Invoice management may not be the most interesting area of business, but it is certainly one of the most important. Getting it right prevents businesses from running into two problems that can cause severe disruption to operations. The first is late or missed payments to suppliers. This can result in them refusing to fulfil existing orders or accept further ones. The second is not receiving customer payments on time, which could lead to a cash flow crisis.
Many businesses continue to handle invoice management manually, despite the fact that faster and less error-prone methods exist. In fact, the process can now be almost entirely automated. The only part that cannot be done is getting somebody’s approval. This quick guide explains how automated solutions work and why embracing them can help lay the foundations for a bright business future.
How automated invoice processing works
The invoice management process of a typical company contains several steps. For an outgoing payment, it starts with receipt of the invoice. Someone has to read this to get the details, dig up the purchase order to check that there are no discrepancies, enter the details into a computer, then get approval from the appropriate authority to release the payment.
When people do this, it can take hours. But for an automated system it takes minutes. The details of a paper invoice do not even have to be entered manually into a computer for them to work. Data capture can be used instead, meaning you only have to scan the invoice and the computer will read the information for you. It can instantly generate an approval request to send to the right person, or you can set rules so that it just releases the payment.
In addition to being quicker, automated invoice management is also more accurate. For example, it is less likely to confuse dates than humans are. This reduces the chance of late payments being made by accident. It can also spot discrepancies between invoices and orders a lot faster, letting fewer of them slip through.
Business benefits of automated invoice management
Invoice management systems can be expensive – just contact Futurelog or your preferred vendor to get an idea of prices. However, they do not directly lead to more sales or significantly reduced costs. So what justifies the expense? Besides improved accuracy and speed, they benefit businesses a lot in indirect ways.
Improved business relationships
Suppliers and contractors obviously prefer to work with businesses that they can trust to pay up fully and on time. If your business is one of them, the companies you work with will appreciate your business more which could lead to better prices or terms, or your business getting some other kind of preferential treatment.
You can also use automation to help streamline your accounts receivable. There are systems that can recognise late or missing payments and automatically contact your customers for you. They can also handle receiving payments in several different ways. It is important for any business to make it as easy as possible for customers to pay.
Scalability
A lengthy invoice management process fraught with possible inaccuracies is only going to get worse as a company grows. But an automated system can be dramatically scaled up and still work just as well.
Valuable insights
Automated systems can simultaneously complete their core function and analyse the data that is put into them. This can help business owners to spot when fraud is taking place, to see which vendors and customers are reliable, and to see where money might be being used inefficiently. When invoice management is done by people who treat each invoice as an isolated task to be completed, nobody sees the bigger picture.
Keeps key staff free
The idea is not to automate away jobs but to transfer valuable human capital – which you presumably spent considerable time choosing and training – to more important tasks than those which can be done by a computer. Good personnel would serve you better by improving your products or providing excellent customer service.
Adaptability
People tend to get set in their ways. Every manager has seen situations where a slight change in the way a task is performed requires a lot of retraining to sink in. Automated systems can pick up new ideas much faster. For example, if you receive an invoice with a different format to any seen before, the system will pick up the new layout quickly and will soon be reading it with no problems.
Conclusion
Automation has lots of benefits to offer, especially for repetitive numerical tasks like invoice management. It is faster, more accurate, and more adaptable than a person, which means it can help your business become more efficient even while you are scaling up.
