The functions performed by finance professionals can quickly be overwhelming for them, regardless of the business type. Batch processing is an alternative in some situations. Invoice processing may be challenging at times because real-time invoice processing consists of multiple steps and is, thus, cumbersome. It would be overwhelming if the AP department processed, paid, and adjusted every invoice separately. What makes it even more time-consuming is that usually, small to medium businesses receive about 100 or more invoices per month! A fantastic alternative to traditional invoice processing (manual) is accounts payable batch processing. Usually, organizations like some banks and other institutions process transactions after their business closes.
Before getting into the details of invoice processing, let’s look into the meaning of this practical approach to invoice processing. Simply put, with accounts payable batch processing, businesses can:
Real-time invoice processing necessitates separate entries per invoice on accounting journals. Businesses can effectively group each invoice, adjustment, and payment into batches with AP batch processing. These batches (both small and large) of invoices will, in turn, get processed as a single payment to each supplier.
The general steps of AP batch processing include:
Here are scenarios when one must not use invoice management processes through AP batch processing:
Invoice management shouldn’t be done through batch processing in the scenarios mentioned above. The reason is that processing in batches is a bit slower than real-time processing. Invoices move slightly slower and take a bit longer to settle. So, it’s best to avoid the risk of the invoice getting delayed or lost in the batches.
The benefits include:
A 2019 report by the State of ePayables showed that the average cost of manually processing an invoice is about $12-$30. As invoice management happens in batches with AP batch processing, the time-saving and cost-saving benefits are prominent and undeniable. Making payments for invoices in large enough batches through payment methods like ACH can significantly cut costs.
Many suppliers and vendors struggle to maintain positive cash flow and operate on tight margins, primarily if they work for businesses with manual invoice management systems. With AP batch processing, businesses can keep consistent and timely payment cycles for their suppliers. The trust between suppliers and companies also improves. Businesses can also benefit because batch processing allows businesses to project their credit needs and cash flow.
The accounting records maintained by sub-ledgers and general ledgers can become cleaner and more condensed with batch processing. The process is beneficial for effective invoice management and audit preparedness.
Businesses can operate efficiently with this new invoice automation and management software like GetMyInvoices, which streamlines invoice management by automatically downloading invoices from portals and integrating with third-party systems like accounting or ERP systems.
See the benefits of automated invoice management:
Better overview. Less accounting work. More time for your ideas.