Irrespective of the industry your business belongs to, be it the manufacturing or services industry, invoicing is an intrinsic part of every business. Invoice processing can quickly become complicated, especially when your finance team has to struggle to access invoice details. If your finance team gets it wrong, your business won’t get paid or get paid late for the products and services already delivered.
HighRadius’s AR Suite can act as a single source of truth for your Accounts Receivable (AR) team and brings to the table all-round visibility into critical metrics like such as credit limits, invoice details, payment dues, and collaboration history before they can initiate collection activities for customers.
Now that we are unanimous on how critical it is for your Accounts Receivables (AR) team to have all the invoice details, and historical reports at hand, let’s focus on why most AR teams fail to do so. Here are a few reasons:
If you want the invoices to be paid on time without the need for additional manual intervention, they need to be precise. So, instead of putting the due data as ‘upon receipt, your AR team needs to mention an exact date for payment by referring back to the client agreement.
Moreover, inserting elements like a one-liner in the form of a miniature agreement helps to keep all parties on the same page on agreed terms.
It is much easier to gather historical data when you have collated the data sources to a single location. Your AR team can get a 360-degree view of client credit trends, invoice payment history, invoice dispute figures, and client’s business forecast in an integrated dashboard.
In the absence of such a repository, your AR team faces numerous challenges in the entire workflow of invoicing and collections process. Deploying a comprehensive credit assessment ecosystem with credit-risk models is also not possible without a unified data repository.
For most businesses, month-end closing rarely works out as planned. Sometimes, it may not be possible to draw together all the invoices that have piled up during the accounting period, before initiating the month-end procedures.
Often, orders are delivered by sales at the last moment and the AR team has a tough time collecting details and reports for these late deliverables and thus fails to assign them to the current month. This could lead to the invoices not being paid in time or worse the invoice amount turning into bad debt.
Many companies still rely on traditional methods like paper invoice generation. Besides being subjected to manual errors, paper invoicing can also be hard to integrate with electronic systems, when the integration process is attempted at the last minute.
Invoice data syncing from paper to sophisticated systems is a complicated process and often leads to generating e-invoices with erratic data sets. But what’s even worse is that your AR team members will rarely discover if the data is incomplete or erroneous, until it is too late.
Oftentimes, inter-departmental miscommunication can also hinder the AR team’s ability to get adequate invoice reports. Often these roadblocks are self-made by the departments which ideally should help finance teams get invoices paid quicker and with less trouble.
Moreover, these departments fortify their existing data silos to such an extent that it allows very little data to be shared with internal stakeholders including AR teams.
So now that we know the reasons that thwart AR teams from accessing actionable invoice data, let’s look at the best practices for ushering in uninterrupted and timely accessibility.
Initiating e-invoicing can remove a lot of data accessibility bottlenecks as it can be integrated with any Enterprise Resource Planning (ERP) and client Invoice Registration Portals (IRP). E-invoicing also negates the error-prone elements associated with paper invoicing and takes less time to upload in client portals.
HighRadius’s RadiusOne eInvoicing & collection app enables improved collector efficiency, minimizes bad debt write-offs, reduces DSO, supports low-cost invoicing, and supports payments via ACH and credit cards. It enables account prioritization based on industry-specific best practices.
This step is all about keeping the structure of the invoice simple as it makes the job of your AR team much easier to collate invoice details. Essentially, it means simplifying the invoice by inserting relevant data points only and removing unnecessary jargon and complicated interpretations.
Adding ‘Item headings’ such as expenses under digital marketing to invoice structure will make it much easier for your AR team to extract details from at a later stage.
Your finance team will find it convenient when crucial client data like credit history, behavior patterns, etc are available at the click of a button without having to collect them from different data sources. The concept of real-time financial data will make more sense if it is available in a unified repository.
Customer credit management depends on the historical data of existing clients which are stored on multiple spreadsheets. Extracting them from myriad sources is cumbersome and futile. Your AR team can replace them with a centralized data repository.
Discover more on how a centralized repository empowers your AR team to address looming challenges in invoicing and collections processes.
Proper planning needs to be done regarding the invoice receipt timeline. Your AR team needs to draft a thorough Standard Operating Procedure (SOP) on which accounting period to assign an invoice for the products delivered or services rendered in the eleventh hour of a month-end.
The SOP will assist teams to collect invoice data and general ledger details only for the invoices during the month and allow them more bandwidth on invoice uploads, follow-ups, and reconciliation processes.
Your AR team needs to fill critical data gaps like invoice number, reference number, and payment due dates for each invoice that is generated. This step will enable your AR team to unearth more financial data during the cash reconciliation process. Invoice reference numbers will assist your finance team to gather remittances from different sources like web portals, ERP, and email, and in different formats.
Check out key features of our cash reconciliation app which enables automated cash reconciliation across diverse payments and remittances sources and formats with automated invoice matching and short payment identification.
Every AR team needs to focus all their efforts towards making their organization a cash-positive one. With this goal in sight, they need to examine, detect and resolve all data accessibility bottlenecks from every stage of the accounts receivables process. So to sum up, you might want to keep the below points in mind and possibly act on them to help your AR team stop focusing on obsolete data collection techniques.
Deploying a self-regulating data collection ecosystem such as a unified finance CRM will help break down data silos and resolve invoice data accessibility issues permanently.
HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.