Invoice management strategies for handling busy seasons

Updating invoice management processes and strategies, using increasingly automated and digitized methods can save businesses time that they can devote to more valuable tasks.

While some businesses are still reliant on outdated procedures or find themselves dealing with invoice bottlenecks during busy periods, there are modern solutions to invoice management which can increase efficiency and provide a more seamless process.

In this article, we’ll explore the rationale for improving invoice management and the options available for doing so.

What is invoice management?

Invoice management, also known as invoice processing, is the method businesses use to track and pay invoices from their suppliers. It is an internal business process linked to procurement. At its most basic, the process involves receiving invoices, validating them, making payments, and recording sent payments. The numerous parties involved during the various stages of the process often create opportunities for invoice errors. These can be both costly and difficult to fix, often leading to late payment penalties or missing out on early payment discounts.

Errors are typically caused by a lack of communication between various divisions of an organization. This is where automating the invoice management system can be particularly useful, offering tools to generate internal payment calculations, verify figures and other relevant data, as well as automatically initiate payment once approved.

Understanding the common challenges of invoice management

An effective invoice management process is a fundamental component of sound financial management, but many businesses operate manual invoicing processes that present them with major challenges, especially during peak or busy periods.

One of the biggest challenges faced by SMBs is that managing invoices can be time consuming and costly. For example, it may involve creating, printing, mailing, and storing invoices, as well as manually tracking their status and following up on payments. This administrative process can easily lead to errors which can have both short and long-term implications for the business. Similarly, there may also be an opportunity cost attached to invoicing. The time spent manually processing invoices could far more profitably be spent marketing, planning, projecting revenue, or on countless other more important business processes.

Another major difficulty is reconciling the inconsistent and complex data that may be employed across different sources. This could include formats, currencies, languages, or tax regimes.

The complications of poor invoice management

As mentioned, there are multiple consequences of poor invoice management. These include:

• Errors occurring and poor visibility when manual invoice processing
• Higher costs from manual processing
• Processes can be very time consuming
• Increased customer dissatisfaction and churn
• Irregularities in invoice payment leading to disruption of the supply and production chain
• Unpaid invoices causing issues with inventory levels and bottlenecks
• Late payment of invoices resulting in penalties
• Damage to credibility with suppliers

How to effectively manage invoices

Help is available from modern invoice management processes that have emerged in recent years. The increased automation and digitization of processes has reduced paperwork and admin, and improvements in communication infrastructure often means errors and issues can be ironed out faster than in the past. However, businesses that are still struggling with their invoice management strategy in busy periods could benefit from focusing on several key areas, including:

1. Streamlining the invoice process
2. Effective time management
3. Mitigating errors and delays

Streamlining the invoice process

Automating the invoice process using specific software can aid effective management. Not only does this generate payment information, verify data, and send payments, it also removes the burden of having to track invoices manually. This can help to increase the transparency of the process as well as improve relationships with the suppliers who create invoices.

Effective time management

Automation, such as the setting up of recurring invoices or scheduling payments can increase efficiency. It may also help to enhance productivity and save time and money across the whole invoice management process. Automated invoice tracking removes the need for manual processes, which can be very time consuming. It can also help identify bottlenecks and streamline invoice processing workflow.

Mitigating errors and delays

Creating invoice checklists can help to avoid common mistakes which can hinder a business further along the line. Human error has traditionally been a major challenge with invoice management, and although automation of processes will help to resolve this, creating an invoice review checklist can also help to reduce the risks.

Using PayPal to manage invoices efficiently

PayPal invoice software can do a lot of the heavy lifting required during invoice management. The PayPal invoicing tracker automatically updates each invoice and records its payment status. The status of each individual invoice can be seen, and the system can quickly and conveniently record payments, set reminders, and more.