When it comes to paying bills, knowledgeable finance managers understand the reasons to streamline the invoice approval process. Without the proper protocols in place, they know it can be a complex and cumbersome procedure. This is particularly true for larger companies where purchase orders and multiple approvals are involved. Nevertheless, smaller companies are not immune to having inefficient invoice approval methods in place. When finance professionals replace manual invoice approval systems with automated ones, they have taken the first step toward simplification. Read on for more reasons to streamline the invoice approval process.
By modernizing invoice approval procedures, finance managers can help their companies minimize fraud. There are bribery schemes that suppliers use to entice unscrupulous employees. The proper fraud protection strategies can significantly improve your invoice approvals. In addition to those, scammers have clever ways to fool even the most honest staff members. In fact, studies estimate losses to be billions of dollars per year. Companies of all sizes are more vulnerable to fraud when the invoice approval process is flawed. However, the smaller the business the more devastating the consequences. Streamlining the invoice approval process can help finance professionals minimize the losses at the hands of these con artists.
Decrease Invoice Processing Time
The way to decrease invoice processing time requires an organized course of events from beginning to end. On the surface, it seems like all this will do is get payments to vendors faster. Although that is true, you might want to consider why keeping that money in the account as long as possible is not always the best idea. Finance professionals who embrace this concept are more likely to see the cost savings associate with it. For example, invoices handled in a timely manner have a significantly lower average processing cost. This savings can improve cash flow and your company’s profitability.
Improve Vendor Relations
Companies that promptly pay their bills are well on their way to improve vendor relations. The first step to improve your vendor management practices is to enhance relations with your suppliers. Finance managers should know that there are many perks to being in this position. For example, when you have a good relationship with your suppliers, they will be more apt to offer discounts or other incentives. Additionally, customers in good standing have leverage to request expedited orders. If you do have an issue with a purchase, your vendor relations status will influence how your complaint is handled. Finance professionals are on much steadier ground with vendors when they have an invoice approval process in place.
Prompt Payment Discounts
Many vendors offer a prompt payment discount to companies paying their bill before the due date. If it is not specifically defined on the statement, finance managers should inquire about incentive plans like these. After all, leveraging these opportunities provides significant savings, with all of the proceeds going to the bottom line. Not surprisingly, research shows that very few companies take advantage of these type of incentive plans. However, the numbers significantly increase for those with a streamlined invoice approval procedure. For finance professionals, this should be enough motivation to start restructuring the invoice approval process.
Avoid Paying Late Fees And Interest
Having an organized invoice approval process helps avoid paying late fees and interest. Overdue payments create expenses are not typically in the budget. Furthermore, they can be costly and negatively impact your company’s bottom line. From time to time, finance professionals may find themselves on the phone disputing the charges. The hours you spend doing this can sometimes result in a reversal of the charges. However, you will probably agree that this is not the best use of your time. Instead, use your resources to implement an organized bill paying process to prevent these unnecessary expenses.
Well-informed finance managers have a multitude of reasons to streamline the invoice approval process. Adopting an automated method helps to decrease the processing time which can lead to better relationships with vendors. Additionally, you can help add to the company’s bottom line by taking advantage of early payment discounts. When you are organized with the invoice approval process, it becomes less likely that you will incur late fees and interest on your bills. Modernizing your invoice approval procedure mitigates your company’s exposure to fraud. Consider the points in this post if you are a finance professional looking for reasons to streamline the invoice approval process.