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Best Practices for Invoice Processing
Invoice Processing has commonly been known as the paperwork involved for Accounts Payable purposes. It is related to a business’s purchase of goods and services which are received before they are paid for.
It is the process that a business’s Accounts Payable will use for all supplier invoices.
Paper invoices, Electronic or PDF can be received. The invoice can either be entered manually or automated.
Typical steps involved in invoice processing
- The invoice is received, either in paper form or electronically.
- The invoice is then confirmed by the business and placed into the system by category.
- The invoice is then matched with its corresponding Purchase Order (PO). (Read more about this here)
- The invoice is then given to the person who placed the order.
- Before the invoice is given to the person responsible, an employee superior to them may have to approve the invoice.
- The invoice will be checked that it corresponds with what was ordered, ensuring the right quantity and product was delivered as well as that the materials were delivered on time. (Read more about this here)
- 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.
Issues related to invoice processing
Since the procedure relies on several people, there can frequently be errors. The most common errors are, PO’s go missing, incorrect amounts, dates or categories entered into the system or even wrong currencies being entered.
Research has indicated that as much as 80% of companies manually input their data. Almost 30% of these mistakes are down to human error.
These figures might be surprising, but don’t worry because there’s a solution.
You can significantly enhance how your business handles invoices by implementing a system that automates all of your invoices. Technology has come a long way, and artificial intelligence has made invoice processing a lot more efficient.
Why you should automate your invoicing process
It reduces human error. There’s no reason to be relying on spreadsheets to process your invoices. It may work, but it relies on manual data entry, which always has the potential for human error.
Software automates the process so your employee’s don’t have to spend time manually inputting all incoming invoices. Software can also throw up any red flags regarding your invoice, such as an overpayment or incorrect quantity.
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. This may improve your credit with them in the form of additional funds or more favourable payment terms.
Manual invoicing means a huge amount of time is spent on the invoice process. This is not only time consuming, but it can be quite costly. If an employee can’t locate documents to support a particular invoice, the time wasted will only increase.
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.
One of the key features of livecosts.com is is invoice automation and supplier tracking. As well as the process being completely automated, we notify with any discrepancies in your order, such as an overpayment or damaged material.
You can learn more about how we use invoice automation and supplier tracking here.