Guide to making supplier invoice management process easier
Any mistakes made in supplier invoice management process can incur a massive loss to the company. Hence the goal of the AP team is to streamline the invoice management process with the help of well-structured invoice management software.
Supplier invoice processing is a term that explains the cycle of events that happens from invoice issuing to payment processing. Typically, manually processing an invoice can take from one to three months, prolonging the approval and payment process. It depends on the number of vendors a company has and how many invoices they receive every month. More often than not, this task is handled by the AP team.
The significant roadblocks this team might face in supplier invoice management are constant checking from the vendor end, late or missed payments, wasting time on manual work, and relying on heavy paperwork.
And any mistakes made in this task can incur a massive loss to the company. For instance, sending the payment to the wrong account details or not updating the processed invoice in the general ledger.
Vendor invoice is the bill sent by a supplier company for the goods you buy from them. An invoice carries the order information and debt your company owns to your vendor. It also has billing/shipping charges and sales tax for the concerned order. The vendor invoice is issued by the vendor company and processed by the company's accounting department that placed the order.
Challenges in invoice processing occur when a company does traditional supplier invoice processing. These factors affect both that company and its vendors.
Research shows that around 60% of invoices are paid late, which affects the working capital of SMEs big time. Lack of communication between teams that collaboratively process an invoice makes invoices wait months to get approved. This broken process causes unnecessary delays and cumulates workload exponentially. Late payments also trigger penalty charges that are a loss for the company.
Different vendors prefer different methods to send invoices (paper, pdf, online receipts, or email). If processed manually, capturing and prioritizing them will be demanding for your AP team. There are possibilities to overlook or miss a few of them. Losing invoices can happen when you don’t have invoice capture software and receive invoices by all means.
An invoice typically waits in the approval bin for three weeks to 4 months. The approver will usually be the CFO or head of the finance department, which already has a hectic schedule. Sending invoices one by one for approval when the due date is very close and not having a structured workflow leads to this.
Prolonged time consumption is considered one of the most common challenges in invoice processing. Engaging in repetitive and laborious tasks can lessen the productivity of any team. Invoice processing involves much manual verification and inputting functions that prolong the whole process's duration. Also, it needs multiple teams to come together and work. And if there is no effective communication between them, work gets stalled again.
The average amount spent manually processing an invoice ranges anywhere from $12 to $35. Imagine if your company has copious amounts of vendors, you will have to employ a whole team for supplier invoice processing. And there is a cost involved in buying office supplies as well.
Your company should incorporate the following steps to cross the hurdles and challenges in invoice processing and management.
Duplicate invoice happens when the same invoice gets registered twice in the invoice management system thus leading to double payment. Chasing the vendor for a refund is unnecessary when we can check the system and eliminate the duplicate invoices. If the entered fields - vendor name, invoice number, accounts payable, and invoice date - on both invoices are the same, invoice capture software can detect the duplicates. Review the vendor master files in your invoice processing system, and check for multiple entries under the same vendor. Multiple vendor entries can happen due to miskeying the characters or mistakes in automated capture by the OCR.
Majority of companies have switched to digital supplier invoice processing methods, which saves them time and spares them from the manual effort. Automated supplier invoice management software helps company save countless hours spent on manually entering and processing data by automating the entire process. This system will capture the data in the invoice when it's released. Later you can schedule the payment and set the workflow to process further. And it sends real-time notifications to approvers and initiates the transaction.
As discussed already, invoices are issued in different forms. Automated invoice management software is programmed to capture invoices in whatever format they are published. This way, you can ensure that no invoices are missed or delayed for payment. It makes the vendor satisfied, when they notice the instant acknowledgment from your end. When you automatically receive invoices, you know where to look (one place and not everywhere) and never miss any of them.
To avoid late payments or missing invoices in supplier invoice management, you can rely on automated reminders. You can tune your invoice management software in a way to trigger an alert whenever a new invoice is received. You can set email reminders of the processing and due date when you receive a paper invoice. Or you can request your vendor to add you to the reminder list if they have an invoice reminder system.
In the process of the purchase-to-pay cycle, an invoice has been transferred and processed by multiple teams like accounts payable, finance, purchasing, and audit teams. Delegating the authority appropriately and letting the respective team know their responsibilities will make this process slicker. Reduce the processing time needed by creating a strategic approach for your company to process invoices.
Companies waste plenty of their precious time processing invoices via old-school approaches. Automating supplier invoice management processes can save you time, which can be invested in team-building or improvement tasks. The strenuous invoice management process will have a shorter and more organized life cycle when automation is brought into the picture.
When money is involved, no error is a slight error. In many cases, manually dealing with invoices and payment information leads to human and typing errors whose effects you wouldn’t want to face. 100% accuracy is the only way to achieve balance in your general ledger funds, and getting invoice capture software can do it for you.
Today’s vendor can be tomorrow’s partner or even client. Risking a solid bond with a supplier over some payment issues is a blunder from a business perspective. On the other hand, paying your vendors on or before time and showing care and importance in processing their payments can make you a desirable client.
Gaining a single dashboard view where you can view your vendor's information, check the processed payments, and act on approvals is considered the most sought-after feature. Volopay's accounts payable software offers you with the ability to get instant notification on pending payments, payment schedules, the ability to pay in different currencies, not to mention processing bulk payments.
Volopay understands that vendors fall into different categories. So you can set custom workflows along with auto-categorization for each vendor and make the software do your work. The platform will be so lucid and user-friendly, and learning to use this will be a cakewalk for your AP team. You can add a vendor, create multi-level approval workflows, receive an invoice, set deadlines, approve invoices, and do much more with Volopay’s automated invoice processing.