If you’re doing business, you’re managing invoices. Invoice management is critical to keeping an organized financial ledger, keeping money coming into your business, and being prepared for tax season.
With only a few clients, invoice management is relatively simple, but once you start expanding your business, it can quickly become complicated. Without proper strategies in place, invoices can get lost, be filed incorrectly, or paid too late …
Even if you do everything fastidiously by hand, turnaround times will lengthen until they are unsatisfactory to your business partners. This could affect your business’s overall reputation. BirchStreet Systems knows about the dangers of manual invoice management and are able to remedy the issue. The answer: automation.
What Is Automated Invoice Processing?
invoice information and payment, and the collection of money. It allows businesses to have greater control and because the information in automated systems is stored in the cloud, it prevents the loss of important files through natural disasters such as floods or fires (or even human error).
Automating your invoice management will help you improve turnaround time, avoid mistakes, organize your filing system, and improve relations with business partners. It will save you time and manpower.
First, we’ll talk about the process of sending invoices to people who need to pay you.
1. How Do You Create Invoices?
When you create invoices, do you do it by hand every time or do you have a template? If you don’t already use a template, consider switching as templates are quicker, more accurate, and ensure you don’t miss any important information.
There is plenty of software out there that can help you choose a template or even create your own. Information that you’ll need to fill out these templates includes:
- invoice number
- Table for client information (name, address, contact info, etc…)
- Itemized receipt including quantities
- Any remarks
Be sure to specify the approval conditions when creating an invoice by including terms and conditions. Also, layout step-by-step instructions for any further actions that may need to be carried out.
2. How Are You Sending Your Invoices?
Not all invoice-sending systems are created equal. If you are sending hardcopy invoices by mail, there is a lot of room for improvement. This is the slowest way to do it. It also opens you up to the risk of loss in the postal system.
A faster way would be by email. This way, there is an electronic trail of the invoice that can easily be saved in an electronic filing system. The invoice will arrive in the recipient’s inbox instantaneously. Make sure to convert the invoice to a PDF for added security.
An even better way to send an invoice is through invoicing software. Invoicing software can help you design the invoice, brand it, and send it on its way in a matter of minutes. When a customer sees an invoice sent through invoicing software they will simultaneously see a link to where they can pay. This is faster and more convenient for the recipient of the invoice and may lead to you being paid more quickly.
Now for processing invoices that you receive.
3. What Is Your Accounts Payable Process Like?
The accounts payable (AP) process is not simply paying invoices. There’s a lot that goes into a thorough and safe AP process because it’s a place that’s vulnerable to losing a lot of money.
For example, Google and Facebook lost $23 million and $100 million respectively to a cyber scammer who created a fake company through which he was sending fraudulent invoices to the companies. Though it was eventually recovered (a rarity in most invoice fraud cases), the companies lost a lot of money by paying a “company’s” invoices without thoroughly checking them for legitimacy.
To keep track of your finances and avoid any potential scams, follow a thorough AP process.
First, match the invoice with a purchase order (PO). A PO is issued to the buyer after the deal is made, specifying what has been ordered, how much, by whom, from whom, and the delivery date. It also has a unique PO number, without which is not complete. You’ll need to resolve any irregularities such as missing PO’s or mismatched PO numbers before proceeding to the next step.
After the PO is located and matched with the invoice, send it to a manager or senior staff member for approval. Hopefully, they will have a good idea of who the company regularly does business with and can flag anything suspicious that may have slipped past. Next, update the ERP (enterprise resource planning) system to reflect the receipt and imminent payment of the invoice.
Finally, and only after the preceding steps are completed, issue the payment.
4. How Are You Actually Paying Your Suppliers?
You’ve completed the AP process up until the last step. Now it’s time to actually issue the payment to your supplier. How do you go about this? Are you still writing checks?
If you are, maybe you’re unaware of the time, money, and security this form of payment is costing you. Checks, even if they’re printed instead of handwritten, are more time-consuming than other types of payments. Not only the writing and envelope stuffing, but the trips to the post office to send them and the trips to the bank to obtain them, cost you time.
What’s more, checks are more expensive than alternative payment methods. While checks cost about $1.22 a pop, the average ACH (Automated Clearing House) payment costs only $0.29. If you’re making high volumes of payments, this cost gap can really dip into your finances over time.
BirchStreet Pay is one invoicing software that can help you avoid the money, extra time, and risk associated with writing checks. It will not only make your life easier, but can let you earn cash rewards for something as simple as paying your suppliers.
It works by switching virtual cards for checks, and as these cards are used you can rack up cash back rewards. BirchStreet Pay can help you make secure, rewarding payments quickly.
5. How Are You Filing Your Invoices?
An organized filing system is crucial to any operating business. Start by knowing the difference between the various types of invoices. These include a proposal invoice, an interim invoice, a recurring invoice, a past due invoice, and a final invoice.
Perhaps consider color-coding these by their respective types. An easy way to do this is to pick up some colored sticky tabs at a local office supply store and mark invoices as they are produced and received.
If you are keeping physical files, dedicate a filing cabinet, drawer, or basket to this purpose. However, as mentioned before, this could leave you susceptible to flood, fire, or human error. The best way to file your invoices is to move them into the cloud using automated invoice filing.
In the past, companies would often need to employ a full-time bookkeeper to generate, categorize, pay, and file invoices. This is a lot of manpower for a rather repetitive task. These days, there’s software that can do the same thing as a paid bookkeeper. This software can do everything from generating invoice templates to correctly filing your invoices to making payments on time.
Invoice software can file your documents in an organized, intuitive, and thorough fashion so that even an audit won’t bring you stress. Everything will be safely stored, organized, and retrievable from the cloud.
6. Are You Digitizing Your Invoices?
In order to use invoicing software, you’ll need to digitize your invoices so they can be stored in the cloud. If you have a cabinet full of paper invoices, you’ll, unfortunately, have to go through the initial task of scanning and uploading them to the cloud. Once you’ve done that, you can start dealing exclusively in digital invoices which will ultimately make your life a lot easier.
Once, or even before, you have all physical paperwork uploaded to the cloud, you can start moving your current invoices from physical to digital. Use email, or better yet, invoicing software like BirchStreet Pay to issue invoices and pay those issued to you. No more scanning, no more paper cuts, just hassle-free invoice management via cloud technology.
Moving your business to online invoicing software has huge and numerous benefits.
Everything is stored in the cloud. This means you don’t have to worry about losing physical copies or losing digital copies in a computer crash or lost thumb drive. Invoicing software also allows you to customize documents to further your brand identity.
What’s more, invoicing software allows you to deal in many languages and currencies, so doing international business is a breeze. Invoicing software also boasts faster service, saves ink and paper costs, and anywhere, anytime access.
If you’re still performing invoice management manually, consider this your kickstart to going online for an easier, safer, more accurate invoicing experience.