Supplier invoice management: a complete guide
55 billion invoices are being sent out worldwide in paperless form each year. Yet that's only 10% of the estimated 550 billion invoices that are issued annually.
Supplier invoices are a tedious task for finance teams. It's even harder when they're handled manually. Small to large companies alike struggle with finding a system that streamlines invoice management, every step of the way.
Supplier invoice management is usually handled by the accounts payable department, which can be made up of one or many employees. In smaller companies that don’t have designated AP, this work often falls to multitasking office managers or finance-savvy employees.
But regardless of who’s doing the work, many of these teams still rely on error-prone manual processes to receive, validate, and log invoice data along numerous touch points in the company.
Even the smallest errors can result in major inconsistencies across the board, resulting in wasted time, lost money, and even legal complications for companies.
Since cross-team collaboration on invoice management is inevitable, the real solution is making the system easier, quicker, and more accurate. That’s where we step in.
To kick it off, let’s cover the basics.
What is a supplier invoice?
Supplier invoices are the bills issued by a seller to a buyer. The seller, also known as a supplier or vendor, can invoice their buyer – who can be first-time customers or recurring clients – for goods and services.
All businesses have expenses, and many receive supplier invoices from all kinds of different vendors – whether they’re for material goods, software subscriptions, service fees, or even outsourcing labor.
Why you need a vendor invoice management process
There are a few common reasons why the invoice management process can be notoriously challenging.
One is the number of people involved: invoices are usually sent from suppliers to their direct point of contact within the company (often the person who is actually using the product/service), then passed on to the accounts payable team, which then sends it on to a budget or finance manager for validation, and then back down the chain.
The second reason is that suppliers send their invoices in formats which can be difficult to access, with random file types, different languages, and even old-school paper invoices sent by post.
Each of these elements can make handling invoices more complicated and time-consuming, requiring finance teams to double handle invoices or chase down colleagues internally to re-validate key steps in the process.
Accounts payable and managing invoices become even more difficult for businesses as they grow and receive a greater volume of invoices over time.
Here are a few ways that implementing a better invoice management process can help your finance teams:
For many businesses, time is money. Outdated invoice processing takes an inordinate amount of time. The bulk of that comes from manual data entry into spreadsheets, and sending documents back and forth. Implementing an automatic invoice management process directly cuts down on time and increases efficiency and accuracy–allowing exponentially more invoices to be processed at once.
Invoice management is a task that will always involve multiple people. But outdated systems lack clarity and transparency, resulting in a high risk of losing sensitive documents, delayed approvals, and duplicate payments.
Automation lets finance departments standardize their invoice processing policy and workflows to function proactively, eliminating inefficiencies and human error. You can create form templates for teams, and always ensure that the format and delivery of invoices is correct.
Maintain good relationships with suppliers
When it comes to invoices, mistakes are not only costly–they’re also harmful to your collaboration with vendors. Manual processing errors like slow or incorrect payments and late fees cause major stress for both sides.
An automated invoice management process lets AP teams focus on strategic productivity and building long-term supplier confidence, instead of constantly worrying about triple checking their numbers and putting out fires.
Stay ready for audits
Audits are one of those stressful realities of the finance sector. Freshbooks explains, "Using automated invoice processing makes dealing with an audit a lot less painful." They're right. With software automation, you're able to catch and fix accounting errors easier, and prevent problematic miscalculations in advance.
5 keys to processing supplier invoices easily
Automated invoice management lets AP teams capture, approve, and process supplier invoices more efficiently and accurately than ever before.
Here are the most important upgrades to make to your own supplier invoicing process.
1. Digitalize vendor invoice capture and approval
Eliminate unnecessary and error-prone steps from manually entering supplier invoice data into spreadsheets. Or worse – documenting it all on paper.
Use an automated invoice management platform to transform this tedious time-consuming task into a streamlined system. Employees upload their supplier invoices and in a few clicks, pertinent info is captured and directly forwarded onto budget managers for approval, then financial controllers for processing.
It’s also easy for everyone involved to track the status of all invoices at every step. No more redundant back-and-forths, digging for email attachments, or chasing down colleagues.
2. Eliminate duplicate and fraudulent vendor invoices
Whether due to human error or abuse, duplicate and fraudulent invoices are difficult to catch with the naked eye – especially when the AP team is constantly processing more than they can handle. These expensive mistakes can bring on costly audits and bureaucracy that take even longer to sort out.
Automated invoice management prevents these issues by matching every supplier invoice to its corresponding purchase order. Employees submit their purchase orders, and budget managers can easily approve requests and input them in a few seconds.
If an invoice has already been paid or the supplier info isn’t linked to a PO submitted by an employee, it won’t show up as a pending invoice to process. Finance teams simply need to review the summarized details to ensure all is verified.
3. Let budget owners approve spending quicker
Invoice review and approval is usually the site of most delays. The involvement of too many people and a mix of random communication methods (including emails, calls, texts, and word of mouth) multiply these inefficiencies.
For example, in the IT and telecoms industry, each organization has on average 28 people involved in the approval and processing of supplier invoices. In scenarios where team members travel for work or take vacation, this creates a bottleneck when approval requires access to different devices or a multitude of documents owned by separate individuals within the team.
Using an automated invoice management tool, budget managers are immediately notified in one place of purchase order requests and supplier invoices the moment they are submitted. They can then approve invoices on the spot within the same interface, passing it onto the next step of the approval process – whether they’re at the office or on the road.
4. Automate and simplify finance employee workflows
Many AP and finance team employees spend a chunk of their working hours responding to inquiries from suppliers about the payment status of their invoices. This cross-referencing and constant follow up can create further delays across the entire process.
A fully automated and centralized invoice management platform lets employees easily submit multiple purchase orders and supplier invoices at once. Tools like Spendesk use OCR text detection to scrape and pre-fill text content from uploaded forms, saving hours and ensuring accurate data entry.
Simplifying the process ever further: invoices are automatically sent to the appropriate budget manager and employees can check on the status of their requests at any time–allowing them to relay reliable updates to suppliers when asked.
5. Integrate spend data and increase visibility on overall spend activity
Finance teams who have deeper insight into their company spending have a greater comprehension of the different departments’ finances across the entire company. In addition to supplier invoices, finance teams also need to process employee reimbursements, like business travel and office expenses.
Using a platform that breaks down and visualizes company expenses into an easy-to-understand overview of spend data helps you optimize your company’s overall finances.
In addition to being able to track and process all purchase order requests and supplier invoices from a dedicated platform, finance managers can make more informed and accurate decisions on budget allocation, spend control, and cash flow management across the company.
Simplify your supplier invoices with Spendesk
With a fully automated invoice management platform, employees, budget managers, and finance controllers have full visibility over the entire purchasing process–empowering these teams to work more confidently and quickly.
Eager to implement this at your company? Book a Spendesk demo with one of our specialists. We’re ready to level up your invoice management process!