Invoice Management Guide for Businesses in 20235 min read
Reading Time: 2 minutesIn a modern world with innovative solutions Invoice Management is perceived as a burden, an unbearable workload just like any other financial process.
Almost always finance departments of small businesses are overwhelmed by the infinite number of invoices that they are supposed to process on a daily basis.
Despite the hard work, dedication and best intentions businesses have pieced invoices to come together and add up to be a big pile of a problem that makes life harder for the financiers and accountants.
Quick Definition of Invoice Management
Before searching for the cure to the problem above, let us try to answer the question, “what is invoice management?“
Invoice management, also known as invoice processing, is the method that a business tracks and pays invoices from their suppliers.
The invoice management system goes through the same stages in almost every business.
Stages of Invoice Management
- Invoice is received
- Invoice is validated
- Invoice is approved
- Invoice is paid
- Invoice is logged in the accounts
From this point of view, it doesn’t seem like a very complicated thing to do but actually, the interference is larger than you can imagine.
Types of Invoice Management
It doesn’t matter whether it is a small business or a relatively bigger enterprise invoice management is considered part of the accounts payable process for most of them.
Generally, there is a clerk responsible for the receipts and invoices collected from suppliers and/or vendors.
Traditional Invoice Management Method
The traditional method has the same basic stages that we mentioned above. It also includes lots of manual work.
Invoices are gathered from suppliers and vendors, usually through the mail, e-mail, or physically delivered.
Only this can cause more than one convenience. For instance, if there is a problem, the delivery person may not know about it, or if the recipient employee is not an AP clerk, the problem can’t be detected right away.
Both will cause sent backs, lack of approvals, and revisions which means time and energy waste.
Even if the invoices arrive flawlessly with an AP clerk, there is still the burden of processing the data into a spreadsheet or invoice processing platform, waiting for approval from the responsible manager or CEO and executing the payment, and yet again entering the data into accounting ledgers.
Without any doubt, this is inefficient for our digital-oriented financial needs.
Invoice Management Software
As you can guess, smart companies would like to reduce the burden of two things.
Manual Data Processing: Causes lots of time and energy waste and is prone to mistakes and errors.
Double Handling: Sending back and forth all the documents causes much of a burden than we think.
That is why technology has taken over. If you have invoice management software there will be only one data entry, and it will be immediate.
Then the automated system will inform the related parties directly, and the whole process can be completed just in a few minutes.
Some of the software even let the suppliers input their own invoices and get approved directly through the program.
There is one thing left, when will you transform yours?
