Getting hold of all the supplier invoices efficiently proves to be a challenge and a major headache for many. Huge volumes, many formats, and multiple locations only add to the misery. You may get high volumes of EDI invoices, receive lots of paper invoices at different physical addresses, PDF- and e-invoices pouring into various inboxes. And finally employees bring back bills from business travels and onsite work. Bills that seem to trickle in relentlessly.
Getting data from the received invoices into the ERP system is both time-consuming and complex. Many have already come a long way with EDI and e-invoices, but manual booking will be around for the foreseeable future. And it's still a formidable task for most companies. Very often the initial booking is only preliminary. It takes the business specialist to specify the exact customer, project, department, vehicle, machine or whatever the object is. Scribbling codes and numbers on the paper copy is often the way this specialist communicates the final details to Accounts Payable. Time consuming, error prone, and not at all scalable.
Manually filing supplier invoices and copies in ring binders or filing cabinets, is a tradition that lives on in many companies. Time consuming and expensive. Wasting both time, equipment costs, and valuable office space. When the invoice is circulated for approval you will find that many even make their own personal copies and hence are building local archives. Just in case. Even more waste.
To get hold of a copy of an invoice, once it's "burried" in Accounts Payable's filing cabinets and ring binders, is not without its challenges. If you are on the same floor it's quite easy. Being on another floor, in another building, another city, or even another country, adds to the challenge. Being on the road, or at a customer, almost makes it impossible. One challenge is the geography. Another is time. Try to get hold of a copy once the Account Payable staff has left the office for the day. It's simply not an option. If you are late preparing for next day's budget review. Tough luck!
Getting invoices ready for distribution is not a trivial task. Often it takes very experienced staffers to know who is to approve what invoices. And the distribution itself is costly - no matter if the approvers collect by themselves, get it delivered to their desk, or work in a remote location serviced by post or parcel services. The more people and the more locations you involve, the more complex it gets. And just for the record. Sending it around by e-mail won't make it much better.
Approving an invoice that lands on your desk is not a big thing. Still it tends to sit there for days. And for good reasons. You have to match it with a purchase order, and with a delivery that is not yet complete. You need to consult a colleague. You are waiting for a credit note. Or you are simply tending to more urgent matters. Or maybe you are not even in the office. Traveling for business, or away on vacation. All perfectly good reasons. But invoices piling up at your desk will make your return living hell, and disrupt the flow in the organization. In the end it generates excess work for everyone around you.
When an invoice isn’t paid on time, you’re the one that ends up paying. First of all, you give up early payment discounts. Maybe even end up paying statutory interest. Less measurable, but much more costly, you burn time. When due dates are fast approaching Accounts Payable frantically starts tracking down delayed invoices throughout the organization. At the latest when reminders from suppliers come pouring in, and annoyed suppliers start calling. Imagine the resources wasted. Not only in Accounts Payable, but throughout the entire organization. When you pay late, you pay big time.
Verifying that only authorized staff make payments, accept invoices, and initiate purchases is a vital task in the systematic auditing of any company. With or without Sarbanes–Oxley. With procedures based on paper and manual routines this verification takes up lots of valuable time, both internally, and with the external auditor. Unless you auditor works for free, this eats right into your profits.
Companies that use a manual and paper based invoices approval process, tend to wait with the booking. Wait until all details are available and the invoice is approved and ready to pay. This makes it almost impossible to establish an up to date balance sheet, and especially a credible real time cash flow projection.
As long as physical documents play a role in the business process, you are severely crippling your organization’s scalability and agility. Increased activity will call for recruiting and training new staff. An expensive and time-consuming process. Slow down in business will call for layoffs. Equally expensive and time-consuming. Any notion of optimizing procedures, dividing or merging business units, distributing workloads, working from different offices, or from home, are all made virtually impossible when valuable information cannot be shared, accessed or put to use.
Streamline how you process supplier invoices with our standard-setting software solution, Next®.
Exactly what inco achieved by streamlining the business processes around supplier invoices. Money in the bank today, and ready for tomorrow.
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Jørn M. Christensenjmc@nextway.software
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