Businesses are constantly striving for efficiency and improved productivity. They want to be doing things faster but also better. There needs to be less redundancy and at the same time fewer errors. One area in particular that tends to be bogged down and unable to operate at a peak level of efficiency is invoice management.
Dealing with invoices is a process full of errors, and when invoice automation isn’t introduced there’s a lot of time spent on manual work and not a lot of strategy.
So why is invoice management so important, and how can efficiency levels be improved in this area and across accounts payable and receivable?
Why Is Invoice Processing Important in Business?
The problem in some businesses is that the importance of invoice processing is overlooked. Invoice processing is seen as somewhat of a necessary evil, but in that same regard, it’s not necessarily looked at something where there’s room for improvement.
Understanding why invoice processing is so vital to a business and particularly that it’s done efficiently and accurately can help make some shifts in thinking that will bring value to other areas of the organization.
Efficient and accurate invoice processing can help ensure that companies have strong working relationships with their vendors. It can make sure there aren’t additional costs because of delayed payments. It helps with cash flow to make sure everything is accurately accounted for.
It’s important for businesses also to realize that the longer their invoice process takes, the more expensive each invoice is.
Automating the Process
One of the most important things an organization can do in terms of their accounting department and improving processes is to implement automated invoice management. Research shows that with automated invoice processing, it’s possible to cut down the time it takes to process each invoice by days or even weeks.
It’s also going to improve the number of invoices each accounts payable and accounts receivable employee can process.
Along with working more quickly, these employees will have more opportunities to be strategic in how they think and what they do. For example, employees are more likely to see where there are places money could be saved if they’re spending less time processing each individual invoice.
Thoroughly Train Your Employees
When your employees in the accounts payable department are introduced to new automation technology, it’s imperative they’re trained on not just the basics of how to use it, but how to really work within the platform to derive the most value at their individual level and for the entire company.
Before introducing a new invoice automation system, consider having a point person available who can help employees when they have questions or concerns.
Also, implement the software gradually so employees can get used to working with it.
Define Your Policies
While automated invoice processing is the major component of making accounts payable and receivable more efficient, there are other steps that can be taken as well. For example, businesses should revisit their policies. Make sure these policies are modern, up-to-date and in-line with current demands and processes.
Once that’s done and any relevant changes are made, ensure that everyone is clear on company policies regarding invoice processing. This includes not only relevant employees but also customers, vendors, and other people who might need to know this information.
Some things you want to make sure that you’re clearly communicating include your terms of service and what steps you take if payments are late, and in particular if they’re regularly late.
Consider the Use of Contracts
Sometimes improving the efficiency of your accounting department isn’t just about what’s going on internally. It can be about how you handle things with customers and vendors. With that in mind, you might want to consider using contracts to make sure things stay on track and everyone is meeting their commitments.
When you have contracts, it can help reduce the pitfalls that come with non-payment and late payment. This will also allow you a more consistent and structured way to offer rewards and discounts to customers when applicable.
Finally, this can come with automation, but going paperless as much as possible in accounts payable can do wonders for the efficiency of the entire department. Make as many things digital as is possible. You’re going to find that you save time and money in so many areas-even those areas you might not think of. For example, you’ll be more efficient because you won’t have to store as many hard copy documents.