The shift from traditional paper-based methods to electronic invoicing (e-invoicing) has proven to be a game-changer for organizations worldwide. The benefits of e-invoicing are multifaceted, ranging from increased efficiency and accuracy to improved transparency and cost savings. However, it’s crucial to have a well-defined roadmap that aligns with your organization’s unique needs and goals when selecting an e-invoicing solution.
In this blog, we’ll dive into the current state of AR teams in managing the invoicing process, understand the drawbacks of traditional invoicing, and explore a roadmap to the right e-invoicing solution for your business.
Status-Quo: State of AR Teams
In most companies, AR teams handle the invoicing process manually through Word docs, excel sheets, or legacy systems. Performing the invoice process manually involves a series of steps that the Accounts Receivable (AR) team follows to create, send, and manage invoices.
- Creating a document that includes the company’s details and customer information.
- Creating different types of invoices, such as proforma invoices, recurring invoices, GST tax invoices, and so on.
- Assigning a unique invoice number and include the invoice date.
- Listing the items or services provided, each with its corresponding cost.
- Including any applicable taxes or discounts and calculate the total amount manually.
Depending upon the size of the company an AR team generates 100 to 10,000 invoices per month. Imagine the time consumed to just create the invoice.
- Verifying the accuracy of the invoice details and ensuring that pricing and quantities match the agreements with the customer.
- Obtaining approval from relevant internal stakeholders.
- Confirming that the invoice complies with company policies.
In companies that have a complex and manual hierarchy, this step could take days and the AR team has zero visibility over the process.
- Printing the finalized invoice on company letterhead and ensuring all necessary attachments, such as receipts or supporting documents, are included. Then sending the invoice to the customer via mail or fax.
- Drafting emails for each invoice that needs to be sent via email.
- Logging in to various portals to attach the invoice details.
Delivering invoices via different mediums according to the customer’s preference is a draining process for the AR teams.
Invoice Status Tracking
- Keeping track of the invoice status and following up with the customers.
- Updating the status when invoices are paid.
- Identifying and resolving discrepancies.
Most companies don’t have a proper system to monitor invoice status and discrepancies, AR teams often maintain this information in sheets.
Recordkeeping & Reporting:
- Maintaining a physical or digital filing system for invoices and supporting documents.
- Entering invoice details into the company’s accounting or ERP system.
- Creating reports manually on accounts receivable status.
Many companies lack a centralized repository and lack visibility over critical reports for better decision-making.
Drawbacks of Traditional Invoicing
Human Error: Manual data entry can lead to errors in pricing, quantities, or customer information.
Time-Consuming: The manual process is time-intensive, especially as transaction volumes increase.
Limited Scalability: Handling a growing number of invoices becomes challenging without automation.
Dependency on Paper: Manual processes often involve the use of paper, making it less eco-friendly and more prone to data loss.
High OpEx: Due to the manual nature of the process, the reliance on manpower contributes to higher operating expenses. Addition costs due to paper and storage also contribute to high OpEx.
Longer Time to Cash: The entire invoicing cycle, from creation to payment receipt, takes more time, impacting the organization’s cash flow and liquidity.
Lack of Real-Time Monitoring: Manual invoicing lacks real-time tracking, making it challenging for businesses to monitor the status of invoices. This lack of visibility can lead to delays in identifying and addressing issues with payments.
Broken Communication Trails: Manual invoicing often involves a disjointed communication trail, where different departments handle various aspects of the invoicing process. For example, the sales team handles customer communication whereas the AR team handles invoice creation, without a proper collaborative workspace the communications are often lost in transit.
Evolution of Invoicing
Invoicing has undergone significant transformations, evolving from hand-written documents on materials like parchment or paper to the contemporary era of e-invoicing and mobile invoices.
Invoicing originated with hand-written invoices crafted on materials such as parchment or paper. These invoices contained essential details and often featured signatures or seals for authenticity.
The invention of computers brought a new era of invoicing, driven by cost reduction and increased efficiency. Electronic invoices emerged as a more economical, convenient, and faster alternative.
The rise of the internet marked another milestone in invoicing. Online invoices, facilitated by email communication, provided a more secure and environmentally friendly means of interacting with customers. Transactions became paperless, and payments seamlessly shifted to online platforms.
The era of disruptive technologies has revolutionized the invoicing process, offering automated, secure, and instantaneous solutions. Now, professionals can generate invoices on the go, adapting to the dynamic needs of a mobile-centric world.
Modernizing AR teams: Need of the Hour
In today’s world, finance processes across various industries are undergoing a profound transformation through the integration of technologies such as cloud computing, Robotic Process Automation (RPA), and Artificial Intelligence (AI). Despite the perception among AR teams that they are modern, many still rely on traditional platforms, and those who have embraced some degree of automation have often done so in a haphazard manner.
The optimal approach to modernizing an AR team involves the strategic management of processes through best-in-class e-invoicing solutions. By harnessing the power of next-gen automation tools, employees can redirect their time and focus from non-value-adding activities to strategic operations. This shift not only enhances efficiency but also allows AR teams to concentrate on activities that contribute directly to the company’s broader strategic goal.
Peakflo e-Invoicing Solution: Your Roadmap to Maximizing ROI
Features You Need in an e-Invoicing Solution
User-Friendly Interface: An intuitive and user-friendly interface ensures that your team can easily navigate and use the invoice solution without extensive training.
How Peakflo Helps: Peakflo employs a clean intuitive design that minimizes complexity. The interface is structured logically, making it easy for users to locate and use essential features without feeling overwhelmed.
Customization Options: The ability to customize invoice templates to match your brand identity and specific business needs is essential for creating professional and personalized invoices.
How Peakflo Helps: Easily generate invoices with your company’s branding and tailor the line items, discounts, and tax rates to match your specific requirements. Also, set up recurring invoices with just a click.
Automation of Approval Process: The capability to set up and automate approvals for invoices is crucial for businesses with regular billing cycles, saving time and reducing manual effort.
How Peakflo Helps: Invoice approvers can quickly review and approve invoices, with their e-signatures automatically added upon approval.
Integration with ERP & Accounting Software: Integration with popular ERP and accounting software (e.g., NetSuite, Xero) ensures a smooth flow of data between your invoicing system and financial records.
How Peakflo Helps: Seamlessly integrate with ERPs and accounting software without affecting your day-to-day operations.
Mobile Accessibility: A mobile-friendly solution enables flexibility for users who are not always at their desks.
How Peakflo Helps: Users can effortlessly create, send, and manage invoices on the go, enabling efficient and convenient invoicing anytime, anywhere.
Real-Time Reporting and Analytics: Robust reporting features provide insights into your invoicing and financial performance, helping you make informed business decisions.
How Peakflo Helps: The receivables dashboard, enables you to access real-time AI-powered reports and monitor critical metrics. Check overdue, paid, and disputed invoices at a glance and take action accordingly.
Compliance and Security: Ensure that the invoice solution complies with legal and regulatory requirements, including tax regulations and invoicing standards in your industry and region.
How Peakflo Helps: Improves data security, transparency, and confidentiality by being SOC Type 2 certified.
Customer Portal: A customer portal is essential to keep track of customer communications and proof of payment records.
How Peakflo Helps: Makes it easy for your customers to ask questions and submit payment and tax proof for each invoice in one place, enabling a hassle-free centralized platform to keep tabs on your customers.
Scalability: As the business grows, the solution should also be able to scale as per the business requirements.
How Peakflo Helps: Our solution can adapt to the growing needs of your business, handling an increasing volume of invoices and transactions without compromising performance.
Support and Training: Access to responsive support and training resources ensures that your team can maximize the benefits of the invoice solution and address any issues promptly.
How Peakflo Helps: Get support from our team 24/7 and find solutions to your doubts by accessing our help center. Moreover, gain access to exclusive training videos that will help you master the solution in days.
Peakflo streamlines day-to-day financial operations with minimum human intervention. AR teams can dedicate more time to strategic tasks such as building customer relationships, persuading past-due accounts, and developing stronger credit policies