R&D, operations, production, sales, and customer support – there are many tasks that leaders have to deal with while running a business. While invoice management doesn’t seem as challenging as other functions, it’s critical for a smooth AR process. If managed accurately and in a timely manner, invoice management aid regular cash flow, check accounting woes, and save time.
A lot of business owners and organizations have a limited understanding of invoice management and consider it a challenging task. That’s why we decided to make things easy for them!
In this blog, Finsmart – the leading accounting outsourcing firm in India – will share 7 invoice management tips for modern-day businesses. These ideas will help process and handle invoices while reducing invoicing costs and increasing AR collection.
Are you ready for some invoice management tips? Let’s go!
#1 Create a comprehensive checklist
Let’s say you are looking forward to buying a property. It is obvious that you will ask the dealer about the construction quality, carpet area, developers’ reputation, location, and neighborhood before making a down payment, right? Creating a comprehensive list of client information is just like that. It will provide your team with all the invoice critical information and improve your chances of forwarding accurate and timely invoices.
While compiling invoices, create a checklist of tasks enacted and total hours worked. Divide up these points in regard to compensation. Tick off these details while creating the invoices:
Customer name
Mobile number
Alternate mobile number
Invoice number
Invoice date
Tax identification numbers
Payment terms
Service or product that you are invoicing
Include any breaks that your business took, products delivered, the exact rate of pay, or the days you worked. Also, manage and register invoices in a timely manner rather than saving them for the last.
#2 Put invoice numbering system in place
Mid and large-sized businesses that occasionally face issues regarding tracking and managing invoices should definitely consider this tip. Documenting your sales and purchases using a numbering system is important in the accounting system and the same minimizes the chances of errors. It can also help you differentiate bills correctly as well!
Organize your invoices according to the payment period or numeral value. Values like BusinessInvoice_001 or InvoiceNumber_010 will immediately help you identify invoices. You can also state dates in the file name. That will make it easy for you to manage and keep a record of your payment period.
#3 Automate invoice process
While MNCs use inventory management software for tracking product availability in real-time and also generating an order, a lot of small and midsize businesses still stick to traditional ways of invoicing. For those who don’t know, paper invoices are usually time-consuming to generate and a headache to manage.
In some cases, paper invoices become difficult to track. You might find a problem checking when a specific invoice was sent or whether it was actually paid. Not to mention, one can make a lot of errors in manual processing. Put simply, it can seriously impact your bottom line.
Automating your invoice management process, on the other hand, can help your organization in speeding up invoice approvals. It can also help in minimizing errors like duplicate bills, overpayments, and late payments, and reduce processing costs.
Some best invoice automation software for businesses are:
Docsumo
Tipalti
Rossum
ABBYY Flexicapture
Kofax
Learn about accounts payables and receivables services in India
#4 Send invoices promptly
Aryn Kyle once said, “Don’t wait for the perfect moment. Take the moment and make it perfect.” Our next invoice management tip is all about this quote! If you really want your clients to take your business seriously and you want to leave a good professional impression on them, never delay your invoices.
Send your invoices to clients immediately after creating them and accomplishing the work you’re billing for. By doing so, you are more likely to remember all the details and less likely to make mistakes in your invoice. In other words, your chances of making your clients angry or delaying payment will reduce a lot. Payment will also process faster and in a more streamlined way.
Watch what the leading bookkeeping firm of South Florida has to say about Finsmart:
#5 Set reminders
Sending reminders to clients regarding pending invoices is not easy. Some business owners fear that it will make the clients mark them as annoying. But truth be told, setting reminders and asking for timely payments can help your business establish itself as professional and reflect the importance of timeliness.
Mid and large-sized businesses can remind their clients of pending invoices by sending quick payment reminder emails using software like HoneyBook. Make sure to consider the following points while sending payment reminder emails:
Re-attach the original invoice
Use clear subject lines
Keep email tone friendly, even if payments are late
Make the payment due date clear. Also, restate the payment terms your clients have agreed to
Remind your clients of how much they need to pay
List the payment methods your business offer
Yield clear and complete information about the work done for the client
Attach any previously agreed-upon consequences document of overdue payments if your client fails to pay your business again and again.
#6 Charge late payment penalty
Another important invoice management tip for large businesses to consider in 2022. One of the greatest issues for any business is not receiving payments on time. There are many cases where clients either ignore the invoice alerts or intentionally hold up the payment. To check such clients, start charging a late payment penalty. Here’s a legit way to get started with this:
While sending invoices, state that a late fee would be charged on delayed payment. Also, mention that the late fee charges will increase with respect to the delay. If you don’t put a late fee policy in place, clients who don’t pay on time may repeat the behavior.
Effective cash flow management strategies for businesses of all sizes
#7 Turn to AR and AP experts
Using invoice management software is not everyone’s cup of tea. While some find it too complex to use, others consider it a drain on financial resources. For them, hiring accounts receivable (AR) and accounts payable (AP) management experts is still a profitable option.
Outsourced AR and AP experts like Finsmart are helping organizations reduce their cash-flow burdens. From preparation of sales invoices on behalf of clients to following up for invoice payments, flagging long outstanding or stuck-up cases with management, and updating books of accounts for inward receipts – our team of experienced professionals will completely manage invoice function and other AR and AP tasks on a day-to-day basis.
With AI-powered technology blended with human expertise, Finsmart ensures timely deliveries and streamlined processes. The same can make invoice management hassle-free and transparent.
Invoice management solutions for businesses: Final words
Above are some useful tips and solutions for managing invoices for mid and large-sized organizations. Keep in mind that mishandling invoice data can contribute to costly errors. It is highly advised to follow these best invoice management practices while generating or sending invoices to clients. We are certain you’ll face no errors and receive payments in a timely manner.
Got any queries to ask? Send them to info@finsmartaccounting.com and have them answered by our AP and AR experts.
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Founder & Director
Shalaka Joshi, a Chartered Accountant passionate about outsourcing and problem-solving, brings over 20 years of extensive experience in accounting, payroll, and MIS reporting to her professional endeavors
