Invoice management is nothing but a necessary evil for many business owners. Just like most other finance processes, invoice management is such a burden that 61% of all invoices sent in the US are incorrect, while 11% of customers don’t even receive their invoices. If the thought of invoices gives you a headache, you’re not alone.
A majority of businesses are usually overwhelmed by the number of invoices they have to process every day, in different formats. What if we told you that the process could be easier with invoice management?
What Is Invoice Management?
Managing invoices can be a piece of cake with invoice management, also known as invoice processing. It’s a method used by businesses to track and pay their invoices seamlessly.
As soon as you receive an invoice from a third party, all you have to do is validate it, pay your supplier, and note the payment in your records. It’s quite complicated because multiple people are involved, which creates plenty of room for errors.
So how does this work? Considering that cash flow is the number one reason why most businesses fail, it’s imperative for you to track all the money coming in and going out. This post will guide you through every step of invoice management.
The Importance of Organized and Timely Invoices
There are numerous benefits of timely and organized invoices because you will have a better chance of getting paid on time. When invoices are paid promptly, your financial records and books can be organized accurately and stay up to date at all times.
Sending complete and professional invoices also makes your business look professional, and your suppliers and clients are likely to trust you more and want to continue doing business with you.
Best Invoice Management Practices
While writing an invoice is not that hard, managing multiple invoices is the tricky part. For this reason, we have some of the best invoice practices that you can utilize to streamline the process. This will ensure your business gets prompt and accurate payments, and you won’t have cash flow problems.
Set Clear Expectations
When managing invoices, one of the most important things you want to avoid is to surprise your clients or suppliers. it’s essential for you to be crystal clear about any expectations from the very start of your business relationship.
It’s important for you to agree on your invoicing schedule, your rates and prices, your payment methods, and the party that caters to any payment costs such as credit card processing fees.
Have an Action Plan for Late Invoices
As a business owner, it’s unfortunate that, at some point, you will have to deal with overdue or past-due invoices. Have an action plan instead, by setting up follow-up communication with the involved parties. Agree upon interest charges on late payments and have a long-term legal plan for non-payment.
These are contingency steps because you have no idea what may happen in the future, and you need to protect your business. Sending your clients and suppliers proactive reminders on the due dates of their invoices can help you avoid late payments and make it easier for them to pay you one time.
Have a Running Pulse on Cash Flow
Managing invoices can be a lot easier if you keep a pulse on the cash flow. Your payment terms likely vary by clients based on business agreements.
It’s very important for you to have a plan that’ll help you pay yourself, your bills, and your employees. What this means is that you should know when to expect payments, what you can afford between those payments, and how you’ll manage unpaid payments.
When you receive invoices yourself, it’s imperative for you to know when you can pay them. Depending on your cash flow, decide whether you want to pay invoices as they’re due or immediately they’re sent to you. Then decide on the best payment method that will work for your cash flow.
Utilize Invoice Management Software
There are many ways to go about this, such as finding the best PDF generation tools, invoice management platforms, or invoice management software. An invoice management software is an online system that you can use to manage invoices.
Some of the benefits of using the software include having the ability to send invoices on the internet. They are easy to use, and the possibility of increased cash flow.
Having the ability to operate online is beneficial because you can get paid for multiple invoices at the same time. The system also gives access to customers. They can view the documents, attachments, receipts, and past invoices at their convenience.
Invoice Management Outsourcing
If you feel that you’re too busy to pull off the overwhelming task of managing invoices, you can also outsource to invoice management companies. Outsourcing to professionals is a good idea because they already have automated invoice systems.
They use web-based invoice approval to ensure that all invoices are accurate and sent out on time. Outsourcing will accelerate your performance, reduce the number of errors, and cut costs that you would incur on employees, printing, and mailing.
Hire a Virtual Assistant
Virtual assistants are more affordable compared to in-house employees, and they can manage and track your invoices for you accordingly. If you don’t want to work with a system, you can outsource these tasks to a virtual assistant. They will send out the invoices, clear up any errors, and follow up with clients as you take care of the core business matters.
Invoice Management: Finding Working Solutions
Managing invoices is no easy feat, but these tips will help you take care of it. If you’re not up for all that hassle, you can opt for invoice management software or simply outsource to an invoice management company or a virtual assistant. Whatever you decide to do, the most important thing is that you find a lasting solution that works for your business.
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