you can just edit, update and refine them – you don't have to start from scratch.

This is a nice example of narrow, well-defined AI use, as opposed to the open-ended use that is common in the field, and it's where AI tools are most likely to be accurate.

If the payment reminder is generic, that is, consists of the same three sentences regardless of when the invoice is due, it's likely to be ignored because the client can see that it is a generic one. A gentle reminder that can be personalized to match the true lateness of the invoice and whether or not the client generally is on time or generally requires a reminder to pay. A letter of intent is a perfect use case for AI – the tone of a letter can differ based on whether the client is 3 days late and has a clean payment history or is a month late and a regular biller.

It should still be something you look at before it goes out (more on this later), but having a reasonable first draft that is geared to the situation at hand eliminates the blank page dilemma that makes many business owners procrastinate sending reminders at all.

Likely to have one late payment. When the client you have always dealt with within a week becomes silent, it's another indicator, and it's one that is simple to overlook when following outstanding invoices across a spreadsheet or a stack of e-mails. Comparing the client's own payment history to a rule-of-thumb isn't a pattern that AI is particularly good at recognizing — and neither should it be — but comparing what the client is doing to his or her own history is the sort of pattern that AI does excel at recognizing, and which can be quite helpful to finding a slow-pay client before it becomes a real cash-flow problem.

When your business sends invoices to clients in multiple currencies and markets, the language on the invoice and the copy sent to the client are minor details, yet they can lead to a lot of pain when you're juggling multiple clients in various countries and regions, and they're easy to get wrong. This is a narrow task well-scoped for AI to take on, and a very important one for freelancers/agencies who are billing internationally.

Every business owner should be able to answer the question ‘How much is outstanding, and what needs to be done first' in seconds! Typically, when this question is asked, the answer consists of working through the invoicing system, looking through a list and performing some mental calculations. That will become closer to a glance when you have a summary of the outstanding invoices, flags any overdue risks and identifies what needs to be done next.

None of what is above is an accident either because AI doesn't actually send or change an invoice amount or because it doesn't call about a client relationship. Invoicing is one of the last places in a business where an automatic error will have repercussions: If you send out an invoice for the wrong amount, a reminder to a customer you're trying to keep happy will have the wrong tone, and a currency conversion error on a big retainer can be the last thing you need. None of them in themselves is disastrous, but they take away trust at a very quick pace, and trust is the cornerstone of a billing relationship.

This is why the more flexible variant of AI that drafts and structures, but doesn't send, can be more helpful here. The items are filled in a form to check. Reminders are created but delay for approval. Anomalies are raised, do not get done. The AI performs repetitive cognitive tasks, such as reading notes, checking history, comparing patterns, and a humans final decision is made before it goes to a client. That's where the division of labor is beneficial, without introducing one more risk line.

When considering any tool that claims to be "AI-powered invoicing" (and Invoicycle is no exception), some questions come across the marketing hype in no time at all:

True honesty with AI for invoicing isn't a department of automated billers. It is a quick, efficient first draft – for line items, reminders and the occasional ‘this looks off' flag – waiting for your approval. That's the division that Invoicycle's AI billing tools are based on: AI drafts the repetitive items, humans approve all items that involve clients or dollar amounts.

If you're not familiar with recurring billing, this guide to automating retainer invoices is a good place to start; if reminders are the most dreaded step in billing, dive into this breakdown of reminder timing and tone. Or create a free invoice and experience the AI in action without needing any card —– you can even try it without paying for the card!