Invoicing processes can have a significant impact on the bottom line of your company, for better or worse, making improving these operations a high priority for any finance team.
Creating invoicing processes that are efficient, accurate and transparent can save both time and money, improve compliance and record-keeping, and affect your company’s overall financial position. Conversely, manual processing, inconsistent procedures and a lack of structure can all reduce efficiency and lead to errors, which in turn delays payments, frustrating everyone involved.
Here are five steps to help you improve your invoicing process and reap the benefits.
If you don’t have a single, well-defined workflow from issue through to approval and payment, then at a minimum, creating some standards will assist improvements in consistency. How quickly should a customer expect you to issue an invoice or approve a payment? Do you have a single invoice template with all required details or are your employees filling them in as they go? Do you have a set day of the month when all invoices are processed? When do you send reminders or follow up outstanding accounts?
Having a clear and consistent process will improve efficiency and set expectations for your finance team, while also increasing the likelihood of being paid. You’re also minimising the risk of important steps or compliance issues being overlooked. Not to mention that your customers and suppliers will appreciate knowing what to expect from your company!
2. Create an electronic paper trail
Ensuring that there is a digital record of every action taken on any given invoice is a vital. As well as being valuable in the case of a legal dispute between you and a client, electronic paper trails, such as those provided through the use of an enterprise content management (ECM) system, are beneficial for both security and compliance reasons.
Paper records are at a greater risk of being lost, stolen, copied or altered without anyone’s knowledge, particularly as archived stores grow and become more difficult to monitor consistently. On the other hand, digital counterparts enable the ability to secure and monitor all access, encrypt data, and protect yourself from unauthorised changes and back up. Digital stamps also record every action taken on an invoice, ensuring compliance, while the ability to search electronic records quickly, without wading through numerous files, makes it easier for your finance team to prepare for an audit.
3. Automate for efficiency and accuracy
If your finance team is still using manual processes, then it’s time to take the steps and automate. While sorting through paper documents and recording in physical ledgers worked well enough in the past, when compared to modern automation tools, manual processing is inefficient and prone to errors.
Each individual invoice takes significant time to process, documents go missing, a single data entry error can cause chaos and take hours of work to find and correct, exceptions create stress and monopolise time that should be spent elsewhere, chasing approvals is time-consuming and frustrating.
Automating your invoicing process can save you time and money by:
- Centralising all data to avoid errors, as well as reducing time spent looking for information
- Implementing workflows that reduce administration and double handling
- Minimising data errors through automated invoice creation
- Reducing the overall time and cost spent on each individual invoice processed
4. Set reminders
If your finance team is not using reminders, then payments that your company could count on may be delayed. Sending a polite reminder to a customer before a payment is due is often appreciated, especially if it will save the company from having to pay a late fee.
Reminders can also ensure that invoices are processed, payments are made and outstanding accounts are followed up in an efficient manner. Standardising your invoicing process, eg. payments are made within two days of approval received, and putting this into a workflow can automate reminders and keep the entire process running smoothly.
5. Review and improve
While it can be easy to ‘set and forget’, regular evaluation of invoicing processes allows for ongoing improvement and adaptation to changing needs. Reviewing recent upgrades to processes will determine if the changes are having the desired effect. Additionally, as businesses grow, industries evolve and technology advances, the needs of your company may change and create other opportunities for improvement.
Analysing monthly reporting, as well as talking with the accounting team about their frustrations and bottlenecks, will create a picture of how well your invoicing process is functioning and where there may still be room for improvement.
Whether you're looking to scale up or diversify your business, automation can help you create efficiencies, support future growth and add value to your organisation. Download our guide, Business Automation: How it generates value and supports growth, to learn more.