5 most common mistakes in incoming invoice approval and how to avoid them
Processing and incoming invoice approval are important business processes of any business. It is important that all segments of a business are optimized for the business to operate successfully, but unintentional mistakes that affect the business as a whole, can sometimes happen in any organization. Accountants and managers of many smaller and bigger organizations say that the complex process of invoice approval is one of the biggest problems in departments. Thus, we elaborate on the 5 most common mistakes that occur in that process.
Belated incoming invoice approval
Classic invoice approval is based on reviewing paperwork and demands a lot of time and an outstanding organizational ability of all those involved in the process. Most business processes in the market today, happen rapidly and often in tense circumstances, so it’s no wonder that the amount of necessary time and the risk involved lead to sometimes forgetting an invoice or two, misplacing it or not approving it in time. These situations then lead to payment delays and subsequently to negative relationships with clients, and in long term, a bad reputation in the market.
Business process automation decreases the amount of time invested, the amount of paperwork and overall costs of business processes. Besides, the document management system enables having all your data electronically stored in the database, without the fear of losing them or ‘disappearing’ from the office desk. Such systems provide recording of all your data and a complete and clear overview of data. For example, you can check who and when approved an invoice at any time via electronic invoice approval. Therefore, the transparency of documents is increased, and the possibility of delays is decreased.
Lost or incomplete invoices
“Electronic invoice approval enables you to know where an invoice is located at any time, who is responsible for it and which phase of the approval process it’s in.”
Losing documents is not uncommon. Numerous papers and documents that circulate through organizations, apart from being ecologically questionable, also create a higher risk of making mistakes. Sometimes in businesses, many people deal with processing and approving invoices which of course, leads to a higher probability of mistakes occurring. Those employees are often unaware of comprehensive processes in a business, don’t possess complete information and are sometimes overwhelmed with the number of invoices coming in.
Getting around in piles of papers requires great concentration and responsibility from a worker, and that can lead to saturation and burn outs. Interestingly enough, incoming invoices are most commonly the documents that often get lost in processing, in hand-to-hand transfers. That is the reason why they often don’t reach the person authorized for approving it. Electronic invoice approval enables you to know where an invoice is located at any time, who is responsible for it and which phase of the approval process it’s in.
Double payments
Double payments pose a great risk and a problem for business operating, but they are still very common when manually processing incoming invoices. These situations most often occur due to incorrect and inefficient data input, document storage and approval control. Also, a slow approval process isn’t an advantage.
Businesses sometimes receive incoming invoices through various sources (mail, e-mail, special programs), so when they notice a reminder for paying a client with little time left, they pay the amount without checking if it has already been paid. There are many situations, all of which are bad for business. That is exactly why it is important that you have a view into the cash flow of a busines, the database of all invoices, i.e., business expenses, at any given time.
Systems for contactless incoming invoice approval and program solutions like electronic approval enable you to input an invoice into the system regardless of the source it came in through. Therefore, all the data can be found in one place and you know whether the invoice has been recorded and paid, at any time. Believe us, it makes it impossible for the invoice to pe paid twice.
Incorrect data input
Institute of finance and management concluded in their research that human errors are a constant threat in manual, i.e., traditional business processes. Namely, up to 3,6% of invoices include a mistake. Invoice processing can be tedious and long-lasting work, and since people are not computers, it’s no wonder that mistakes happen occasionally. Unfortunately, one wrong digit in the invoice amount can mean a tremendous loss for a business, even a complete downfall. Digitalized automated programs decrease the possibility of that happening.
Program solutions for electronic invoice management enable the possibility of inputting all the data from paper invoices into the system (the amount, PDV, the invoice source etc.). If the invoice comes through a service like the e-invoice, the system processes it itself and sends a notification for each new input. It is easy to integrate it in the existing accounting programs of the business, so it also serves as an extra simplification of a complex process. These solutions also serve as a certain security. A backup can be created for the database, and only authorised persons can make changes to it.
Poor resources management
Searching, processing, viewing and invoice approval are all processes that require a lot of time, money and people. They are all valuable resources and extremely important for the success of an organization, so managing it is of the utmost importance for realizing business gals of a certain business. If the resources are systematically being spent on only one process, that means that other processes are lacking. Poor management means overburdening the capable and efficient employees with routine, exhaustive tasks. This changes with program solutions and the afore mentioned resources are optimized.
It is necessary to create a good and positive work atmosphere where people can perform tasks more easily, without stress, while having necessary resources so the job can be done as successful as possible. The afore mentioned solutions decrease the cost of doing busines, give an insight into real business expenses, lead to greater employee satisfaction and don’t require more financial expenditures for the business.
Conclusion
“Electronic incoming invoice approval helps with the accuracy of inputted invoices, enables more efficient business, and gives a clear financial overview.”
Processing and incoming invoice approval can be an exhausting task for all the people involved. Thus, there is the possibility for making mistakes that can be fleeting oversights, but also a serious worry that affect the success of a business in long term. Luckily, electronic incoming invoice approval helps with the accuracy of inputted invoices, enables more efficient business, and gives a clear financial overview.
To conclude – all the above-mentioned mistakes can be avoided, so why not avoid them then?
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