The global economy is still reeling from the Coronavirus pandemic, and will probably be feeling its effects for many years to come.
As such, businesses need to prepare to adapt and improve their efficiency if they want to survive and thrive during and after this catastrophe.
While many other factors, such as lack of demand, supply issues and others will also impede the economy’s recovery, one challenge stands above the rest. Invoice processing and the inefficient way that many small businesses go about it will have the biggest impact on the success, or lack thereof, of companies throughout the corporate landscape.
For more information on how poor invoice processing can harm small businesses and stall economic recovery, read on, and we’ll explain.
Poor invoice processing impedes cash flow
After the pandemic, cash flow is one of the biggest challenges facing many SMEs, with many struggling to get invoices paid on time so that they can pay their own costs. As such, small businesses need to optimise their invoicing processes to ensure that they get their invoices out on time and that they are accurate so that they can be paid quickly. If invoices are sent late, or they are incorrect and need to be amended several times, then this will impede cash flow and reduce a company’s chances of survival in these turbulent times.
Invoices are the lifeblood of many small businesses
While large companies often take payment before they provide their services, many small businesses have to show their client that they can deliver before they are trusted, and that means issuing an invoice. If your invoices aren’t being paid, and your company isn’t monitoring this, then clients could get away with ordering multiple times before it becomes apparent that they’re not able, or willing, to pay. Effective invoice processing will help small businesses from any niche to manage their accounts and reduce the chances of clients taking advantage of their poor invoicing practices.
Manual invoice processing takes a lot of time and resources
During these challenging times, companies need to cut costs, avoiding wasteful expenditure and ensuring high-value assets and personnel are used effectively.
Manual invoicing can take a lot of time and effort, particularly if you receive paperwork through a variety of different channels such as paper invoices via mail, electronic invoices via email, or EDI and even fax.
Automated invoice processing can save your skilled accounts payable staff time, reduce the chances of human error and increase processing speed. If you’d like to learn more about automating your invoice processing, then check out Cleardata who specialise in the digitisation, automated processing and validation of invoices. using a combination of scanning services and intelligent capture software. Their solutions have been used by a range of businesses, to help save time and resource. Automated invoice processing will:
- Help your business go paperless
- Improve invoice processing speed
- Save manual processing time
- Validate invoices on arrival , improving data accuracy
- Extract key data automatically for import into your financial systems
- Reduce errors such as duplicate payments
- Provide reporting for common invoicing issues and bottlenecks
It’s extremely clear why so many businesses have switched to automated processing, so consider the switch if you want to reap the benefits.
Chasing old invoices is inefficient
Often, when customers refuse to pay their invoices, it’s because the invoice is unclear and they’re not sure what they’re paying for, or because the invoice is wrong. Chasing out of date invoices is time-consuming and can be very challenging for even experienced accounting staff, so small businesses should focus on getting their invoices right the first time and improving their chances of getting paid on time.
Engaging debt collection agencies Is expensive
If poor invoice management processes are to blame for late payments, then you could find that customers refuse to pay their invoice at all, leaving you with few options. You could work with a debt collection agency; however, they tend to be expensive and can’t always guarantee success. You could also consider taking the client to court, but if the initial fault was yours, either due to late or inaccurate invoicing, then you might not achieve the legal success that you need. As such, your company need to improve the effectiveness of its invoicing to reduce the chances of clients not paying their invoices promptly.
Late payment fees aren’t often paid
Some small businesses threaten to charge late payment fees to customers who don’t pay their invoice on or before a set date. By law, an invoice that doesn’t have a specified date on it is late when 30 days have passed, and it hasn’t been paid. While interest might seem like an easy way to make extra money from late payments, the reality is that many customers won’t pay the interest if they do pay the invoice late. If they don’t intend to pay it at all, then the interest will be eaten up by the cost of working with a debt collection agency, so either way, you don’t benefit. If your firm’s invoice processing is to blame for the lateness of the payment, then the customer will expect you to waive the fee, meaning that you won’t get your payment on time and will receive no extra money for your trouble.
Ultimately, the only way that businesses throughout the corporate landscape are going to survive the pandemic, and the probable global recession that follows, will be to improve efficiency. Invoicing is a key area that every SME needs, so it’s essential that your business starts to explore time and money-saving options sooner rather than later.