How to simplify invoice processing
How to simplify invoice processing
How to improve invoice processing? This is a problem faced by many small business owners when developing their businesses.In the invoice and Get paid Essential to the survival of small companies, your business also needs to handle invoice processing in the accounts payable system. Delays in payment may mean losing major suppliers and obtaining lower commercial credit scores for small businesses, making it more difficult to obtain funds.
Are you ready to accept your accounts payable invoice processing? Here are a few ways to start:
1. Specify invoice processing procedures
When dealing with accounts receivable, your business is almost controlled by the customers or customers who pay you. You can request payment within a certain number of days and provide multiple payment methods, but the time and method of final payment is beyond your control.
For accounts payable, in most cases, you can inform the supplier of your accounts payable system and negotiate from there. For example:
- purchase order. Does your business need a purchase order before the project or sale is completed? For some industries, purchase orders are standard. However, even if your business usually does not receive purchase orders, in some cases this can be a beneficial first step in a sales relationship. The purchase order contains useful information, such as a detailed description of the order, including quantity and unit price, as well as payment terms and delivery details. Purchase orders help make sales between buyers and sellers more transparent, so there is less chance of misunderstanding in the future.
- Billing method. How and when would you like to issue an invoice? For example, do you prefer to receive invoices via mail or email or through automated invoice processing procedures? Of course, sellers may have their favorite invoice methods, but as a buyer, you can request invoices to suit your invoice processing.
- detail. What information do you want to include on the invoice? Depending on your purchase, you may need more detailed information about the product or service, such as color, weight, product material, and date of completion of the service. Do you want the payee’s name to be printed directly on the invoice? If there is a purchase order number, it should also be included for cross-reference.
- payment termsThe invoice must include payment terms, including due date, discounts for early payment, and any potential late payment fees.
2. Simplify the accounts payable process
Regardless of whether your company is large enough to have an accounting department, the key to simplifying the accounts payable process is to have formal procedures and a system of checks and balances. Without these two, your business will face costly mistakes, fraud, and possible corruption. Many companies use the following accounts payable steps to simplify invoice processing.
- There has never been a single person in charge of accounts payableTo avoid errors and fraud, it is best to have two or three people responsible for your AP reconciliation and payment.
- Establish an approval system. One person receives invoices and checks them to make sure the information is complete and correct. If there is a purchase order, it should be checked against the invoice. Then another person should approve the invoice and arrange payment. In most small businesses, the owner approves the invoice and then returns it to the original person for arrangement. If you have enough employees, please consider assigning a dedicated person to be responsible for the final approval before payment.
- To automate. The easiest way to simplify invoice processing is to use accounting software to automate most of the process, thereby eliminating errors caused by handwriting or digital transposition. Look for a program that is not only user-friendly, but also has many customizable reporting functions that can be expanded as your business grows. Once you start, you will find that going paperless makes it easier to stay organized.
- Make full use of program functionsThe accounting software system provides a range of functions, so it may take a lot of learning curve to become familiar with the system. However, it is important to enter as much information as possible because it will save you time in the long run. For example, record as much information about the supplier as possible, including the credit period, expiration date, 1099 W-9, etc.
- Train your employeesAutomation does not eliminate human error, so your team should be fully trained in the use of your invoicing procedures. Make sure that you password protect your accounting information and allow only a few people to access it.
- Automate some monthly payments. If you are confident in your company’s monthly cash flow, consider automatically arranging some regular supplier payments. The utility company makes automatic payments easy, but requires the information to be correctly entered into the system. By automating some invoice processing, you can reduce a lot of useless tasks.
- Supervise the aging report. Your accounting system keeps track of when it is due, so you can know at a glance when you need cash on hand to pay your bills. If you know that a large amount of accounts payable is about to come, the aging report can help you maintain your budget and avoid bounced checks.
3. Pay invoices on time
Late payment or omission of payment will affect your Commercial Credit Score More than any other factor. In addition, once your credit score is hit, it will not be so easy to build it up again. Suppliers may check commercial credit scores before deciding to do business with you. Neither the supplier nor the credit company has to tell you that they ask you to provide a score.According to Experian No approval required Ask someone from the business to order their business credit report. This is different from personal credit reports, which are only supervised for permitted purposes. Therefore, you may never know why your business did not get the job.
By taking advantage of early payment discounts, keeping your invoice processing system up to date, and ensuring that you have sufficient cash flow, you can avoid missed or delayed payments. On the other hand, every business owner will encounter shortages at some point in the business life cycle, so making a backup plan is crucial.
Many business owners turn to factoring (also known as Invoice factoring) Temporarily increase cash flow.and Invoice factoring, You sell your unpaid invoices to a factoring company, and they collect payments directly from your customers. You may receive 60-95% of the invoice value instead of the full amount. But using Fundbox’s invoice financing system, if approved, you can directly work with your customers and quickly deposit the full value of the invoice (not exceeding your credit limit) into your bank account. The repayment process is simple, and there is no early repayment penalty.
Another way to keep paying bills is to have a credit limit It can be accessed at any time when there is a shortage of cash. A credit limit is a preset amount that your business can use when you need it and repay it later. Unlike term loans (which have a fixed repayment amount), in some lenders, you can repay the credit line in full or in installments without having to pay any early repayment fees. The best part of the credit line is that once you have repaid the borrowed amount, you can fully use the funds again without having to reapply for the loan.
Fundbox provides access to invoice financing, term loans, and credit lines, all of which help improve your business cash flow and pay suppliers on time. Cash flow is an integral part of simplified invoice processing, so contact us today to get started.