Running a business is no easy task. It involves juggling multiple moving parts, such as overseeing production, executing operations, and devising and implementing marketing campaigns. In order to succeed, you need to be able to focus on all of these processes, and more.
Despite this fact, it is surprising how many entrepreneurs overlook the importance of proper bookkeeping. They neglect tasks like processing invoices, which actually play a vital role in profitability. In this article, we will discuss the importance of effectively managing invoices and provide five reasons why you should outsource invoicing.
Explaining Invoice Management
Invoice management is a business’s method of controlling and paying vendor bills, often referred to as invoice processing. For example, a company will receive a document from a third party requesting payment. After confirming the document’s legitimacy and accuracy, the firm then needs to pay the invoice and display the transaction in financial reports.
This process may seem straightforward, but sometimes unforeseen complications arise. After all, the risk of error increases when several participants are involved in a transaction. Initially, an invoice is sent to a contact person within the firm, who redirects it to the finance department. If there are problems with the invoice, it is returned to the contact person and the distributor for correction. As the invoice changes hands multiple times, there is a risk that it will be processed twice, leading to further headaches. Invoice processing requires careful management in order to avoid these situations.
Keeping proper financial records is time-intensive and small mistakes can be costly. BooksTime makes sure your numbers are 100% accurate so you can focus on growing your business.
Importance Of Invoicing
Based on estimates from the IMARC Group, the global e-invoicing market was valued at 11.2 billion USD in 2022. Experts predict significant growth, projecting that the market will reach 35.9 billion USD by 2028, with an average annual growth rate of 20.26% between 2023 and 2028. These forecasts emphasize the vital role of proper invoice management in today’s business landscape. Consider other arguments in favor of effective account management:
- Bills are the basis for timely settlements with counterparties. By carefully overseeing bills, you can prevent any inaccuracies when it comes to obtaining and making payments for goods or services.
- Effective invoice management helps you to control and optimize your company’s inventory and resources.
- Information gathered through invoice management is valuable for planning and analyzing your business’s finances and production. This information provides insights that help you make informed decisions and improve overall operational efficiency.
- Careful management of invoices simplifies tax accounting and auditing.
Effective account management and timely settlements with vendors have a significant impact on a company’s profitability, comparable to revenue and expense control. The best way to eliminate billing bottlenecks is to outsource business processes, including invoice processing, to a specialized company.
Key Reasons To Outsource Invoicing
According to Daniel Ball, the CEO of Wax Digital, a staggering 82% of finance departments are overwhelmed not only by the high volume of invoices that they need to handle on a daily basis, but also by the diverse formats in which these invoices are received. It’s no wonder that a growing number of businesses are opting to outsource these labor-intensive tasks to external bookkeeping services. Here are 5 key reasons for companies to outsource their invoice processing:
- Reduced costs: if you handle invoices internally, you may need to hire additional staff to manage the workload. This leads to increased expenses for bookkeeping, administration, recruitment, personnel management, and the use of digital tools and hardware. By outsourcing to a financial service provider with expertise in optimizing invoice management, you can reduce these costs by up to 50%.
- Real-time payment control: every bill processed by experts is meticulously date-stamped, allowing you to maintain control over payment deadlines and effectively plan your finances. The advantage of regularly receiving updated records lies in your ability to monitor the movement of capital in accounts nearly in real time. With timely access to accurate financial information, you can effectively track and analyze your performance.
- Full compliance: by delegating tasks related to accounts payable, you can ensure that you are operating legally. The experts responsible for your invoice processing know the federal law for the industry, surpassing the average employee you might hire to deal with creditors. These specialists are also well-versed in the intricacies of invoice factoring, a popular financial tool.
- Optimization of company image: never underestimate first impressions in today’s business landscape. When counterparties see that you have an efficient and streamlined invoice processing structure, they are more likely to choose your company over competitors. This boost to your profile can increase your revenue and broaden your customer base, as it instills confidence in your business.
- Ability to implement advanced software: financial service providers are able to implement advanced software solutions to meet your business’s needs. These digital billing platforms allow for the timely and precise processing of paperwork, guaranteeing that all information in the documents, such as transaction details, volume of commodities and services provided, supplier information, and payment deadlines, is accurate. Accuracy is crucial, as a reliable record ensures that you can resolve any payment disputes that may arise.
If you’re worried about not having enough time to work on your bills, consider the success story of the Family Allergy and Asthma network. As a fast-growing business with numerous clinics and patient care services, they made the decision to outsource invoicing. According to Zach Kulov, the company’s Controller, outsourcing allowed the company to reduce the invoice processing period by 90% and cut the billing lifecycle by 70%. This example demonstrates the positive impact that outsourcing can have, both on the process of invoice management and on your business as a whole.
How to choose optimal outsourcing services
The quality of the work performed depends on the service provider you choose. When hiring a specialist, avoid signing a contract with the first person who submits a resume. Instead, you should carefully evaluate the knowledge and skills of multiple professionals. To help you choose the right team to outsource invoicing, consider the following criteria:
- Experience and track record: before signing with an outsourcing firm, make sure to verify their financial experience. Research the market to assess their legitimacy and reputation. Explore the firm’s client list and check if reputable companies have used their services. Additionally, you should read reviews to learn more about their quality of work and the level of service you can expect.
- Services offered: ensure that the organization is prepared to take responsibility for all your business’s invoice management requirements. They should provide clear communication and demonstrate a thorough understanding of your business’s needs.
- Software used: verify whether the financial service provider uses the most up-to-date invoicing digital solutions. These advanced digital tools will ensure that bills are settled with precision and speed.
Even if an outsourcing provider offers you the lowest prices in the industry, you shouldn’t assume that you’ve gotten the best deal. Don’t compromise on quality to save a few dollars.
Trust the professionals
Outsourcing invoice processing services provides many benefits for small businesses. If you are seeking ways to become more efficient and profitable, you should consider delegating out your accounts payable workload. You may be pleasantly surprised by the extent to which it can boost your business’s performance and growth.
If you are seeking a trustworthy partner to handle your invoice processing, look no further than BooksTime. We have the essential infrastructure and a team of skilled professionals to efficiently manage your billing processes. Unlike your employees, who often spend endless hours on manual data entry, we automate the process of paying bills, allowing your bookkeeper to solve other critical tasks. To learn more, simply fill out the form on the site, indicating your phone number and email. We will gladly provide you with further information about how we can help your business succeed.