Invoicing Management
What is invoice management?
Also known as invoice processing, invoice management is the method by which companies track and pay supplier invoices. At its most simple, the process involves receiving an invoice from a third party, validating it as legitimate, paying the supplier, and noting the payment in company records.
Which doesn’t sound all that complicated. But there are usually multiple people involved, and there are plenty of opportunities for error.
For one, invoices are typically sent to the point of contact within a business – the user of the service. This is not usually a finance team member or accounts payable clerk, which means that this invoice has to be forwarded on.
If there are any issues with the invoice (spotted by the AP clerk), the invoice then goes back to the point of contact and then back to the supplier for changes. Already there’s plenty of double handling.
But even if the invoice arrives flawlessly with the AP clerk, there’s still the matter of entering its data into a spreadsheet or invoice processing platform, getting validation from a manager or CEO that the bill is legitimate, making the payment (via a bank), and entering all of this data again into accounting software.
This is standard operating procedure for most growing businesses. But as we’ll see shortly, there are faster and more accurate ways to handle invoices. And this becomes vital as their number grows.
But before tackling that, let’s say a few quick words about accounts payable.
Invoices and accounts payable
In large and established businesses, invoice management is usually part of the accounts payable process. AP is there to make sure that suppliers get paid, and you get the goods and services your company needs to thrive.
As we mentioned above, accounts payable teams work with other staff to make sure they have what they need. This can include raw materials, software, and even freelancers and consultants. All of these come with invoices that need to be paid.
In theory, your accounts payable team is there to improve supplier relations, hunt discounts, and find the best possible businesses for you to partner with. They can even help you streamline your pest control billing process, as demonstrated in this helpful guide.
In theory, your accounts payable team is there to improve supplier relations, hunt discounts, and find the best possible businesses for you to partner with.
In reality, they spend a huge amount of time on data entry and fixing errors made by other people in the process.
And if you don’t have a dedicated AP manager or team, it’s the office manager or finance experts doing all this work. They definitely have better things to worry about.
This is usually the case for most small and growing businesses. They still have plenty of invoices to process – they just don’t have a unique team to handle them all.
Whichever your business is large or small, you still may be struggling from the same problem: old fashioned processes. Which is a shame, because invoice management has come a long way.
