Invoice Processing is a workflow that has been established by a company to receive and pay incoming bills / invoices. In construction, due to its nature of supplying materials, the volume of monthly invoices to be processed can be extremely high and in turn difficult to manage.
Manually keying in invoice data is a time consuming and costly exercise. This is especially true when trying to match the invoice to an order and delivery as well as spot checking fluctuating prices.
Traditionally invoices are managed manually, but with advancements in construction software, this no longer needs to be the case.
Let’s take a look at the manual process and how it can be improved.
The problem with manual invoice processing
The invoice processing procedure tends to rely on several people, it’s generally not enough just to pay the invoice without asking questions like:
– Who placed the order?
– Was it received in full?
– And is the price correct?
Involving multiple people during the process obviously adds to it complexity and time and can leave the process open to errors. This can be PO’s going missing, incorrect amounts, dates or categories entered into a spreadsheet or even in wrong currencies.
Let’s take a look at the manual process of invoice processing and why it’s so time consuming.
An invoice is received, in paper form or electronically which is then confirmed by the business and placed into a system. It’s then matched with its corresponding PO and checked that it corresponds with what was ordered, ensuring the right quantity and price. A check is then done on wheter the delivery of the items has been made in full.
After this is complete, the business’s bookkeeper will extract the data from the invoice and it will be inserted into the accounting books/software.
This process is incredibly time consuming and with modern construction software, it shouldn’t be necessary. You can simplify how your business handles invoices by implementing an automated 3 way match system that will save time and money.
The 3 way match process
A 3 way match is the process of matching an invoice to its purchase order and delivery receipt. Before the invoice is paid, accounts payable will review the quantities, prices and terms to ensure that what is ordered matches the goods received which matches what they are being charged.
3 way matching is a great business practice, but doing it manually, truth be told, it is labour-intensive and time consuming.
Looking through stacks of paperwork or excel sheets to find these three documents is difficult. Construction softwares such as LiveCosts are built with the invoice workflow in mind and can enable a company to adapt a 3 way match system with ease.
Why automate invoice processing?
Simply put it make things easier. Invoice automation extracts invoice data and populates the information in an accounts payable system. Automated invoice processing saves valuable time and money for a company’s Accounts Payable team.
It reduces human error. There’s no reason to be relying on spreadsheets to process invoices. It may work, but it relies on manual data entry, which always has the potential for human error.
Software can throw up any red flags regarding your invoices, such as an overpayment or incorrect quantities.
Sometimes an invoice can be misplaced or forgotten about due to human error. Automating your invoice process eliminates the risk of missing any invoices. It enables you to pay all your invoices by the payment date. Not only can you save your business time, but it will also build on your relationship with your suppliers.
With the right invoice processing software, you can minimise the manual invoice process, allowing your employees to focus on their other job functions as well as saving the business money.
Simple Scan is a LiveCosts feature that has been built on a foundation of machine learning. The LiveCosts system has been trained to recognise and extract the key values from an invoice. By extracting a purchase order number, we immediately get access to what Project / Phase this invoice belongs to and if the goods have been received. This cost is applied to the project to get a true understanding of how we are spending vs our budget.
Book a demo for more information.