All too frequently, the invoicing process is plagued with complications, ranging from inefficient manual processes to the possibility of human error. However, businesses may streamline this process and mitigate risk by using effective electronic invoicing or invoice automation technology. Continue reading this Upflow.io article dealing with past due invoices to learn the obstacles that come with invoicing, and how to optimize invoice management.
How Is The Invoicing Process Carried Out?
Before we discuss how to optimize invoice management, it’s necessary to define what we mean by the invoicing process. While the details vary per company, the manual invoicing process generally consists of the following steps:
A supplier issues a paper or digital invoice outlining the expenses associated with the goods or services delivered.
The invoice is then forwarded or assigned to the appropriate member of the accounts payable department for processing.
The invoice’s data is input manually into accounting software or filed in a paper invoicing system.
The invoice is manually approved internally to verify that it is relevant and accurate.
Payment to the provider is planned or paid promptly, bringing the invoicing process to a close.
That’s a lot of stages for what appears to be a very straightforward operation. When extended to the business level, the invoicing process consumes a significant amount of time and effort. Additionally, each stage of the process that requires human involvement is a potential point of failure. As a result, there are numerous considerations while attempting to optimize invoice management.
What Are The Difficulties Associated With Invoice Management?
For suppliers, in particular, the invoicing procedure is frequently fraught with difficulties. For one thing, mailing a paper invoice costs time and money, while sending an electronic invoice still carries the possibility of error and delay. Additionally, if an invoice is lost or delayed, suppliers may be forced to spend valuable time resolving issues or may even be forced to reprint the invoice.
Additionally, invoice processing offers some difficulties for the buyer. While entering a supplier’s invoice into an accounting or ERP system may appear to be a simple operation, it is frequently inefficient and labor-consuming in practice. Suppliers may send invoices via various channels, ranging from physical mail to PDF invoices sent via email, posing a variety of operational issues. And in many circumstances, manual data entry is employed to enter the required information into the buyer’s system — a time-consuming and prone to human error operation.
Switching to Invoice Management systems has helped many businesses in various ways, we have an example of Stencilgiant.com, the company switched to an invoice management system and it has saved on labor and made things easier.
How Do I Optimize Invoice Management
Fortunately, you can avoid many of these obstacles by setting out to optimize your internal invoicing process methodically and thoughtfully. The following are all strategies for increasing the efficiency and accuracy of your invoice processing, resulting in a more seamless, less manual, and error-proof invoicing process.
– Eliminate Paper
If you continue to use a paper-based manual invoicing method, going paperless by digitizing the entire invoicing process is the natural first step toward optimization. Without this stage, you will have minimal potential to streamline and optimize the process. There are essentially two ways to become completely paperless: either encourage your suppliers to migrate to electronic invoicing or develop your means of digitizing paper invoices via invoice scanning.
– Reduce Human Intervention
As excellent as your accounts payable department is, they are only human. And that means they’re prone to make errors, which is the polar opposite of what you want in an otherwise well-optimized invoicing process.
Every stage of the conventional manual invoicing process requires human intervention, from the supplier sending the invoice to the buyer’s final payment. By automating each cycle, this input may be reduced, resulting in enhanced dependability and cost savings.
– Integrate Invoice Management With Your Enterprise Resource Planning System
Invoicing is only one aspect of daily company operations; it is connected to and connects with other processes such as cash forecasting and supplier management. As a result, there are frequent advantages to be gained by integrating your invoice processing system with any other processes managed within an ERP, creating a single platform for gaining operational intelligence and achieving cross-departmental efficiency.
– Establish And Monitor Key Performance Indicators
Finally, one of the simplest strategies for optimizing invoice processing is developing and tracking key performance indicators. KPIs will indicate the overall efficiency of the process and should also provide insight into which phases are falling short. By defining KPIs and then monitoring your invoicing process regularly to identify and rectify inefficiencies, you can steadily improve your system’s efficiency.
– Invoice Automation
That may seem like a lot to tackle at once. Still, you can achieve the majority of the value generated by improving the invoicing process with a single solution — invoice automation software.
By using an invoice automation solution, you may drastically eliminate manual input, significantly optimize invoice management accuracy, and link the invoicing process with the rest of your ERP effortlessly. And, perhaps most importantly, it does not necessitate significant changes in the behavior of your suppliers.
Historically, it has not been easy to develop a method capable of accomplishing this effectively. While traditional optical character recognition (OCR) can help automate invoice data capture, OCR is typically only successful when the correct information is in the precise right location in the invoice file. Manual intervention is frequently required to fix any inaccuracies.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.