Negosentro | 5 Common Invoicing Problems and the Corresponding Solutions | The digital world has arrived, and doing things manually has become a thing of the past, or so many people believe. However, certain areas in life continue to be handled manually. Invoicing is a good example of this. Why aren’t more companies making the switch to technology when it comes to their invoices? What problems do they encounter when attempting to do so? How can these problems be solved?
Five main problems face those in charge of invoicing. These problems bring about scheduling challenges, extra work, extended processing times, and higher costs. How can a person overcome these electronic invoice processing challenges with the help of Xpress-pay? Each challenge must be examined individually to determine the answer.
Increased Errors and Higher Costs
Electronic invoices will undergo fundamental changes in the coming years, according to the Billentis Report. Only 10 percent of invoices currently go out in paperless form, and that includes all invoices across the globe. Ninety percent either require a person to enter them manually or they must be scanned before going out. This leads to additional costs for the sender and error rates go up.
No human is perfect, and even those invoices that are scanned before being sent contain errors. For instance, the recipient might not be able to read the invoice when they receive it. This doesn’t take into account those invoices that were faulty or missing information when they were scanned.
To avoid these issues, business owners need to create and send all invoices digitally today. Doing so eliminates any entries during the digitization process while saving time, money, and resources. In fact, a business could save almost 60 percent for each invoice created and sent digitally.
Reduced Efficiency
Digital invoices serve as only one part of the solution when talking about processing challenges. The business must be able to attribute the invoice to the correct order. When suppliers and purchasing companies use different information to identify an invoice or things of that nature, problems arise. The invoice might not contain the information needed to identify the order or the invoice might show only a portion of the order. If prices change, the invoice might not reflect this, or the quantity may change and this information has not been updated in a timely manner.
Businesses find they can avoid these issues by addressing all aspects of the invoice processing system, from the time the order is placed to when the payment is remitted. When all are combined into a single digital system, businesses discover efficiency improves. It does so because the order data, invoice data, and goods receipt are all automatically compared. This allows faulty invoices to be identified and rejected before they are sent to the customer.
Some companies have a system that compares the invoices after they are sent, but this step works best when completed before the invoice makes its way to the customer. Doing so helps to reduce administrative effort and decreases processing time. Customers can remit payments sooner, which helps to avoid dunning charges while permitting the business to offer more discounts.
Correcting Mistakes
Erroneous invoices must be corrected, which takes time away from other tasks. Numerous problems arise on invoices, from those mentioned above to legal compliance issues. With every step of the invoicing process that is completed manually, the potential for errors increases. Furthermore, language barriers lead to problems with invoices that must be addressed. Staff members often find the correction process is complex and time-consuming. How can a business resolve these issues to improve efficiency?
The company needs to implement a solution that reviews all invoice data before the document is issued. This process reviews the order data, the advance shipment notice, the goods receipt, and more. Many people overlook customer specifications, and this missing information often serves as a source of errors. With this information, any discrepancies could be easily identified so the billing team can resolve them without delay. Furthermore, this allows for more transparency, which customers appreciate.
Invoice Status
Businesses need to know the status of an invoice at any time. They want to determine whether this document has been received and checked by the client and whether the client found any errors. Likewise, they need information on when the invoice will post and when the client plans to remit payment. Sadly, manual invoices often come with little transparency, leaving owners in the dark along with the customers. This brings about a rise in inquiries, which places stress on the accounting department while extending the remittance process.
A digital invoice process tends to make the invoice status transparent, and this benefits clients and the company’s billing department. Everyone can clearly see any potential errors and measures taken to correct these mistakes. In addition to showing the mistakes and corrective actions, the process needs to share information freely with the invoicing party. More transparency leads to processes that are faster and more efficient.
Tax Issues
When invoices fail to comply with VAT requirements, businesses find they end up spending extra money. Problems often arise in cross-border supply relationships because the VAT requirements must be adhered to in different countries. When a tax invoice is incorrect and not recognized while the input tax isn’t deducted properly, a subsequent payment may be due. In addition to the added tax, the company also spends more internally to resolve the situation.
Thanks to the review process digital invoices go through before being sent, all invoices undergo a compliance check. This ensures the document meets all tax laws in both countries. The business no longer needs to worry they will be penalized for incorrect information on an invoice and need to spend additional money to resolve the issue.
Every business needs to look to its invoicing processes when it wishes to save money. Current processes used by many companies today remain inefficient and lead to a loss of time, money, and employee effort. The move to a completely digital process eliminates common issues, as long as the business includes all information regarding the business transaction. This ensures all errors are caught before the invoice is sent to the customer for payment. When this is the case, all parties find the entire transaction goes smoothly and everyone is happy.
