Processing invoices manually is time-consuming and prone to human error, not to forget it’s inclined to fraudulent activity. According to CFO.com, the five areas most impacted by internal fraud are purchase-to-pay processes, corporate credit cards, payroll departments, sales and receivables processing, and information systems departments.
Using invoice automation mitigates the risk of fraud and leads to numerous other business advantages, including enhanced payment processing efficiency, better allocation of resources, superior reporting capabilities, and on-time, verifiable payments.
Ways to Use Invoice Automation Software
Read below to discover eight tips for getting the most out of your invoice automation software.
1. Create a Checklist
Invoice automation software is simple to use, but it still requires the manual input of vendor information. You must ensure this information is entered correctly in order to make payments on time. Create a checklist and make sure all relevant employees are provided a copy that hangs somewhere near their desks. For each vendor or supplier that is entered into the system, check to see if the following information is correct:
- Name of vendor;
- Contact information, including postal address, email address, website address, phone number, etc.;
- Tax ID number;
- Names of vendor representatives who are responsible for billing and invoicing.
The more thorough you are in providing information on each specific vendor, the better, particularly come tax season. It will also help to ensure that you are paying each vendor out of the correct account. Transposing a number while manually entering account information can lead to costly financial issues, including overpayments and hindered cash management. Most importantly, it can damage vendor relationships. Your checklist will deter these problems.
Also, don’t forget to brand each invoice with your company name and logo. This expands brand awareness and adds professionalism to the invoices and credibility to your company.
2. Verify Payments and Monitor Changes
Getting the most out of invoice automation software requires checking it periodically for discrepancies. Track and monitor all actions within the software and address any questions or concerns promptly. Even a small error can lead to financial loss. For example: A particular vendor is categorized as being an entity that provides an early payment discount. While monitoring changes performed by employees, it becomes apparent the vendor has been removed from the Early Payment category and is no longer receiving an early payment from you, thus leading to a 5% discount loss each month. Verifying payments is also essential to eliminating double payments.
3. Create and Deploy Automation Rules
Automation rules trigger a certain action to take place. They are linked to specific statuses and simplify invoice processing. There are many automation rules that you can create and deploy. Here’s a look at a few of them.
- Delete invoice record: generally only used when an invoice has been inputted incorrectly. In almost all instances, a new invoice will be created to take its place.
- Activity: creates an activity to take place when a certain action occurs. For example: The activity rule can automate an email to be sent to the employee responsible for paying invoices once they are nearing their due dates.
- Change status: can be used to automatically change the status of an invoice to “paid” once the accounts payable automation software finalizes the payment.
- Schedule a call: can be set to alert the appropriate entity to schedule a call with the applicable vendor once an invoice has become past due.
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4. Use During Audits
Audits can be painful and laborious, especially when dealing with paper invoices. Automated invoice processing eases the audit process by allowing you to run on-demand reports. Use these reports to prepare for the audit and identify any issues before it begins. Quickly retrieve AP documents through digital access and enjoy enhanced response times once the audit has started. Having direct access to invoices via the invoice automation software mitigates last-minute scrambling to locate missing paperwork. All of this leads to less internal and external disruption, which improves workflows and vendor relationships.
5. Streamline Accounts Payable and Receivable
Effective management of accounts payable and receivable is key to establishing long-term relationships with vendors and suppliers. Manually tracking due invoices, identifying the age of each invoice, and checking their payment statuses can be frustrating. Use invoice automation software with your customer relationship management software’s data-tracking capabilities to keep a bird’s eye view of all invoices and customer relationships at the same time. You can easily tell where your money is being spent, which allows you to see where money-saving opportunities exist. You can pinpoint early payment incentives and improve cash flow. Invoice automation also increases accountability in the accounts payable and receivable department by letting you see which invoices are stalled and the person responsible.
6. Provide Mobile Access
Choose an invoice automation software that features mobile access. Your accounts payable and receivable department will thank you for the ability to process invoices on the go. This means that even when they are away from the office, invoices can be approved and paid. Mobile invoice processing increases productivity and leads to better vendor relationships because you are more apt to make payments on time. In fact, according to John Rampton in Entrepreneur, mobile invoicing entices payers to reconcile invoices up to three times faster than regular invoices.
7. Identify All Vendors Who Prefer Automated Invoicing
Paper invoices and spreadsheets are quickly becoming replaced by automated invoices because of the better experience automation creates. It allows vendors to easily access invoice status updates via the cloud and helps them get paid on time by sending out payment reminders. For the payer, automated invoicing creates a seamless payment experience across all vendors and suppliers. It’s imperative to identify which vendors prefer automated invoicing and to adhere to their preference.
8. Take Advantage of Wholesale
Purchasing large orders from wholesale providers makes automated invoicing all the more beneficial. When purchasing wholesale, the stakes are higher, especially in relation to payment terms. The automated invoice process, however, allows you to focus your attention on the supplier relationship, which may lead to lower purchasing costs; this translates into higher profit margins. Instead of being tied to tedious administrative processes, automated invoicing simplifies the entire accounts payable and receivable aspect of doing business with a supplier.
In Entrepreneur, John Rampton goes on to say that automated invoicing can save businesses up to eight working hours each week per 1,000 customers. When compared to paper invoicing, the savings average anywhere from $4 to $8 per invoice.
Invoice automation software is ideal for businesses of all sizes. Send and receive invoices on the go, process payments, update invoice status, and record and track all expenses. These are only a few of the advantages gained when you switch to invoice automation. Are you ready to make the switch?