If you are using an accounting software, a standalone Procure-to-Pay solution can manage your procurement and invoice processing needs efficiently. If you’re not already using ERP to streamline all your business processes into a single database, you can dramatically improve efficiency and productivity by adding invoice processing to the list of modules your business needs to include in their ERP implementation. Integrate Invoice Processing with Your ERP With the right invoice processing software, you can minimize manual AP process work by up to 20x, allowing your team to focus on their other job functions and saving you money. If your employee cannot locate documents to support a particular invoice, the cost may also increase. The cost of processing invoices come from labor, storage, manually routing the invoices, and misfiling. Depending on what you pay employees and how long they spend on the process, you could lose anywhere from $8 to $60 on each invoice. Manual invoicing processes means paying man-hours and other resources for each of those invoices. To avail of these better invoice management with a streamlined invoice processing flow is a must. Similarly, your suppliers may offer early payment discounts. This may improve your credit with them in the form of additional funds or better payment terms. Not only do you save money by no longer running into late fees on vendor payments, but you also maintain an excellent standing with all your suppliers. If the missed invoice is a large sum of money and the late fee is a percentage of the invoice amount rather than a flat fee, that’s a potentially damaging hit to your cash flow.Īutomating your invoice processing procedure eliminates the risk of missing invoices due to human error, enabling you to pay all your invoices by the payment date. Vendors will often charge late fees as a result of the missed payment, which costs you more money in the long run. No matter the size of your business or how long you’ve been operating, at some point or another an invoice will be misplaced or forgotten as a result of human error. Then, it can be searched and matched with the right purchase order in seconds. When an invoice comes in, it can be stored as an attachment or scanned image in the central database. Procure-to-Pay software automates the process so you don’t have to spend time manually organizing all the incoming invoices. This method works, of course, but also relies on manual data entry in the general ledger, which always has the potential for human error regardless of how well your AP department is trained. With today’s available technology, there’s no reason to be relying on email and spreadsheets to handle your invoicing needs. Reasons to Automate Your Invoice Processing Procedure Reduce or Eliminate Human Error The multi-step approval workflows take time but can be automated for faster and more efficient processing. Then, the invoice has to be sent to the responsible person or budget owner for review and approval. From there, the invoice amounts must be coded for the correct accounts, cost centers or projects. The invoice must either be scanned or manually entered into your ERP system or accounting software. You can receive paper invoices, PDF, or other electronic means. It starts when you receive an invoice and finishes when payment has been made and recorded in the general ledger. Invoice processing is the entire process your company’s accounts payable team uses to handle supplier invoices. That’s why your method for processing invoices in accounts payable can make or break your business. Using a manual invoice process to address all of your invoices leads to the potential for issues, even if you have the most responsible and highly detail-oriented finance staff. Sure, you can work with vendors to extend payment terms to buy yourself more time, but the only true way to make sure you have a steady cash flow is to make sure vendor invoices are paid strategically, without misplacing any of them or allowing them to go past the due date.Īs humans, we’re all prone to make mistakes from time to time. If you don’t have the funds to continue to order supplies from your vendors, then you face the possibility of halting production, which will create a cash flow issue in the future when you don’t have invoices to send out to customers. If your working capital is low, it doesn’t necessarily matter how much money is due to come your way. Business owners often worry about their ability to manage cash flow.
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