An invoice is a document that lists the goods that have been supplied or services that have been rendered. This document specifies the amount of money that the client owes to the supplier.
Invoicing is at the heart of accounts receivable processes. Sending out invoices is often tedious and it does not guarantee on-time payments.
Fortunately, as technologies are evolving, procurement processes and workflows can be automated. You can streamline your supplier invoice management process in the most organized and accurate way possible when it is integrated with a software. Check out below what supplier management means and what it does for businesses, especially for their payable departments.
Supplier invoice management or otherwise known as invoice processing involves companies tracking and paying supplier invoices. This process also includes receiving invoices from a third party or supplier, validating and paying them, and archiving the payment transaction in company records.
A supplier invoice management system is an online internal business accounting system that manages invoice documents from vendors and suppliers. Innovative companies look for ways to eliminate the following:
FAQ: What is the difference between invoice and receipt?
Invoices and receipts are both related to the payments process. The difference between an invoice and a receipt is their purpose. An invoice is a payment request, while a receipt is proof of payment.
Invoice management can be confusing especially if the financial terms or jargons are not familiarized. Before getting started with invoice management, it is important to understand a few of these terms:
This is also known as AP. It refers to the accounts or amount of money owed to vendors or suppliers for goods and/or services. The total of any and all outstanding payments are recorded as the balance of accounts payable on the company’s balance sheet. Accounts payable processes are typically handled by a company’s own accounts payable team (AP team).
This is otherwise known as AR. Contrary to AP, AR refers to the money due to the company for the goods and/or services offered to the clients that are not yet paid. Accounts receivable are listed on the balance sheet as a current asset.
This is the step-by-step written records that are usually used for verifying the accuracy of many transactions such as accounting transactions and trades in brokerage accounts. It can be useful in determining the validity of an accounting entry, source of funds, or trade.
This is a periodic document issued by a financial institution to its customers detailing all account activity for a specific period. It specifies every product or service being paid for.
It is the number that follows when the net payment needs to be paid. For example, Net0 means the payment is due on that day.
It is the technology automated invoice management tools used to recognize text. It is also sometimes referred to as text recognition.
It is an invoice that is sent to the customers at regular intervals of time for the same amount of money.
Allowable Business Expense vs Disallowable Business Expense
| Accurate Data Processing |
Mistakes are inevitable when details are manually transferred. The more invoices are handled, the higher the risk of human errors to happen. An automated supplier invoice management ensures accurate data processing. This reduces the chances of processing erroneous data. |
| Faster Invoice Processing |
One of the most notable benefits of supplier invoice management is the speed of processing invoices. Automated invoice processing is estimated to be 90% efficient compared to the traditional approach. This saves the business from lesser admin resources, removes the information lag, establishes better relations with clients, customers, and suppliers, and provides financial managers with updated company costs, sometimes in real-time. |
| Quicker Payment Approval |
Invoice approval is the process of reviewing and approving supplier invoices before the payment is processed. Automating supplier invoice management addresses the gaps and inefficiencies that traditional invoice processes have. Having all the information readily available allows for simplifying the decision-making processes and approval workflows while eliminating paperwork. Faster invoice processing means speedier payment, which is always good for improving relationships with the vendors and clients. Accounts payable automation (AP automation) speeds up invoice processing, thus making things easier for the people in the company (especially the approvers) and the people dealing with businesses. |
Invoicing is at the heart of the accounts receivable process. A timely, comprehensive, and accurate invoice process ensures an adequately managed cash flow.
Manual processes for invoices leave greater chances of human errors. Paper invoices are more difficult to manage. They are time-consuming to produce and susceptible to getting lost. These circumstances can lead to severe consequences for the business.
Supplier invoice software can recognize potential errors like duplicate bills or missing payments. Efficient invoice management software automatically compiles costs and quotes or tracked billable time and generates invoices from this information.
A comprehensive checklist of information for each invoice is crucial for effective invoice management. This checklist ensures that all the information needed is organized and displays everything the clients need to pay. Such information should include:
Scheduling regular invoicing sets up expectations with your clients. Automating invoice management makes payment faster and saves time.
It can set up recurring billing schedules to automatically charge any recurring fees and automate overdue invoice reminders. This also allows processing invoices online so that the clients can pay anytime using a payment method that works best for them. Lastly, it issues sales, prepayment, and credit invoices.
Manage Your Invoices with Spenmo
Invoice automation by way of supplier invoice management can do so much more that can benefit any business industry.
Spenmo is a spend management platform that helps companies to have control and visibility of their cash flow. Spenmo is a one-stop-shop integrated software suite that makes spend control, expense management, accounting, and budgeting easy. For supplier invoice management, contact Spenmo. They can help manage all business payments in the cloud.