Invoice Management
Every business in their lifetime must receive or deal with an invoice, one of the essential financial documents. But how long can they have an important role in the age of digitisation? Procurement and supply chain needs to handle a myriad of these documents to operate a business, no matter their size. As we scale up, we can see how the number of invoices grows.
Invoices in the narrow legal sense: Bills/invoices with full content and authentication of issuer and receipt. Typically issued by accounting systems. Basis for electronic transmission and automated processing.
Invoices in the broader legal sense: 'Simplified low value' bills/invoices without customer authentication. E.g., payment receipts, tickets, etc. Typically, anonymously issued by cash registers at points of sale. Not suited for automated electronic transfer and automated management.
Our article will discuss the first group and refer to them as invoices.
Invoices
The Covid-19 pandemic brought change to our economy, where many players in the global supply chain needed to evolve to overcome the difficulties.
One of these was that B2B businesses started to sell their products and services online, which provided an ever-growing need for optimisation.
Problems Around Invoices:
Even though the format is almost as old as the economy, it still possesses some problems that have only escalated with technological development.
The first and foremost problem that comes to mind is missing invoices. Many of them are still mailed in paper form, leading to disappearance or delayed transactions. Paper-based invoicing is the least compliant and unsustainable way of handling transactions. Another problem can occur from missing or incorrect data on the invoice, causing further delays and extra labour for accountants. All of these can pump up the cost of invoice handling on both the buyers' and the suppliers' sides.
Invoice Processing
If done right, you can save many resources for your business. Processing your invoices can mean the following steps:
The supplier sends the invoice
Accounting or procurement validates whether the invoice is legitimate.
The invoice goes through the approval flow
Finance onboards the supplier
Payment of the supplier
Payment is recorded in the ledger
This critical process depends on many players in your business and is strongly connected to your cash flow. It can stall the operation if the ineffective workflow causes missing or is late execution. It is common that purchases can halt, starting a chain reaction that causes severe problems for the whole supply chain.
How to automate the process
We don't deny the existence of experts and specialists in invoice processing. But as we can see above, it depends on many actors, and when the workflow is not watertight, that can quickly start the avalanche. To overcome human error, we need to introduce automation and machine learning to the picture.
With good invoice management automation, you can eliminate many bottlenecks from manual processes and improve your bottom line.
Let's go through which steps can be automated from the invoice processing and how:
Supplier sends the invoice: you can set up an inbox only for receiving invoices from suppliers. With the help of AI and machine learning, the data can be accessed without manual interaction.
Accounting and Procurement validate whether the invoice is correct: with the help of machine learning, invoice validation happens right after you receive the invoice.
Accounts payable approves the payment: ensure pre-approval for every purchase with dynamic request forms and customised approval flows. Automate request-to-purchase processes with business rules that cover all your purchasing needs.
Finance onboards the supplier: You can automate this step by receiving data from, for example, Mastercard or other trusted third parties. With a vast database of suppliers, automated onboarding, sanction screening and up-to-date data, you no longer have to worry about this step when paying your invoice-based suppliers.
Payment of the supplier: We are all familiar with the struggle after receiving the green light for a payment. Our vendor is waiting for their money to arrive, but finance hasn't allocated the resources; procurement is caught between the two parties. Digital payments can solve these issues. Virtual cards provide transparency, and we are ready to pay the invoice immediately after approval.
Payment is recorded in the ledger. Manually extracting data from thousands of invoices is a hassle no company should deal with. All data needed to post transactions should be collected, automated and easily integrated with your accounting systems.
The Future of Invoice Management
At Mazepay, we believe B2B payments should not be complex. If everyday consumer purchases can be simplified into contactless payments, why can't this focus on convenience and simplification inhabit the world of B2B payments? We created Mazepay to enable a global B2B ecosystem that supports buyers and suppliers. An ecosystem that removes all the unnecessary complexity in today's long-tail procurement and instead facilitates trade based on trust, compliance, and on-time payments.
We provide a platform for enterprises to control their spend by simplifying and automating processes and workflows for every layer of the organisation. With the help of Mazepay invoices can long live; all the drawbacks and extra costs are disappearing instead.
If you want to know more about how to get in control of your invoices and improve supplier relations, contact us or book a demo.