What is invoice management?
At its most basic, invoice management is writing checks and making payments to cover your restaurant’s expenses for food and drinks, rent and utility bills, equipment, and services, and then keeping track of those payments in a ledger, usually Excel.
Ensuring your vendors are paid on time is key to an efficient supply chain for your restaurant, and when your suppliers are paid regularly, it builds a positive reputation for your business and avoids delays or complications in the delivery of goods.
Accounts Receivable and Accounts Payable
Invoice management also deals with both accounts receivable and accounts payable, and a lot of restaurants still do all of this work manually – it is an outdated, insecure, and inefficient way of handling your business finances.
Has anyone walked by your desk and wondered how you manage the mounds of paperwork that are piled up all around you (see our tips on cleaning up your office)? While you might have your own methods of tracking down paid invoices when a distributor says you did not pay it, what if you were on holiday and someone had to fill in for you? Would they be able to sift through the documents and Excel sheets to find the invoice in question, or would they have to call you while you are away to figure it out? Your filing system or pile of paperwork that may have the invoice in it, takes a long time to sort through, costing you and your business money!
Invoice Management Cost
Research from Sterling Commerce averages the cost of processing a paper invoice at $30 per invoice. That is a cost no company can afford. It gets worse when you factor in the loss due to human error in manual data entry. According to a 2008 study, large companies lose an average of $62.4 million per year due to human error and misunderstanding.
You can grade the cost of your own business’ invoice management process by looking at:
- Time spent processing invoices
- Time spent reviewing invoices
- Time spent correcting manual entry errors or refunding duplicate payments
- How are physical invoices stored and the cost of mailing invoices, checks, etc.
- Penalties and late payments incurred due to lost discounts, errors, and slow mail delivery
- Payroll cost for employees specially trained for invoicing and accounting
Invoice Management Solutions
To solve these issues and reduce costs most businesses have turned to an invoice management system. Invoice management systems can completely automate the process of managing invoices and accounts payable, including scheduling payments, payment approvals, and automated payments.
However, most invoice management companies only provide you with software to help you automate just some parts of the invoice management process. You still need an employee or team of people with an understanding of accounting to use these tools.
Even with experience, the time it takes an employee to learn a new software or skill is about 20 hours. Meanwhile, your business suffers a loss of labor time and productivity, and if you are paying for training time from the software provider, the cost to your business is compounded.
Keep in mind though, no invoice management system is 100% automated. Somewhere a person has to adjust the records, verify information, ensure the items are tracked to the proper G/L, and authorize payments. That person can either be an in-house employee or part of Navrae’s team of qualified professionals.
What to look for
When you are looking to streamline your invoice management process, you should keep a few of the topics discussed in this article in mind.
Your focus should be to look for a service that proves all the ease of automation without the cost and frustration that comes with training an employee to learn a new software system.
Also, you should ensure that if you are paying an employee to use it, it should be used minimally will little to no training. Your staff should not have to update G/L lines or adjust the records.
An invoice management service, like Navrae, handles your accounts receivable and accounts payable for you and eliminates the need for specially trained employees or time spent learning new software.
- Eliminates the cost of storing paper invoices and postage
- Reduces labor costs by removing the need for specially trained staff
- Eliminates most human error
- Virtually eliminates overpayment and double payments
- Handles any exceptions that require manual entry
- Provides daily reports and budgeting tools
- Makes auditing and tax reporting much more efficient
- Reduces risk of fraud or exposing sensitive financial information
If you are looking to upgrade your invoice management process, or you are just looking for a way to reduce costs and improve efficiency, contact us at Navrae. We would love to discuss how we can help you eliminate the headache of invoice management while reducing your overhead costs.