Why Your Business Needs An Invoice Management Tool?
Why a business needs an invoice management tool? This is a very common question asked by businesses at least once in their lifetime. Most of them find the answer by themselves as time goes by. Let’s try to find the answer in the following lines.
Every business works with Invoices. The volume of the invoices a business deals with can be different according to the nature and the size of the business. That doesn’t make much difference in workload as the resources a business allocates to the process are usually in accordance with the volume it deals with.
An invoice is a business document that records a transaction of some goods and/or services delivered by one party against some amount of money by the other party.
The first and foremost division of invoices for a business is:
- Inward (Inbound) Invoices
- Outward (Outbound) Invoices
Inward invoices are the invoices received by the buyer of the goods and/or services from the seller of the same.
Outward invoices are exactly opposite to inward invoices. These are the invoices from the seller to the buyer of the goods and/or services.
Radically the invoice remains the same in both cases, it’s the same invoice but both seller and buyer would deal with them differently. This division is based on two different nature of invoices according to the roles of two different businesses but a business is usually performing both roles during its daily routine. Almost every business buys as well as sells goods and services at the same time. So it will be working with both inward and outward invoices in its daily operations.
The second major classification of invoices comes with the terms of payment. An invoice can be divided into two major categories
- Instant Payment Invoices (Cash)
- Deferred Payment Invoices (Credit/Debit)
Instant Payment Invoices (Cash)
As the name suggests, these invoices are instantly paid/get paid. These types of invoices are less difficult to manage.
Deferred Payment Invoices (Credit/Debit)
These types of invoices have some future payment dates. The seller will treat these invoices as accounts receivable whereas the buyer will treat those as accounts payable. These types of invoices require proper invoice management.
The payment terms are applicable in both inward and outward invoices.
Now that we understand what an invoice is, let’s take a look at the importance of an invoice for the business.
An invoice is equally important for both seller and the buyer. It becomes more important when it has some future payment date. For both parties, an invoice serves as chronological evidence of the transaction and the terms that govern the same.
Why do you need an invoice management tool?
Many of the smaller businesses manage invoices manually. All the invoice processing is done by humans. They receive/create/send invoices, keep a record of those invoices, send them to other concerned authorities within the business for verification, validation, review, and approval, finally send/receive payments against those. It all looks very simple but that’s not the case when the number of invoices exceeds. One has to ensure that all the invoices are received in time to avoid lost/missing invoices. Then they need to check the accuracy of invoices according to the quotes, terms, and delivery challans/receipt. This is very critical to avoid fake, incomplete, or tampered invoices. Once the invoice is accepted in the first place, it needs to get reviewed and approved by the relevant authorities within the organization. It also needs to ensure that the invoice is not lost during this process. It should not remain unattended with some concerned person for an extended duration. It may require to be sent back to the drawer/sender of the invoice for correction/amendment. After all these activities it needs to be paid once it becomes due. The above process is lengthy and error-prone at all levels. Following are the very common challenges a business faces with manual invoice processing of a significant volume.
- Duplicate, Lost or Missing Invoices
- Insecure & Inefficient Review & Approval Process
- Tiresome Manual Work
- Excessive Number of Errors & Discrepancies
- Additional Resources Required To Scale
- Tedious Vendor Onboarding & Management
- Reconciliation Issues & Lack of Right Level of Financial Controls
- Lack of Visibility To Invoicing Lifecycle
All of the above issues/challenges lead to losses for businesses in monetary terms as well as the loss of time and human resources. These losses and challenges become more grave with the increase in the number of invoices ultimately leading to a point where a business simply can’t afford them to continue as it is.
The above challenges and the subsequent losses faced by the organizations make it necessary for them to adopt the automation of invoice processing. For this, they need to adopt an invoice management tool/solution.
An invoice management tool/solution lets you overcome most of the manual invoice processing by automating it. A good invoice management solution should be able to help businesses by addressing and optimizing the following areas.
To remain profitable and efficient a business needs to choose an effective invoice management tool. A comprehensive and effective invoice management system is supposed to have the following features;
- Easy Onboarding (Supplier & Concerned Parties)
- Flexible Workflow Creation
- Versatile Invoice Capturing
- Data Management
- Integration (With ERP and Legacy Accounting Systems
- Visibility & Trackability
- Cross-Organizational Collaboration
- Payment Processing
InvoiceMate is the premier invoice management solution by MateSol. It is the first invoice management system on blockchain. InvoiceMate ensures trust and efficiency at each point of the invoice journey from procuring to payment. InvoiceMate completely overcomes the challenges of manual invoice processing. Going further, by utilizing modern technologies like blockchain and Artificial Intelligence, InvoiceMate also addresses the shortcomings of legacy/conventional invoice management systems. The unmatched level of trust, transparency and efficiency added by blockchain makes InvoiceMate the most reliable invoice management solution in the market. More details about the amazing features of InvoiceMate can be found here.
If you have any queries regarding InvoiceMate or you want to have a demo of the product to explore it further, please feel free to write at: firstname.lastname@example.org