Your company may be doing a great job, serving a long list of customers and having dedicated team members. However, if the invoicing system isn’t operating correctly, it’s most likely challenging for you to stay in business for a long.
Invoicing isn’t the most fun aspect of running a business, but it’s a must for most sales. Many businesses do not understand why they need to issue invoices and the benefits of doing so. In addition to tax liability, invoicing allows you to manage your company’s cash flow and finances. Getting it wrong can delay payment for products and services, significantly impacting your cash flow. You can’t reward your employees or cover your overhead costs if salaries aren’t paid.
The Overview: The Affect of Invoices on Business
Invoices have always been difficult to process. Every business faces particular challenges when it comes to processing invoices. To remain profitable and productive, these challenges must be addressed effectively. Billing directly impacts cash flow, and billing issues can prevent you from effectively managing your business and generating income. Unfortunately, many small businesses struggle to build and maintain a smooth billing process. This leads to late payments, customer disputes, unpredictable cash flows and a bad reputation.
It’s a shame because invoices are a non-negotiable element of running a healthy business and can be addressed if appropriately handled. An invoice is a legally enforceable financial contract between a customer and a company in which the customer agrees to pay for services provided by the company. It also serves as a record of financial transactions between customers and the company.
There is a lot of room for improvement. Automation is the only solution to these problems, but let’s address them first before discussing solutions
Unclear Invoices
You can ensure you’re on the same page as your customers when you bill them.
However, partners may struggle to understand how they arrived at the calculation and where the breakdown came from. Therefore, you will need to participate, clarify and reconcile your billing statements. Solve this billing problem by linking invoices to purchase orders, quotes, or other supporting documents. Referencing previously agreed documents will reduce approval time and help move your bill forward.
This challenge has a simple solution. A system that automates the billing process automatically sends follow-ups and updates on payment status, providing transparency to your customers.
Fully automating billing and managing and maintaining multiple applications with transparency can be challenging for small businesses with limited resources. Look for an automated system that can flag and notify you when an invoice has not been seen for a while.
Missing Invoices
These large companies, especially enterprises, have multiple departments and employees that process invoices for specific services or segments.
If you charge the wrong person, the charge risks being “stuck in undetermined (TBD)”, which will remain until warning bells start ringing regarding billing issues or late payments. Don’t hesitate to check this out. Please double-check with your billing representative if necessary. Carefully store any comments or “additional notes” regarding boundaries between finance staff and their customers.
Avoid this problem by sending invoices via email or directly to the appropriate person in the client’s accounts payable department and using financial software that notifies you when an invoice is opened and viewed. In addition, please ensure that you have the correct email address associated with each customer account and regularly check for “unconfirmed” invoices. This indicates that they have not been received or verified.
Incomplete Data
If you want your bills to be paid on time without additional human intervention, your invoices must be accurate. If a customer is missing data required to process an invoice, payment will likely be delayed until someone resolves the issue.
For example, specify exactly when an invoice is due rather than using “when received” as the due date. This allows customers to manage their payment schedules without guessing when invoices are due. In addition, be aware of discounts or incentives for early or late payments and accepted payment methods. Having consistent and up-to-date data in your system is essential. That’s where an enterprise resource planning system (ERP) can help.
An automated system should flag these types of problems. Alternatively, you can manually review it to ensure that all fields are populated with logical and relevant information. Either way, you should set up a process to thoroughly review billing information before submitting it.
Erroneous Data
Many errors can occur in the manual billing process. These errors can have various causes. Errors can appear as soon as the invoice arrives at your organization; Invoice amounts, terms of payment, dates and all other important information may be incorrect on the books or with the decimal point in the wrong place, so $1,000.00 of service charges turns into a $10,000 obligation. Anyone can make a mistake, as multiple people are involved. So there is always the possibility that the wrong entry finds its way. Duplicate invoices can result in double payments. Manual invoice processing systems cannot quickly identify and correct these errors and omissions.
Continuous Invoice Mistakes
As noted above, incorrect pricing, inaccurate calculations, missed payment deadlines, and other omissions can result in unacceptable business payment delays. When these mistakes are repeated, they lead to distrust within the customer base. Suppose a financial professional has to track down the problem, identify the number of cycles affected, calculate the necessary adjustments, and prevent it from reoccurring. In that case, they spend a lot of time with the customer. Increase. Even if a mistake is unintentional, it can damage relationships and lose customers.
How can an ERP help you solve these issues?
If you’ve made any or all of the billing mistakes described in this article, consider how these seemingly minor mistakes impact your cash flow and bottom line. But, perhaps more importantly, consider how they negatively affect customer relationships. Following the advice here, you can avoid many problems, improve your customer relationships, and run a more profitable business.
A robust automated billing system like NetSuite Financial Management can quickly reduce human error, minor mistakes, and unfilled fields.
