Invoice Billing and Management Best Practices
Cash flow is the life blood of businesses, but if that cash isn’t flowing in a timely and accurate fashion, the business and its goals will suffer. When it comes to accounts receivable, discrepancies and errors in the billing process are quite costly. And the cost to the business is about more than just the money…errors that lead to disputes can cause friction and mistrust between sellers and their buyers.
The most common errors and discrepancies include issues like incorrect pricing, not following the business requirements of a buyer (such as their PO formats), and mistakes resulting from incorrect data information. These are, in most cases, inadvertent errors; however, consider how this can lead to an invoice being delivered with multiple errors or, worse yet, to the wrong location. Now consider how that could lead to your AR team having to contact the customer regarding payment for an invoice that customer never received. You now have an annoyed customer whose invoices will now have to be corrected, resulting in delayed payments. This is a lose-lose for all involved.
Get your AR on the right track with these best practices
It is essential to understand that, in today’s digital world, every touch point you have with a customer offers an opportunity to improve or harm the relationship. Pinpointing where these problems originate is not difficult. Legacy processes leave a lot of room for error, but streamlining those processes is much easier than you might think.
Maintain Accurate Master Customer Data
This is the first step in ensuring that your customer gets the invoices in a timely manner, and also that you have the correct, most recent data in your system. The data points should include: credit limits, payment terms, discounts, business rules, tax rates and exemptions, delivery address, billing address, e-mail address, relevant users, etc. Errors in any of this data could mean your invoices would not get to the customer; a PO might be refused due to incorrect credit limits being provided; or an incorrect payment term could result in you getting paid in 60 rather than the agreed-upon 30 days. To minimize these issues:
- Centralize the master data process – Control is essential so identify the person who would manage all customer data. That will also mean implementing access controls so that only approved personnel can edit any data.
- Implement approval workflow – By doing this, all changes to customer data will be documented and communicated to the appropriate people, including those in the finance team.
- Create alerts and reports – This will enable you to quickly identify customers with abnormal credit limits, payment terms and discount rates.
Automate and digitize your billing processes
By eliminating legacy processes and transitioning to electronic billing, you will save time and resources and, most importantly, improve accuracy and eliminate errors. And that, in turn, will improve your customers’ experience.
- Convert to e-invoicing – The fact is the fewer invoices you have to mail and the fewer checks you have to process, the easier and more accurate the entire process will be. Automating the approval workflow by submitting e-invoices reduces the time it takes to process an invoice, from 5 to 11 days with manual processing down to 1 to 3 days with automation and e-invoices.
- Get validation – By automatically checking the invoice price against contract pricing, customers will pay the agreed upon amount…every time. In addition, the data format and business requirements are checked prior to settling the invoice for payment, thus avoiding disputes.
- Realize insights with analytics – It’s vital that the automation and digitization solution you choose has a robust analytics platform that will provide insights and KPIs, enabling you to make better, more informed business decisions. Plus, when the solution is seamlessly integrated with other business systems like your ERP or CRM, you will be able to get a complete picture of your customers’ journey.
- Improve customer relations – Significantly reducing disputes and ensuring accuracy are two ways to create better relationships with customers. To aid in this, you should automate the process of sending email notifications, invoice deliveries, and payments received. Create a customer portal to reduce the time and resources needed to handle disputes, collections, and cash approvals.
It goes without saying that, along with streamlining your billing processes, you always need to ensure that you are delivering product in a timely manner so automating receipt tracking is another step to improving business. The fact is, with all of the many changes occurring throughout the globe, an increasing number of companies that still rely on legacy processes need to consider automating those same processes.
See how Corcentric can remove transaction complexity and inefficiency.