Here’s a practical, step-by-step guide to tracking invoices and payments in one place — whether you’re a freelancer, small business, or growing company. It covers tools, setup, workflows, reconciliation, reporting, and security so you can start immediately.

1. Pick the “one place”

• Accounting/invoicing software (best for most): QuickBooks Online, Xero, FreshBooks, Wave, or similar. They combine invoice creation, payment processing, bank feeds, and reporting.
• Payments platform + accounting sync: Stripe, PayPal, Square + sync to accounting software if you want modern payment links and card processing.
• Spreadsheet + automation (low-cost): Google Sheets or Excel with a template + Zapier/Make/IFS to push invoice and payment events into the sheet. Good for solo operators.
• ERP / billing platforms for scale: Zuora, Chargebee, or an integrated ERP when you need subscription billing, complex revenue recognition, or multi-entity consolidation.

2. Minimum setup checklist (common to all approaches)

• Standardize invoice template: header, invoice number, issue date, due date, payment terms, itemized line items, subtotals, taxes, total due, and payment instructions.
• Use a numbering convention (e.g., INV-2025-0001) and never reuse numbers.
• Define payment terms: Net 15/30, due on receipt, early-pay discount, late fee policy. Put this on every invoice.
• Configure payment methods you accept (ACH, credit card, bank transfer, checks) and add payment links where possible.

3. Core fields to capture (for each invoice and payment)

• Invoice record: invoice number, client/customer, issue date, due date, line items, tax, total, currency, status, assigned salesperson, notes/PO number.
• Payment record: payment date, amount, payment method, transaction/reference id, bank account deposited to, related invoice(s), fees, refund/chargeback flag.
• If using a spreadsheet, create separate sheets/tables: Invoices, Payments, Customers. Always include InvoiceNumber as a key to join.

4. Standard invoice statuses and lifecycle

• Draft → Sent → Viewed (optional) → Partially Paid → Paid → Overdue → Disputed → Written-off.
• Track status changes and who made them (audit trail) if your software supports it.

5. Reconciliation workflow (matching payments to invoices)

• Import bank transactions or payment gateway settlements daily/weekly.
• Match by invoice number (best), customer + exact amount, or transaction reference.
• For partial payments: apply payment amount against the invoice and update remaining balance.
• For fees: record gateway fees separately so gross receipts = payments deposited + fees recorded.
• For unmatched payments: create an “Unapplied” payment record and investigate (customer reference, date). If it belongs to an invoice, apply and update.

6. Automation & reminders

• Send invoices automatically on schedule (recurring invoices feature).
• Auto-send reminders: e.g., 7 days before due (courtesy), on due date, 3/7/14/30 days past due. Allow templated messages and escalate tone.
• Offer online pay-by-link on the invoice to speed payment and automatically mark invoice paid when gateway confirms.
• Auto-apply bank rules (based on descriptions) to auto-match frequent payments and save manual work.

7. Handling exceptions

• Partial payments: mark the invoice Partially Paid, update balance, send a receipt showing balance remaining.
• Disputes: flag invoice status as Disputed and attach correspondence / notes. Don’t write off until resolved.
• Chargebacks/refunds: record refund and reverse or partially reverse the invoice payment, create memos for accounting.
• Write-offs: record a credit memo or write-off entry and keep audit trail.

8. Reports and KPIs to run regularly

• Accounts receivable aging (current, 1–30, 31–60, 61–90, 90+ days).
• Outstanding invoices list and total AR balance.
• Cash receipts report (payments received by period).
• Days Sales Outstanding (DSO): (Average AR ÷ Total Credit Sales) × Days in period.
• Invoice aging by customer and salesperson. Run weekly for collections action.

9. Suggested spreadsheet columns (if you’re using Sheets/Excel)

• Invoices sheet: InvoiceNumber, Customer, IssueDate, DueDate, Terms, ItemDescription, Subtotal, Tax, Total, Currency, Status, BalanceDue, CreatedBy, Notes.
• Payments sheet: PaymentID, InvoiceNumber, Customer, PaymentDate, Amount, Method, TransactionID, BankAccount, Fee, NetAmount, Applied? (Yes/No), Notes.
• Customers sheet: CustomerID, CompanyName, ContactName, Email, Phone, BillingAddress, DefaultTerms.

10. Auditing, controls & security

• Use two-factor authentication on all finance apps and bank accounts.
• Limit access: separate roles for invoicing, collections, and reconciliation.
• Keep backups of invoice databases and export monthly snapshots (CSV/PDF).
• Keep an audit trail of changes (who edited what and when).
• Ensure PCI compliance if you accept credit cards (use a compliant processor).

11. Quick workflows to adopt immediately

• On invoice creation: assign number → send with pay link → log “Sent” status.
• On payment arrival: match payment → apply to invoice → send receipt → update status to Paid.
• Weekly: run AR aging → prioritize customers 60+ days → send reminders/cc account manager.
• Monthly: reconcile bank deposits to payments recorded and record gateway fees.

12. Choosing what’s right for you (short guide)

• Freelancer/solo with low volume: Spreadsheet or Wave + Stripe/PayPal links. Keep it simple and automate receipts.
• Small business growing to multiple customers: QuickBooks Online or Xero — full AR, bank feeds, tax reports.
• Subscription or recurring billing: use Stripe/Chargebee/ChargeOver with accounting sync.
• High volume/complex contracts: billing system or ERP with contract management and revenue recognition.

13. Example automation ideas

• New invoice sent → create calendar reminder to follow up X days before due.
• Successful payment in Stripe → automatically update invoice status in accounting software and send a receipt.
• Email with “Paid” in subject from client → route to a Zap that marks invoice as Paid if it includes invoice number.

Final pragmatic starting plan (30–60 minutes)

• Decide tool: choose a cloud accounting app or set up a single Google Sheet if you’re just beginning.
• Build or import your customer list and outstanding invoices.
• Standardize invoice template and numbering.
• Connect at least one payment method (bank or Stripe) so payments can be traced automatically.
• Set up one or two automated reminders and run your first reconcile session.

If you want, tell me which system you currently use (spreadsheet, QuickBooks, Xero, Stripe, or none) and I’ll give a tailored setup checklist and a spreadsheet template or automation flow you can paste into your tools.