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31 May, 2017

The simple way to automate invoicing

Automating invoicing will save time and money, thereby optimising and helping to predict cash flow.

The simple way to automate invoicing
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31 May 2017
Clunky and labour-intensive invoicing processes and cash collection systems are time-consuming and costly. They will not only affect cashflow, but leave businesses with little visibility, unable to know what is outstanding at any time, without any ability to predict.

Furthermore, with the introduction of value-added tax (VAT) looming in the GCC, CFOs and the finance department should not be complacent and start modernising systems now.

Starting with the basics: proper invoicing

Is your finance department dealing with duplicate or late payments, lost invoices, or paying for goods and services that were never received? In a competitive and challenging environment, optimal cashflow management and visibility have become even more important than in the past for GCC businesses.

When looking at the steps required to improve the invoicing process, it's back to the basics, says Warsha Joshi, founder and managing director of UAE-based outsourced secretarial service firm Platinum VA, and chief executive officer of talent development and training organisation Expressions Arabia.

Joshi says the starting point of the invoicing process, which she identifies as data collection and its input into a business system for billing, is most critical.

"For a service company for instance, it is important to know how many hours have been deployed with a client and also the recoverable expenses. To that end, we have found that using a cloud-based time and attendance service serves both these areas and, in turn, can interface with the accounting system," she explains, referring to timesheet services.

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"The timesheet solution helps on two fronts. It should identify how much time has been spent on clients, but also allows for workload/distribution matters, so the client remains properly served at all times," she says.

This is because one of the biggest and most common mistakes made by firms in terms of invoicing is not properly recording where the effort was spent and therefore not recording the recoverable expenses properly.

"This can then also lead to tardy billing, and in some cases, it can impact people's recollections as to what happened if there is a client query or challenge to an invoice," she notes.

Joshi adds that another issue is when businesses do not adequately review current contracts to ensure all fixed contracts, or those that can behave like a retainer, have been billed.

Automating the invoicing process

Once the basics have been addressed, and best invoicing practices adopted, companies need to develop a plan to reduce data entry and increase automated processing.

According to research by consultancy firm PayStream Advisors, automated invoicing solutions on average capture up to 75 percent of term discounts against 18 percent for traditional systems, while the time it takes to process them is slashed to five days versus 45 days, and the average processing cost per invoice is reduced to U.S.$2.36 against U.S.$15.

In terms of practical steps to automate, Paystream Advisors says businesses should first adopt a system of electronic invoice receipts via a portal or network. Then they need to automate matching, work flow and posting processes to speed up invoice approval times and reduce manual input.

Subsequently, firms can implement electronic requisition, purchase order creation, and ordering to increase their ability to initiate collaborative commerce and electronic invoicing with suppliers. Finally, and this is more innovative, it says businesses can increase electronic payment formats beyond automated clearing house networks - and can even consider implementing virtual card payments.

Joshi, on the other hand, says that when it comes to a service company, the use of an online timesheet solution that interfaces with a business's accounting system helps refine data collection and can help further automate the review/approval process.

Automating the full process and switching to ERP cloud solutions asan example will allow easy integration, save time and create greater visibility. By creating a centralised intelligence, it significantly increases financial control and visibility across the entire ecosystem and supply chain, giving CFOs the possibility to plan better for the future.

© Oracle 2017