We understand that every business is unique and is likely to have processes that work well for them. However, in this section, we will look at the steps involved in invoicing. Doing this will help us understand the areas that can benefit from automation..
These are some of the main steps involved in the invoicing process. Manual invoicing processes result in back-and-forth between the steps to close any gaps. It may also require many additional steps that the team may not have planned for.
Do you often wonder why so much importance is placed on the invoicing process? The reason is simple; the continued financial health and the operations of the business depend on an efficient and accurate invoicing and collections process.
One of the most significant impacts of poor invoicing and collection processes is the delay in payments by customers. Customers may often forget to pay the amount due because they did not get the invoice or the reminder to pay on time. In some instances, customers may genuinely forget and in other cases, customers may be using delayed invoice reminders as an excuse to put off payments.
Poor customer experience
Bottlenecks in invoicing and reconciliation of the payments received can result in a distorted customer experience. Take for example a reminder communication sent to a customer who has already paid. Receiving such correspondence can result in misunderstandings and lead to an overall poor customer experience.
Cash flow issues
Delayed payments negatively impact your cash flow. This is one of the main issues faced by companies that have poor invoicing practices.. As it is, mid-market businesses have few reserves and depend on timely payments from customers. Any delay in payments due to invoicing issues can have a negative domino effect on the fund position of the business.
Loss of man-hours
Though the invoicing process is essential to the company’s financial health, it is also a process that is mundane, repetitive, and detail-oriented. Lack of automation of this process results in loss of productivity. It also requires more manpower, resulting in extra expenses.
Any delay in collection of unpaid invoices will result in cash flow problems. As a result, you may incur opportunity costs like interest on borrowed funds, halting or slowing of business operations, and in some instances, loss of reputation.
Risk of litigation
When your invoicing processes are not in order, you run the risk of double billing, wrong billing, and annoying the customers by reaching out to them for payment even after they have paid. When these incidents occur frequently, it may result in offending customers, and in some extreme cases, you may also face the risk of litigation.
Here are some of the main signs that indicate failure of your traditional invoicing method:
If your business is facing more than three issues or signs listed above, it is time to consider investing in invoicing software. However, investing in invoicing software is a long-term decision with strategic implications at every level of your business and you need to consider various factors before doing so,
Here are five broad functionalities that you need to look for when investing in an e-invoicing or accounts receivable software.
One of the main aspects that will affect your invoicing and the overall accounts receivable process is your ability to onboard customers after a thorough credit risk assessment. Any AR solution you seek needs to offer an option to evaluate the credit risk of customers at the time of onboarding and as a continuous process.
This feature will help you to prioritize high-risk and long outstanding accounts for collection calls and correspondence. Invoicing automation will enable you to send invoices with ease and embed payment links in your invoices.
With the right AR automation solution, you can capture details from various sources with ease. It will empower you to accurately reconcile payments received in the bank and close the right invoices based on data from different sources.
Your AR automation solution needs to have the capability to automate mundane and repetitive tasks to save on resources. With a solution that automatically syncs with ERP systems and learns to automate manual processes, you can realize a marked increase in productivity.
Today, businesses of all sizes depend on data to make the right decisions. In accounts receivables, access to analytics and reports ensure that collection efforts, credit lines, and customer relationships are at an optimal level. Your AR solution needs to offer you the option to view reports with ease.
Once you realize that your invoicing process can be improved with automation technologies, you need to look at the different invoicing software available in the market and make a choice that’s best for your business. Check for AR software that offers the functionalities discussed in the previous section.
At HighRadius, we have helped hundreds of small and mid-market businesses transform their invoicing operations with our e-invoicing solutions. Our EIPP cloud solutions support auto-invoice delivery, self-service payment portals, and invoicing for complex parent-child customer scenarios.
Interested to learn more about how the right invoicing solution can help your business? Click here.
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.