Effective Invoice Management Matters
Whether you call it vendor invoice management, supplier invoice processing, or simply paying the bills, meeting your obligations to your suppliers with timely and accurate payments is essential to maintaining both strong vendor relationships and your company’s financial health. Unfortunately, the vendor invoice management process isn’t always as smooth or speedy as it could be.
That said, optimizing your invoice management doesn’t have to be difficult or frustrating. With the right tools and techniques, you can trim the waste from your workflows, eliminate delays and errors, and make sure your accounts payable team is making timely, accurate, and complete payments to your suppliers.
Why Effective Vendor Invoice Management Matters
It doesn’t seem very complex at all: A vendor sends an invoice, accounts payable receives it and makes sure it’s legitimate, then pays the supplier and adds the transaction to the company’s financial records.
What could be simpler?
Sadly, things can get complicated quite quickly when you’re dealing with manual workflows (including the approval process and invoice matching) and paper invoices. And in a world where an estimated 90% of all businesses still process paper invoices and perform data entry manually, every duplication of effort, every invoice that can’t be matched to a purchase order, and every error or exception all translate to additional costs and reduced productivity.
According to 2020 research conducted by Ardent Partners, the average cost of processing a single invoice (including all tech, overhead, and labor costs) was $10.89. But costs can vary wildly, and some businesses may pay as much as $40 to process a single invoice.
The average cost of processing an invoice (often abbreviated to CPI) is one of several metrics used to evaluate the overall efficiency and efficacy of a company’s vendor invoice management. Along with average invoice processing time (i.e., the invoice lifecycle), number of exceptions, and number of invoices received electronically, tracking CPI helps you identify areas in need of improvement.
Maximizing the efficiency of your invoice management (and payable processes in general) is about more than metrics, of course. You also need effective ways to meet regulatory requirements, manage the intricacies of different currencies and tax rates, and integrate your AP processes with your existing software environment (e.g., enterprise resource planning (ERP) software, office and productivity suites, etc.).
Finding ways to streamline these workflows and improve your vendor invoice management metrics is more important than ever to competing effectively in today’s complex global economy. Digital transformation has introduced automation, artificial intelligence, and analytics into business processes, and companies who can optimize their invoice processing will secure the gains to productivity and profitability they need to stay ahead of the game.
A strategic upgrade to your tech capabilities can help you optimize and streamline your payable processes for speed, accuracy, and value.
Better Vendor Invoice Management is Possible
Paying the bills might be a necessary evil, but it doesn’t have to create additional costs through lost time, value, and productivity. Invest in a high-quality invoice management solution, refine your internal processes, and prioritize proactive communication. You’ll be able to pay your suppliers more strategically, reduce needless waste and expense, and make sure every dollar you spend is generating the best possible return for your business.