Author: Rachel Tilley
Poor invoice processes can have some horrifying effects on a finance department’s efficiency and overall performance. When invoices are handled manually, errors in data entry, misplaced documents, and delays in approvals often occur, leading to payment discrepancies and tense customer relationships.
Additionally, relying on outdated processes ie paper-based or manual systems can result in important time wasted searching for invoices, reconciling discrepancies, or chasing down approvals, which ultimately impacts cash flow and operational effectiveness.
The amount of wasted resources allocated to manual invoice processing is truly terrifying.
The scary truth is, poor invoice processes can have serious and often frightening consequences for businesses. Here are some of the chilling realities about the impact of poor invoice processes:
Manual invoice processing is extremely time-consuming. It can take hours to create, send, and track invoices which requires a greater effort from employees. It takes staff away from more productive tasks and can impact overall productivity. If no purchase order exists or the amounts don’t match, it takes employees time to investigate and spend time away from their desks. These issues can be spotted quicker with invoice processing software. A huge way to reduce wasted time is to consider Integration with your Finance or ERP System.
Manual invoice processing is often associated with higher operational costs. It requires paper, postage, storage, and manual labour. Additionally, errors in invoice processing can lead to the need for corrections, and invoices having to be re-sent, incurring additional costs.
Additional staff may also need to be hired to handle high volumes of manual data entry and the costs associated with resolving disputes. These additional expenses can eat into profits and limit a business's ability to invest in growth opportunities.
Invoices can get lost with paper-based systems or unorganised network folders. Invoices hidden on desks or sat in someone’s inbox cause some of the biggest headaches for invoice processing, and it definitely doesn’t work in today’s remote and hybrid working environment. This can result in delayed payments and missed revenue. This lack of visibility around outstanding invoices can create chaos and hinder a business's ability to accurately track its financial position.
Failure to properly process invoices can also expose a business to compliance risks. This includes failing to meet tax or regulatory requirements, potentially resulting in penalties, legal consequences or additional audits.
Poor invoice processes are inefficient with manual data entry, paper-based approval processes, and a lack of automation slowing things down. These inefficiencies can lead to errors, delays, and a lack of visibility of a business's financial operations.
To truly streamline your invoice processes, you should be considering how investing in a data capture and document management system will support what you already have in place. With that in mind, integration with your Finance or ERP software should be a consideration. This way you can eradicate data entry between systems and have one single source of truth.
Poor invoice processes can also result in late payment penalties, further draining a business's financial resources. If emails are deleted, mis-routed, lost or simply inaccessible when employees are off sick or on holiday, the accounts payable processes can fall down. Additionally if it's taking your organisation too long to process an invoice, either because of sheer volume, slow processes or too many manual keying errors, late payments are likely to happen. With AP automation services, invoices that require approval because they either exceed a certain limit or cannot be matched, can be automatically routed to a specific user for immediate approval.
Poorly documented or incorrect invoices can lead to disputes with customers. These disputes can be time-consuming to resolve and may harm customer relationships resulting in lost business. Resolving these disputes takes time and resources that could be better spent on growing the business.
Perhaps the most significant consequence of poor invoice processes is the missed growth opportunities. With inefficient processes, businesses may not have the accurate and timely financial information they need to make informed decisions and seize opportunities for growth.
Late, incorrect, or lost invoices can harm a company's reputation. Customers may associate a lack of professionalism and reliability with a lack of trust which can lead to lost business.
It is clear that poor invoice processes can have a wide range of detrimental effects on a business's cash flow, financial health, and overall success. By recognising these and taking steps to improve invoice processing, businesses can mitigate risks and position themselves for sustainable growth and success.
Effective invoice processing involves taking a good look at the current process, starting from the second an invoice is received to the moment it gets paid, and reviewing where problems occur as well as any process bottlenecks.
This includes checking how accurately data is captured, whether there is thorough validation, and then how well document approvals happen. With the help of automated invoice processing software, businesses can eliminate the need for manual data entry and reduce the risk of human error. This not only saves time but also improves the accuracy of financial records.
Invoice processing plays a vital role in effective cash flow management. By streamlining the process, implementing the right technology and having employee buy in, businesses will improve the efficiency and accuracy of their financial operations.
Avoid the scary consequences of poor invoice processes and get in touch to learn how our solutions will help. We have 40 years' experience in improving processes and a strong knowledge of document management integrations into third-party finance and ERP systems. Discuss the goals you'd like to achieve with us today.
