Invoice processing involves receiving, verifying, and approving vendor invoices, making payments, and recording them in the accounting system. It is a crucial business process that provides valuable insights into maintaining financial health.

Most business owners spend a lot of time managing accounts receivable, ensuring their clients are invoiced correctly and collecting all past dues. The question here is whether you spend the same amount of time and effort on your accounts payable management as well.

A well-functioning and streamlined accounts payable workflow is essential to maintain a balanced cash flow in your accounting system, thereby mitigating the risk of late payments and manual errors. This article also discusses more on the best practices for receiving invoices and how you can transform your AP workflow.

Best Practices to be Incorporated in invoice processing

Whether you are a new, budding business trying to learn efficient ways of invoice processing or a well-established organization looking to revamp your existing system, there’s something helpful for you. Furthermore, this guide provides practical tips to streamline your process. Moreover, it offers insights that can lead to improved efficiency and time savings.

1. Centralize invoice receipt

Make sure to centralize your invoice receipts, whether you receive them by fax, mail, or email. This will prevent any invoices from being overlooked or lost. It will also make managing and tracking receipts much easier.

2. Internal controls

A lot of frauds and vulnerabilities do happen in the accounts payable department if there are no internal controls set up. Setting up internal controls and strictly adhering to them will mitigate the occurrences of fraud. All you need to do is segregate duties to every person. Make sure one person is solely responsible for performing one duty.

One person should completely handle invoice verification, while another person should be assigned payment authorization. This separation of duties ensures accountability. Consequently, it will help you establish a more efficient and streamlined accounts payable system.

3. Invoice management

Timeline is an essential part of invoice management. Make sure that there are no delays in invoicing or billing. Consistency is the key to achieving the timeline goals in invoice management. The best time to start your invoice processing is right after you deliver your product or service to your customer.

This will help you receive payments quickly and could also offer other benefits, like payment discounts. As for periodic invoices, you can set them up for your weekend or the start of the month, depending on whether they are weekly or monthly invoices.

4. Cross-check for duplicate payments

Even if you follow the best practices, you might still end up with duplicate payments, especially if you manage your accounting system manually. Therefore, you must spot duplicate payments before you send them to the vendor. Once you send a check, you may face challenges, such as the vendor refusing to return the check, which could tie up your money for months.

Automation of Account Payable Processing

Automating your accounts payable system will help you minimize the issue of duplicate payments, reduce other human errors, and improve compliance. The other benefits of automating invoice processing are as follows:

  • Automation speeds up the cycle of invoice processing, thereby enhancing the overall productivity of your finance team. As a result, this improvement leads to faster decision-making and a more efficient workflow.
  • Eliminates the need for manual data entry and minimizes the chances of human errors, thereby yielding more accurate compliance and financial reporting.
  • Fosters vendor relationships which in turn are helpful in collaboration and negotiation.
  • Automation offers better visibility in your invoice processing. This visibility is essential to make better, strategic, and informed decisions and increase the accuracy of cash flow.

Conclusion

Whether you are a small business struggling with accounts payable and accounts receivable challenges, or an established organization still following a manual invoice processing system, you might, therefore, want to consider the numerous benefits of automating your AP workflow. Hiring a professional who will help you with bookkeeping and accounting services will help you focus on your organizational goals and objectives.

If you are looking for a firm that offers accounts payable and accounts receivable services, make sure to check the official website of Back Office Accountants firm. Based in the US, the Back Office Accountants firm offers end-to-end top-notch quality accounting services under one umbrella. Be sure to review the official Back Office Accountants website to learn more.