Invoice processing is the process by which your company’s accounts payable team handles supplier invoices and processes them. It begins with the receipt of an invoice and ends with the payment of the invoice. It gets followed by an entry into the general ledger.
However, invoice processing is not as simple as one may think! It’s not just receiving the invoice, checking for accuracy, paying the invoice, and finishing the transaction.
This article looks at how invoices are processed and how automating them can help firms become more efficient by saving time and resources.
Invoice processing forms a part of the Accounts Payable (AP) process in small, medium and big businesses. The invoice management process is critical for organizing cash flow and dealing with vendors and suppliers to ensure timely procurement.
Conventional invoice processing involves the following basic steps:
However, there could be issues at any of the invoice processing stages.
An invoice contains critical information such as corporate IDs, tax information, the service/product rendered, the price, and the delivery status, among other things. Unfortunately, when invoices come in various forms, it becomes difficult, if not impossible, to check for all valid data.
The costs connected with manual bill processing are more than 30% of the AP team’s expenses. In addition, checking for accuracy takes a long time. If it is determined to be inadequate or incorrect, the exception raised will take even longer to resolve—such invoice processing delays leads to payment delays.
When a corporation works with various vendors and numerous bills daily, tracking invoices becomes a problem. Tracking all the accounting statements is challenging with many coming in different forms and from various sources.
Missed invoices result in late payments and penalties, damaged vendor relationships, operational delays, and audit concerns.
A corporation may get many invoices from various vendors daily. After a preliminary inspection, the AP invoice processing team sorts each invoice into the routing queue.
Unfortunately, even the most proficient accounts payable specialist can make a routing error. An incorrectly routed invoice undergoes redundant processes, wasting time and effort.
As a result, while accounts payable teams should assist in the sourcing and procurement process, they may spend excessive time pursuing bills through the complex approval process and correcting any errors.
The status of an invoice in its manual processing structure is frequently uncertain. What happened to it? Who approved? Is there anything else required? When will you make the payment?
These are the kinds of queries that commonly arise due to a lack of transparency in the invoice processing ways.
Invoice processing issues impact the organization and its business partners. Some of the major implications are below.
The issues with the traditional invoice management procedure, as stated in the previous section, can have significant consequences on a company’s productivity and profitability:
The market size for global accounts payable (AP) automation is anticipated to reach at USD 4 billion by 2025.
Invoice processing automation provides an obvious solution to most, if not all, of the issues that come with this human procedure. Nonetheless, automating many of the process’s repetitive processes can save time, and money, boost staff morale and maintain positive vendor relationships.
Invoice processing automation optimizes the purchasing process, improves invoice transparency, saves time and money, boosts staff productivity, and improves vendor relationships. You can download invoices automatically from various portals or defined invoices and streamline the invoice processing.
In addition, thanks to invoice flow automation, human employees may focus on less tedious, higher-value activities like planning and strategizing. As a result, the business’s total efficiency and profitability improve.
See the benefits of automated invoice management:
Better overview. Less accounting work. More time for your ideas.
Many people dream of owning their own business which brings a lot of freedom. The...
Are you a digital entrepreneur within the European region? Even if you’re not, do you...
There is nothing that’s keeping German businesses as busy as digitalization. Both in actively planning,...