Invoice Management

Cash flow is a two-way street. To ensure businesses always have cash surplus on hand, owners should invest heavily in accounts receivables management. However, they also need to ensure their businesses pay their own invoices on time. This is a complex balancing act, which is why it’s so important to have an established invoice management process.

What Is Invoice Management?

It’s tempting to think of accounts receivables when you hear the term “invoice management,” but it actually refers to the management of your own business invoices. This internal business function requires the finance team to process and pay incoming invoices while also aligning payments with available cash.

What Is the Invoice Processing Cycle?

Invoice payments are a significant portion of business expenses. Consequently, finance professionals need to ensure prompt tracking, on-time payments and accurate recording of these transactions.

  1. Receive Invoices: If your business has a choice in how to receive invoices, try to choose the same method for all. Receiving a PDF via email is the most convenient and least costly method.
  2. Approve Invoices: Creating an established approval process ensures only legitimate invoices receive payment. It is too easy for shady characters to pose as legitimate businesses to which you owe money. Even legitimate businesses can make mistakes.
  3. Schedule Payment: The financial professional will need to look at actual and expected cash flow to determine how much cash in hand is available. It can then be determined how best to schedule each invoice payment.
  4. Pay the Invoice: Even if you have an automated process in place to pay invoices, it’s important to confirm the payment was completed. A system glitch at your bank or an expired card can easily thwart your prompt payment.
  5. Record Payment: When and how you record payments depends on your accounting system. If you use the accrual basis, you record the payment at the time you incurred the expense. For cash accounting, you record the payment when you actually pay.

How Can Automation Help You Simplify This Process?

Working with an invoice management platform is the best way to improve efficiency and increase on-time payments. When companies use automation to pay their bills, they ensure better relationships with their creditors, suppliers and vendors. Automated bills payments also reduce the risk of incurring fees and other penalties for late payments.

However, these and other benefits involve choosing the right platform. Your invoice-payment platform should:

  • Be able to process invoices from different sources and in different formats
  • Be compatible with existing account software
  • Provide an easy way for professionals to intervene in automated processes
  • Provide an easy way to add banking information to make payments

What About Automated Invoice Collections?

Automation can also do wonders for accounts receivable invoice processing. In fact, this is the aspect of cash flow management upon which business owners focus more heavily. Invoice collections automation prompts payment from customers with ease and offers multiple payment options.

Automation reduces the need for manual tasks and frees your accounts receivable team to focus on strategizing and communication. Book your free demo to see how Gaviti can help you reach your cash flow goals.

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