Every business owner thinks about one thing: how can I manage invoices in my business and pay bills as and when due?
An invoice is a vital financial record that contains the transactions that the business does, the products, services, supplies, and other services they might have hired or outsourced.
The process of invoicing seems easy at first, especially for a new business but once more customers start coming and expansion takes place, it becomes a burden to manage the influx of invoices. That’s why it is recommended to invest in a company like Key Factors to help keep your finances on the right track.
This is when the business starts to think of setting a system in place for efficient management of the invoices to avoid a lot of issues that could crop up as a result of poor business management.
Like every financial process involved in managing a good business, invoice management deserves its place and emphasis. A bulk percentage of the financial body in the business is often overwhelmed with this aspect of the business.
Several businesses over the years have designed an invoice process that works for them, manually and that they’re happy with. They’re often designed as a long-term solution but with the advancement of technology and automation tools in the market, it is considered a stressful journey and endeavor to waste time manually handling invoices.
There is no better time to advance beyond manual account entry and research alternatives for invoice management than today.
Now, knowing why invoice management is a serious business, it is only wise to do it properly and urge your clients and customers to pay their bills on time. This is a relieves the stress of accounting and bookkeeping in your business.
Accurate management of invoices will be able to regulate the payable system of the company or business and see to it that invoices are approved when they should without attracting unnecessary penalties from the audits.
If invoice management is accurately done It could eliminate human eros and save time, hasten the processing of bulls, and improve the company’s workflow.
What is invoice management?
As earlier stated, invoice management is an important part of every business. It involves the management and proper processing of every single invoice that the business services from its suppliers including that of the customers.
Thus, the management of invoices often has to do with the proper payment of products or services that the company demanded.
Invoice management processes involve:
Getting invoices from the supplier
Finding out the necessary details
Validating every single piece of information and details on the invoice
Storing invoices for future use and reference
Invoice management systems take this information and track the cash flow of the business in a proper sense. This process of invoice management is especially beneficial for small business to enable them to track their expenses and other necessary assets that requires handling.
Invoice management also involves making sure that the incoming and paid invoices are clean and easy to audit when checked side by side.
Most people call invoice management, invoice processing. The management of invoices helps the companies to track their suppliers and ensure that they are paid and products or goods are delivered too.
The process of invoicing validates every transaction that is made by the third party including their payments and record-keeping in the company.
We’ll discuss more on the advantages of invoice management in your business.
Invoice management and accounts payable
Large establishments and businesses often invest in invoice management as a part of the process for their accounts payable. Accounts payable ensure that their supplies are paid when they should get paid and that the goods or services that the company needs are supplied in time for proper functionality.
The team in charge of accounts payable always ensures that the company has what it needs and requires for the company to survive and thrive.
This also includes freelancers, consultants, software, raw materials, goods, and other services are invoices that must be paid.
Normally it is the accounts payable team that handles all the work of the account and invoice management. For small businesses, you have to worry about getting these invoices right.
Whether you’re running a small or large establishment and business, you’ll still need to handle the invoice management whether manually or using a system and software for the invoice management
The risks of handling manual invoicing in your business
There are several risks that are involved in manually handling invoices in your business. A few of them include:
Delays and Penalties
Invoice management as already established and clearly known can be complex in most cases. It especially becomes more difficult for the finance team to handle once the company expands and takes on more responsibilities. More money means more invoices. The costs of handling them are high and in some cases, there are penalties too due to delays that occurred in the process of checking these invoices manually.
Lack of Control
One more outstanding and undeniable challenge of manual] invoicing in companies and small businesses is that they often go out of the control of the person or team in charge of it to track them and equally for the internal team audit to follow due diligence.
It is necessary and of utmost importance, for example, to store invoices over a given period of time for the sake of quality control and taxing even accounting and bookkeeping in the firm.
When these invoices are stored as files in paper form, they are not safe from certain occurrences and hazards such as fire, moisture, shredding, and ink-fading accidents.
All of these do not ever occur in the case of invoice management software and processes because they are digitally and electronically stored. Hence, they are more preserved and safe from harm and hazards.
Sapio and Wax conducted research that proves that manual invoicing processes are often overwhelming for the accounts payable department of the business or firm because of the sheer amount of invoices that they have to process every single day. The larger the company gets, the more difficult it becomes for them to handle the pile of workload manually.
The benefits of Invoice management and automated invoice processing
Invoice management has a ton of benefits which we will highlight here in a minute. When the invoices are automated for the firm, it is a lifesaver and more efficient for the productivity of the company and business.
Now, the accounts payable department has less on its plate and is able to follow up to ensure that invoices are properly accounted for. A few of these advantages include:
Save money and minimize loss
The decisions that are made by most businesses are usually for the purpose of saving more money or making more money. In order words, the goal of every business is to make a profit and not have to spend so much on the workforce.
Invoice management and automation make the process of invoicing less tedious and save money on hiring more hands that may still end up with errors in the data.
Invoice management software and systems manage everything that the accounts department and business team including you as a small business owner detest about taking care of invoices. Manual invoicing as we established causes you to lose money and sometimes, data.
The most preferred way of processing and checking invoices for most establishments is usually data entry. Manual data entry however is filled with tons of errors. So, if you are able to automate the data entry, it is better and faster for you.
Automated invoice management or processing handles a larger percentage of the invoices from the point of capture to when they are fully paid and accounted for.
This means that you have a lesser risk of:
- Accumulating and attracting human error;
- You don’t have to manually oversee the process every single time
- There are reduced risks of overpayments and duplicates too.
- Budgeting, reporting, and auditing are more accurate and faster too
One ingredient of productivity for most firms is time-saving. They are always on the hunt for processes and systems that will make time for them and save one for them too. This way, they can focus and zero in on the other existing works in the company instead of wasting time on checking invoices manually.
Invoice management does this for you. It saves you and your team the time that should be invested in other assignments instead of doing everything manually.
With the invoice processing in place and fully automated, the team does not have to run around to get signatures and verify every single invoice manually. They can easily mark them electronically and send them to the designated bodies for payment and approval.
Creates useful room for archives
Paper files mean that you have to make more room for the archives in case they are needed by the team in the future. Invoice management and automation completely take away that need for archiving since you don’t have to wade through a storm of old files to find what you need.