For some companies, invoice management isn't just an administrative tactic—it's a matter of survival. In your early stages, manual invoice processing makes sense. However, as your sales volume grows, you quickly need an innovative solution for managing invoices and keeping tabs on your company records.
It's time to take control of your invoice management processes. Here are some of the challenges businesses face when processing invoices, as well as proven ways to master the art of invoice management.
What is the role of invoice management?
Invoice processing is aimed at enhancing the purchase process by ensuring that vendors get paid on time. Similarly, a frictionless invoice management system maintains an uninterrupted supply of inventory, materials, and services.
Therefore, invoice management directly overlaps with inventory management. Good invoice management can improve your relationship with external vendors.
How do you effectively manage invoices?
Effective invoice management starts with the right strategy. No matter your industry, you can develop an invoice processing system that streamlines your processes and makes the most of your company resources.
Looking for ways to take your business financial management to the next level? Learn how BILL can help you streamline accounts payable.
1. Implement invoice management software
Even small businesses can benefit from automated invoice management software. These innovative tools offer advanced features such as OCR software, which is capable of automatic detection to pull data from invoices. The tools can then compare data to purchase orders to ensure accuracy.
Improve productivity
Manual invoicing takes time and accounts payable departments often devote large amounts of time to processing invoices and chasing down approvals.
According to a survey by recruiter Morgan McKinley, 94% of financial employees report being overworked. Relying on manual data entry and other processes could lead to burnout and employee turnover.
Automated invoice management tools can also allow users to approve invoices digitally, reducing the time you'd otherwise spend on administrative tasks. The best platforms offer advanced integrations with accounting systems. That way, you can manage your finances in real time, all while reducing the time you'd spend on a traditional invoice process.
Reduce human error
Processing paper invoices demands consistent attention to detail and is prone to human error. For example, if an AP clerk doesn't double-check the invoice number, you could easily submit duplicate payments for a single invoice.
With automated invoice management, you'll experience greater accuracy, with fewer errors that lead to payment mistakes, duplicate payments, or other expensive missteps. By pivoting to electronic invoices, you'll reduce the amount of paper clutter that affects your business and can add to the storage costs of physical documents.
2. Create a comprehensive checklist of information for each invoice
Your billing software should assist you in standardizing your invoice management processes. Doing so will make it easier to delegate tasks to your accounts payable team since they'll have the most critical data available through the computer system. This data includes:
- Customer name
- Invoice number
- Invoice date
- Payment terms
- Invoice template
- Sales representative or point of contact
- Details regarding the products and services on the invoice
Integrating this checklist with your invoice management software will better equip you to establish internal controls over your payment process. Doing so will also ensure that your invoices are processed consistently.
No integration
Traditional systems offer little to no integration with your broader accounting system. This can leave you in the dark about the efficiency of your invoice management system. And if you're unable to keep tabs on the number of supplier invoices that get paid each month, you could find yourself facing cash flow issues.
Conveniently, BILL Accounts Payable offers integrations with leading accounting systems, such as Xero, Oracle NetSuite, Sage Intacct, Microsoft Dynamics, and more.
3. Use your invoice management software to optimize your cash flow
Many business leaders schedule bill payments for the end of the month. But if you have a massive outflow of cash at the same time each month, you'll create an uneven cash flow cycle. This situation can make it challenging to cover unexpected costs at the start of the following month.
The solution is simple. Use your invoice management software to optimize your cash flow. For example, you can set up your digital payments so that they occur on staggered dates. Delaying payment for one vendor can ensure you have the working capital to cover other operating expenses. Staggering your payments also helps ensure that you maintain a consistent level of cash to cover your ongoing operating expenses.
In fact, your billing software can provide insight into sales cycles and other spending patterns to help you select the optimal time to pay vendors. It may also be possible to adjust your payment schedule to reflect seasonal demands and prevent your company from exhausting your resources on any project.
High processing costs
Traditional invoice management also brings high processing costs. That's partly because companies spend more money on their accounts payable teams to review supplier invoices manually. The more time you devote to each invoice, the less cost-effective your process becomes.
4. Comply with all established payment terms
You'll maintain stronger vendor relationships by adhering to their payment terms and procedures. Ideally, you and the vendor should discuss payment information before you receive your first invoice. But at the very latest, you'll see your vendor's terms listed directly on the invoice.
Your invoice processing software can ensure you comply with these terms by rendering payment by the agreed-upon deadline and using the appropriate payment method. The practical benefit is avoiding any cost penalties for late or missed payments.
The more closely you align your purchasing process with your vendor's expectations, the better your relationship will be. Making vendor invoice management tools part of your onboarding process may allow you to negotiate better supplier contracts and deals moving forward.
Fraud risk
No matter how experienced your employees may be, no manual management strategy will include a plan for staying on top of financial fraud. Invoice automation software will typically have better tools to identify patterns and trends and alert you to deviations that indicate suspicious activity.
5. Monitor your accounts payable efficiency
The best accounts payable (AP) automation tools also serve as data analytics platforms. The right software can provide end-to-end visibility of your entire financial ecosystem—from invoice processing to accounts receivables. In turn, this will provide a better understanding of how your invoice management solutions impact your bottom line.
Access to this kind of raw data will help you pinpoint areas of inefficiency. For instance, your data can show how your payment schedule impacts your cash flow or point out where you're losing money due to late or unpaid invoices.
You can adjust your approval workflows to streamline your invoice management process if needed. The result will be greater invoice control than you can achieve through manual invoice management.
Payment delays
Manual invoice management has the potential to create significant delays. That's especially true for large organizations with payment and approval workflows that require multiple individual steps. As a result, your accounts payable employees may struggle to make on-time payments—or worse, you may face fees for late payments.
Better invoice management with BILL
BILL offers superior accounts payable management thanks to its intuitive, innovative platform. Cloud-based tools will allow you to manage your invoices and payment processes from anywhere in the world. BILL also provides customizable workflows, flexible payment solutions, and data management options, allowing you to manage your invoices effortlessly.
To learn more about this advanced new platform, visit BILL's accounts payable solutions page today. You'll discover that these state-of-the-art solutions aren't just reserved for corporate giants—they're also ready-made for businesses just like yours.
