What is invoice management?
Invoice management, often known as invoice processing, is the process through which businesses track and pay supplier bills. At its most basic, the process entails receiving an invoice from a third party, confirming it, paying the provider, and recording the payment in corporate records.
Which doesn't sound all that difficult. However, there are generally several persons engaged, and there are several potentials for the mistake. For one thing, bills are often issued to the point of contact inside a company - the service user. Because this is not a finance team member or accounts payable clerk, this invoice must be passed on.
If the AP clerk notices any problems with the invoice, it is returned to the point of contact and then to the supplier for revisions. There is already a lot of double handling.
Even if the invoice is received flawlessly by the AP clerk, it must still be entered into a spreadsheet or invoice processing platform, validated by a management or CEO that the bill is authentic, paid (by a bank), and all of this data entered again into accounting ledgers.
Most developing organisations follow this standard operating practice. However, as we'll see momentarily, there are more efficient and precise ways to process invoices. This becomes increasingly important as their number rises.
But, before we get there, a short word on accounts payable.
Invoices and accounts payable
In most big and well-established firms, invoice management is integrated into the accounts payable process. AP ensures that suppliers are paid and that your firm receives the goods and services it requires to succeed.
As previously said, accounts payable teams collaborate with other departments to ensure they have what they need. Raw materials, software, and even freelancers and consultants might fall into this category. All of these are accompanied by bills that must be paid.
In principle, your accounts payable staff exists to strengthen supplier connections, locate discounts, and find the finest potential firms with whom to collaborate.
In reality, they spend a significant amount of time entering data and correcting errors committed by others. If you don't have a designated AP manager or team, the office manager or financial specialists are in charge. They certainly have more important things to be concerned about.
This is typical of most small and developing enterprises. They still have a large number of bills to process; they just don't have a dedicated workforce to do it.
Whether your company is huge or small, you may be dealing with the same issue: outdated processes. That's unfortunate because invoice management has gone a long way.
How the invoice management process has changed
Something is lacking from modern workplace environments that used to be standard: in- and out-trays. We no longer have to pass paper from person to person.
Instead of writing letters, we may now readily communicate using email providers and Slack.
In most cases, bills have followed suit. While you may still receive the occasional invoice in the mail, you are far more likely to receive them as email attachments. For software and online subscriptions, you may have to look for them on the platform in question.
However, this has not eliminated the necessity for double handling and data input. Some businesses print electronic invoices, re-enter them into spreadsheets, and then file the paper record. That is borderline insane!
Others transmit these emails to the person in charge (as mentioned above), but human data input is still required to update financial records.
How the invoicing process should look in 2022
Smart businesses search for methods to reduce two expenses:
Manual data input is usually time-consuming and can lead to numerous mistakes; double-handling and excessive communication. All of those emails to send invoices from one location to another are more bothersome than most of us realise.
The importance of invoice automation cannot be overstated. Instead of sending a PDF across the firm for validation, the point-of-contact (as seen above, the service user) can just insert the data into a tool or platform as soon as they get it.
Here's how it might look:
A supplier's invoice is emailed to the point of contact (or even by post) They entered the information into their invoicing management system. Some systems will even automatically read the invoice and extract the data.
Their manager is automatically alerted and can approve or refuse payment using the same system.
The finance manager (or AP clerk) is then alerted, and the invoice may be paid.
This data is then automatically exported to the accounting programme or ERP of the organisation.
Read more - ERP for SMEs? Think again
There is only one occurrence of data entry (or none if the programme can extract the data) and no internal emails to be concerned about. Some systems even allow the provider to immediately enter their invoice data into your programme. They don't have to create and attach a PDF file; they may simply email you the raw data. We'll take a look at these soon.
The benefits of automated invoice processing.
Automation may aid in the improvement of processes in almost any place in the business. And it may be a lifesaver for generally laborious tasks like invoice processing.
Here are some of the primary reasons why experts advocate you use invoice automation to assist highlight some of the key benefits of all of this:
Most company choices are influenced by money in some way. Furthermore, automating your most time-consuming operations is an excellent method to save money on labour and costly data inaccuracies.
"It is estimated that the cost of processing a paper invoice is between Rs.100 and Rs.500." What accounts for the wide range? Aside from the apparent disadvantages, such as labour and storage expenses, there are several "hidden" costs that many people fail to consider.
"Manual routing, categorization, numerous processing of the same invoice, as well as losses and misfiling, are examples of these." Finding lost or missing paperwork might cost up to Rs. 1,000 each invoice."
In summary, all of the things your employees despise about managing bills not only give you anguish but also cost you money.
The traditional methods of processing invoices required a significant amount of data input. More manual data entering means more mistakes. So the sooner you can transition away from this and toward automation, the better.
“Automated matching processes 80 per cent of invoices straight-through from capture to payment.
- It almost eliminates human mistakes;
- It does not need the same amount of supervision;
- Overpayment and repeat payments are almost eliminated.
- It automatically indicates exceptions for your approvers to evaluate;
- It greatly improves the efficiency and accuracy of reporting, budgeting, and auditing."
- There are extremely few possibilities for error once an invoice is in the system (which may be done instantaneously using OCR software).
- The greatest advantage of automation is nearly usually the saved time. When your staff doesn't have to perform everything manually, they have more time to focus on more important duties.
"There's no reason to chase paper bills around for signatures. Consider going digital. Employees may electronically mark, match, and route scanned invoices to the proper parties for speedy approval and payment."
Good invoice management software even eliminates the digital stages that are now slowing you down. Unnecessary emails and follow-up Slack messages are no longer necessary! Paper documents are a headache to archive. If you ever need to discover the original invoice, you'll have to go through vast files and hope that the record in question was filed appropriately.
However, an automated invoicing management system is a very different situation.
In electronic archives, invoices may be immediately accessed if the information on them is required for addressing enquiries or for additional analysis and audit.
"Archiving in electronic format saves both physical space and time in Accounts Payable since sluggish manual searches may be substituted with easily searchable invoice data."
Advantages of using an invoicing software
1. Reduced workload
With an automated system, you'll be able to generate and send invoices to your clients in the blink of an eye, increasing the efficiency of your company's administration. Because the system saves previously entered data, you don't have to enter it manually each time you send an invoice.
2. Maintain an inventory of invoices
Have you ever delivered an invoice to a client and not received payment? You may configure the system to automatically send unpaid invoice reminders to your clients so you don't have to constantly send them manually.
3. All papers at one location
No more worrying about misplaced or damaged paperwork; issued invoices are kept in the system and may be accessed at any time.
4. Document accessibility from any location
Are you going from the location where you maintain your invoices and want immediate access to them? That is not an issue! With an automatic invoicing application, you may retrieve your papers from any location, including your mobile phone - all you need is internet connectivity.
5. Fast invoice search
Do you need to locate a certain invoice? You may find any document using invoicing software by searching for it using keywords such as customer data or invoice number.
6. A large number of templates to pick from
Make your invoices more interesting and different! Choose the finest invoice design for you and fill it up according to your needs.
7. Receive funds more quickly
Do you want to accept payments from your clients more quickly? Connect your account to payment systems and include a Pay online button on your invoices. This enables your consumers to pay for the items and services they have purchased in real-time.
8. Changing the currency on an invoice
No more laborious recalculation of receivables! With the aid of invoicing systems, you may send invoices in any currency in the world, which will be converted according to the defined exchange rates.
9. Recurring invoices
Do you send bills to the same clients frequently? For example, Software companies often work on a retainer basis with their clients. Instead of mailing the same bills every month, automating this procedure saves time. That should apply to your company as well!
10. Invoices in many languages
Make bills in the language of your clients. The system will automatically change the invoice language with a single mouse click.
11. Bilingual bills
Do you send invoices to international customers? Set up bilingual invoices in any combination of accessible languages, such as English-Polish, English-German, German-French, and so on.
12. Include your accountant.
Streamline your paperwork by inviting your accountant to collaborate with you from your invoicing software rather than consulting them each time.
TranZact is a zero-effort digital transformation tool and platform for SMEs that allows them to digitise company operations from client inquiry to delivery. It offers GST services to assist SMEs with their GST billing issues. TranZact manages all of the organization's documentation procedures. It assists firms in the creation of Purchase Orders, Quotations, RFQs, Order Confirmation, Tax & Cash Invoices, Ad-Hoc Invoices, Sales & Purchase Returns, and a variety of other documents. Communication channels are formed as a result of its automated documentation procedure. Furthermore, it facilitates and eliminates errors in inter-departmental communication.