Invoice processing, or "paperwork" as some people prefer to call it, is an integral part of running a business. Not only do you need to make sure that your clients are paying you in time, but also make sure that you clear invoices of your suppliers, vendors, etc.
Studies show that successful and error-free invoice processing is highly correlated with client and vendor satisfaction.
However, invoices are difficult to maintain and there is a large scope for it all going wrong due to minor errors. When invoice-related errors take place, you might have to exchange emails back and forth with the party concerned and explain your situation.
This kind of exchanges need to be eliminated in order to maintain healthy relationships with your suppliers, vendors, clients or customers.
Let us take a look at how you can eliminate common invoice processing errors in order to make your paperwork spotless.
Many businesses do not organize their invoices in a y manner. Not only is this important for maintaining transparency, but also to comply with tax regulations as the tax department may seek proof related to your filings.
To organize your invoices, you should first organize your workflow and make sure that nothing is disorganized. If your workflow is not organized, errors can easily pass your staff's eyes and erroneous invoices may get approved.
To begin with, organize your team and workflow, and put an invoice management system in place. Next, make sure that a verification system is implemented.
Research shows that 80% of businesses still depend on manual entry of data, and 27.5% of all invoice-related errors are due to human handling.
Accidental removal of Excel formulas, errors that actually match (leading to approvals of wrong figures), unauthorized purchases, data entry errors, paying before receipt of service or products and double payments are some of the most common invoice processing errors.
Implementing an automation tool such as ERP or invoice processing software, along with integration with your e-commerce or CRM software will help you avoid many of these invoice processing errors. While automation can eliminate most of these errors, you will still need the assistance of a team that can cross-verify invoices.
While processing invoice seems easy and clear-cut, you should engage in a 3-way matching in order to make sure that the figures on invoices, shipping orders and purchase orders tally.
All the totals, quantities, and prices should be identical and transactions should be licit. If there are any mismatches, this could mean that fraud has taken place or that unintentional errors have been committed.
While automated accounting systems can help you cross-check these figures, there needs to be an "invoice processing team" which can help in invoice verification and issue credit memos. The same team can help you maintain invoice accuracy metrics too, which is crucial for billing and invoicing KPIs.
One of the most common errors during invoice generation and invoice processing is related to wrong contact information. Many businesses do not update the contact details of their clients and vendors, leading to errors and delays during payments.
It is important to update all information related to your contacts regularly, and to cross-check manually as well. Data cleaning and standardization services can help you weed out outdated email addresses, telephone numbers, and addresses so that only updated and accurate information is stored on your invoicing system.
This helps you avoid embarrassing errors and delays, which might lead to reduced vendor and client satisfaction.
The most important aspect of invoice processing is not automation. While automating invoice processing reduces manual errors and fraud, it is still important to have a team that engages in a 3-step invoice approval mechanism.
Such a team can make sure that you don't use Excel anymore, that there is end-to-end transparency, real-time budgeting software, and elimination of actual paper in your paperwork.
Most importantly, invoices will be cross-verified by the orderer, reviewers and the one who approves as well. This 3-step approval mechanism is known to make your invoice processing error-free, increasing your credibility s. After all, nothing is more important than increasing your trust indices.
Processing invoices accurately is a responsibility you have to take seriously. Automating your invoice processing can help you eliminate manual errors and the accumulation of redundant data.
However, it cannot supplement the services of an invoice processing team which can help you not only automate certain aspects of invoice processing, but also ensure that everything has been verified end-to-end and that credit memos are issued in time. In addition, an invoice processing team can liaise with both vendors and clients, and ensure that all payments go through smoothly, without any cause for confusion or disagreements.
After all, a good business strategy is to keep both clients and vendors happy, and one way to do that is via timely and error-free invoice processing.