Handling the invoices has always been tricky. Every organization has to go through certain challenges while going through invoice processing. These challenges need to be addressed effectively to remain productive and profitable. In the following lines, we will discuss some common invoicing problems and the ways to tackle these problems.
Common Invoicing Problems
Legacy invoice processing is an error-prone and inefficient process. Especially if we talk about manual invoice processing, it is the most inefficient and flawed process. There is not much room for improvement due to the inherent nature of the problems. Automation is the only answer for these problems but that has some shortcomings. Before discussing the solution, let’s take a look at these problems first.
The most common invoice processing problems are
- Errors and Omissions
- Fraud Vulnerability
- Lost/Missing Invoices
- Lack of Scalability
- Lack of Transparency and Visibility
Errors and Omissions
The manual invoicing process is exposed to multiple errors. These errors can be due to various reasons. The error can occur as soon as the invoice arrives in an organization. The amount of invoice, the payment terms, the date, any of the important information can be wrongly recorded into the books. As there is multiple personnel involved in the process, anyone can make a mistake. So there is always a chance of wrong entry making its way. There are chances that an invoice can be duplicated and may end up with double payment. A manual invoice processing system can not easily detect and rectify these errors and omissions.
There are many possibilities of fraud in manual invoice processing. There can be bogus invoices, invoices can be duplicated intentionally or the amount of an invoice can be manipulated. As the process is offline so it is not easily possible to detect such kinds of fraudulent invoices once they become part of the process. In the absence of access to the whole process, these kinds of bogus invoices can easily make their way to payments causing financial losses.
As manual invoice processing is an offline process, there is a possibility that an invoice may not reach the buyer in time or even may not reach there at all. In case of deferred payment, the seller may not follow up invoice before the actual due date of the payment. In this scenario, the missing invoice can only be identified at a later stage. Besides this, an invoice can also go missing within the organization during the process. This issue is also not easily rectifiable in manual invoice processing.
Manual invoice processing is inherently inefficient. As it involves multiple human resources so it has a natural tendency towards delay. The persons involved in the process may not necessarily be inefficient on their own but it’s the desk-to-desk manual workload that makes the process slow. There can be multiple reasons like the temporary absence of a particular concerned person, workload priorities, delayed movement of invoices between different desks, lethargy, and whatnot. All these factors lead to inefficient invoice processing.
Lack of Scalability
As manual invoice processing requires human resources so it is not very easy to scale the process in a sudden increase in workload. The number of invoices a business deals with is not always the same and can drastically increase or decrease around the year like special occasions, sales, sudden demands. So it is not easy to cope with these situations. It is not possible to scale your human resources up or down against sudden changes. This problem is also very common in manual invoicing scenarios.
Lack of Transparency and Visibility
A manual or an offline invoice process is not always visible for all the concerned parties. This invisibility also causes transparency issues for the other party. A supplier cannot easily get himself updated about the status of their invoice. Within the organization, it is also not possible for all the stakeholders to remain updated all the time. They all become dependent on a slow, inefficient and invisible mechanism. This leads to multiple discrepancies and reconciliation issues.
The issues discussed above are faced by almost all organizations depending on the manual invoicing process. Many of these issues remain unaddressed in conventional invoice automation solutions as well. Let’s take a look at the solutions to these problems.
How To Solve The Invoicing Problems?
As stated earlier, and as the business world has realized by now, the solution to invoicing problem lies in the automation of the process. This may not 100% solve these problems but can significantly marginalize them. With the evolution of technology, it is also possible to address the shortcomings of legacy invoice automation solutions. Let’s see how
Controlling Errors and Omissions
Though human errors can make their way into automated systems yet they become more easily identifiable and rectifiable in almost real-time. Other errors like calculation and document matching errors (i.e PO and Delivery Receipt matching) are almost eliminated in an automated invoice processing solution. An automated solution can also identify incomplete or missing documents (as defined in the workflow) in the first place. This way an invoice automation solution can eliminate most of the errors to a satisfactory level.
Reducing Fraud Vulnerability
As an automated invoicing solution provides more visibility to all the concerned parties, the chances of bogus invoices making their way into the system are significantly reduced. Duplication of credentials is also accurately detectable. As all the stakeholders are connected to an online system in real-time, it is not possible to exploit the vulnerabilities of the system. This leads to the elimination of most of the fraud and bogus invoices from the system.
Eliminating Missing & Lost Invoices Problem
In a proper invoice automation solution, the supplier will be connected to the system and will be sending/entering invoices by themselves so the chances of invoices going missing are effectively addressed. Once an invoice is recorded in the system, it will remain there till the end of the process. In this way, automation can save the organization from missing invoices and relevant records.
Solving The Inefficiency Problem
The invoice automation system takes most of the workload off of the accounting staff. They don’t always need to be in their seats to perform relevant tasks. Tasks like invoice validation, approval, and payment can be done from mobile computing devices on the go. In addition to that, they don’t need to manually push/move the invoices, registers, and relevant documents to their peers. All the relevant record is accessible online. These factors add a lot in terms of efficiency. The latency factor is almost significantly reduced. Followups also become easier.
Addressing The Scalability Problem
An automated invoice processing solution can effectively handle the sudden larger influx of work. Organizations can easily handle upscaling and downscaling requirements with invoice automation solutions. SaaS-based invoice automation is instantly scalable to any extent. In the presence of an effective invoice automation solution, it is always possible to scale according to the need of the hour.
Bringing Transparency & Visibility To Invoicing
In an online invoice automation system, all the concerned parties can get real-time information. This connectivity makes the overall process much more transparent and visible for all the relevant quarters. This effectively addresses the issues like discripencies by making reconciliation easy. In a connected environment, all the stakeholders find themselves more comfortable and open. The supplier can get updates accordingly about the status of their due invoices. The process also becomes more transparent and visible within the organization.
Invoice Management System on Blockchain
A blockchain-based invoice management system not only eliminates the manual invoice processing problems but also addresses the shortcomings of conventional invoice automation solutions. A blockchain-based system offers unmatched superiority over conventional invoice processing software in the following areas:
- Fraud Prevention
InvoiceMate is the pioneer invoice management solution on blockchain that offers the highest level of trust, transparency, and immutability throughout the invoice processing and management process. More on this topic can be found here. To learn more about this future-proof invoice management system by MateSol, please feel free to contact us at:
Our team is always there to arrange a demo of the product and to answer all your queries.