What Exactly is Invoice Processing, and How Does it Benefit Your Business?
A well-organized workflow is essential to the day-to-day operation of a sales department. This is especially true when we consider that modern consumers are more discerning than ever. A minor inconvenience could cost you a sale; a poor design choice could cost your business thousands.
This short article provides readers with a competent understanding of an invoice processing system and its benefits.
Let’s start with the basics.
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What is Invoice Processing?
The rationale behind invoice processing is it streamlines the process of handling invoices. A complete invoice cycle is as follows:
- A Buyer receives a supplier invoice.
- The buyer approves the invoice.
- The system establishes a remittance date (when the payment is due).
- The buyer pays the invoice.
- The system takes account of payment and records the transaction on the general ledger.
Invoice processing facilitates the entire process, from when a buyer receives an invoice to when the system records the transaction on the general ledger.
To gain a more holistic understanding, we need to understand the invoicing process as a component of a business’s finance processes.
Payment processing with an established invoice processing workflow makes your accounts payable department more efficient. It allows them to track money owed to suppliers, ensure payments are approved, and process payments.
Accurate information on accounts payables is essential to producing an accurate balance sheet. However, it’s also important to understand that invoice processing is a tedious process. The margin of error only increases as your invoice manager becomes increasingly fatigued.
This is why automated invoice processing systems are so valuable – they can digitize invoices, reduce errors, and make your accounts payable department more efficient.
What Are The Main Benefits of Automated Invoice Processing?
Automating your invoicing process (and many other business functions) is a great way to free up valuable human resources so they can be used for other human-intensive tasks. Automated processes will also help eliminate any human error that would otherwise be costly and detrimental to your business.
Beyond these apparent benefits, invoice processing automation also yields many secondary benefits. Below are some examples:
It Saves Time
Manual invoice processing is not only a tedious task, but it also takes time to accomplish. Imagine manually filling up an invoice, getting a buyer to acknowledge it, and receiving payment.
Filling up a ledger is incredibly time-consuming.
Automated invoice processing automates these tasks at a near-instant rate and negates traditional business time constraints. (Traditional invoicing systems can only process invoices during business hours.)
An automated invoice processing system can accomplish invoicing tasks at any hour of the day.
Switching to e-invoicing cuts labor, printing, and mailing costs. It also minimizes interest and late fees. It also wholly negates any cost associated with human error or poor record-keeping.
Inaccuracies in your tax reporting can lead to hefty fines and penalties. The bigger your business operations, the greater the need to hire multiple employees to handle invoicing tasks.
It Optimizes Cash Flow and Performance
E-Invoice processing systems optimize cash flow and performance by optimizing internal business processes. If an e-Invoice is lost or late, a real-time system can detect the discrepancy and permit adjustments on the fly without requiring manual data entry.
This ensures that the overall system stays operational despite the occasional glitch.
Moreover, an automated invoice processing system can be the foundation for implementing other procedures, such as a dynamic discounting system.
It Mitigates the Risk of Human Error
Financial issues can impact relationships. As mentioned earlier, human error can lead to expensive consequences. An automated system for processing invoices can significantly mitigate this risk. It can also provide rapid remedial measures if a system error occurs.
These invoices are entered into a system that will automate the money transfer from the customer to the seller. The system can tell when money has been sent out and make the necessary corrections if customer money is sent the wrong way.
It Streamlines Compliance
Every business owner understands the importance of complying with local tax laws. They also understand why tax filing is arguably the least liked aspect of running a business.
Tax filing requires a significant amount of time and effort to accomplish manually because it entails loads of paperwork, accounting, auditing, etc. This is especially true for businesses with higher revenue. The penalties for failing to comply with tax requirements are significant.
An e-invoice processing system de-stresses the process and allows all business owners to focus on the fun part of running their business – growing it!
Automated invoicing systems record all the payment details in one place, which makes data easy to track and manage. It also eliminates the human errors that sometimes happen in manual invoicing.
This frees up your financial department’s resources so they can focus on other work, such as increasing employee productivity, securing better candidates, or providing better training.
Businesses are meant to grow. While it’s possible to retain a manual invoice processing system, business growth means you’re going to have to hire more people to handle invoicing. The margin of clerical errors only increases as your business handles more transactions on a regular basis.
Upgrading to an e-invoicing system provides you with an invoicing solution that scales with the growth of your business. It eliminates the need to find, hire, and train new employees to fulfill the role.
Moreover, an e-invoicing system can adjust immediately to match business demands. It takes time to recruit, hire, train, and deploy a new hire.
The Bottom Line
The most compelling thing about implementing an e-invoicing system is that it’s not really an option, given the rate at which businesses are digitizing.
If your competitors are streamlining their internal processes, you should be compelled to do the same to stay competitive in your industry. Fortunately, the internet is replete with reliable options. The order management system of Page365 comes with an integrated invoice processing feature.
It can track and send repeated invoices to customers, leverage templates and libraries, and calculate shipment charges. Business processes don’t need to be complicated.