5 Effective Ways to Avoid Common Invoice Processing Issues

To maintain the smooth operation of their business, every business owner hopes for timely payments. Most businesses consider invoicing to be a simple process: create an invoice and get paid. Unfortunately, this isn't always the case. Every type of organization has to deal with invoice issues on a regular basis. To avoid client misunderstanding and payment delays, it's important to avoid invoicing errors. 

Here’s a list of various invoicing mistakes, and solutions to overcome them:

1. Missing Customer Invoices

Finding missing invoices is one of the most frustrating parts of invoicing. This is a common scenario in the Accounts Payable department: a vendor calls to inquire about payment status, and when you investigate the issue, you discover that the invoice in hand was never properly registered in the system. This may result in the payment of duplicate invoices.

Solution:

Find out why vendor invoices aren't making it to the accounts department to help reduce the amount of missing invoice handling concerns. If the problem is that the products or services are not being ordered correctly, this needs to be addressed. All orders should be routed through a central buying department or something comparable. In this manner, invoices may be paid on time, and expenditures can be properly managed. Having purchase order (PO) numbers on all orders is one important technique to make this work. All PO numbers are assigned by the buying department, allowing all spending to be tracked.

2. Invoice Approvals

Trying to get permission takes a lot of time and resources. By storing approver information in the cloud and automating the approval process with workflows, digitization minimizes the amount of time AP spends seeking approvals.

Solution:

Invoices are routed to business owners for approval through digital processes, which eliminates emails, shipping costs, and lost time spent trying to schedule meetings with budget owners. Approvals can even be done on mobile devices, making it simple to obtain approval from any location.

3. Manual Billing Errors and Mistakes

According to the latest Billentis Report, 55 billion paperless invoices have already been sent out over the world. However, that only accounts for 10% of the total. For processing purposes, this means that the remaining 90% of invoices must be manually entered – or the invoices must be scanned and digitized.

All of this adds up to a significant additional cost for the recipient and leads to errors. Remember that scanning solutions can be prone to errors as well. For example, the invoice to be digitised may be difficult to read. It's possible that information is attributed incorrectly. Even the most meticulously scanned invoice is rendered meaningless if the paper original is defective or incomplete.

Solution:

The only option is to digitally create and deliver the invoice. During digitalization, this prevents media breaks and inaccurate entries. Finally, it saves a significant amount of time, resources, and money. According to Billentis, the potential savings per invoice is just around 60%. Invoices submitted using the Microsoft 365 invoice management platform contain solely confirmed and organized invoice data that can be instantly sent to the recipient's ERP system for fast processing.

4. Wrong or Missing Contact Information

In most businesses, all incoming bills are sent to a certain email box or employee. In larger corporations, this work may be delegated to numerous persons from various corporate divisions. If your invoice does not reach the intended recipient, it is likely to end up in the "lost letter pile" of unpaid invoices. If you don't anticipate being paid for 30 days or more after sending out the invoice, you'll have to wait at least a month to notice the problem.

Solution:

Prevent the problem from occurring by confirming—and reconfirming—the correct recipient for your bills, keeping in mind that, depending on the complexity of your products and services, you may have many employees allocated to your account. Also, keep in mind that people change jobs or quit organizations, so evaluate and update your contacts on a regular basis, say every six to twelve months.

5. Tax Arrears

Things quickly become quite expensive if the invoice does not match VAT criteria. It's common for an invoice to fail to meet these requirements, especially in cross-border supply partnerships when the sender and receiving countries' tax laws must be met.

There is a danger of an additional subsequent payment being necessary if an inaccurate tax invoice is not recognized and the input tax is incorrectly deducted. This not only costs money, but it also adds to internal costs.

Solution:

In this case, too, a system-assisted, digital preliminary check of all invoice data pays off in the most literal sense. This is due to the fact that a so-called compliance check is also performed. This entails verifying that all of the information required for a tax-compliant invoice has been provided.

Conclusion

Consider how these seemingly small invoicing errors are affecting your cash flow and bottom line if you're making any or all of the invoicing faults listed in this article. Consider how they are affecting your customer relationships, which is perhaps more crucial. You can avoid many of these problems, enhance your customer connections, and run a more profitable business if you follow the suggestions given here. Digitizing your vendor invoice management function will save you money, increase efficiency, and give you more control over your spending. By automating the entire process with Power Automate implementation, you may save your cost per invoice by 40–50% while also freeing up your accounts payable personnel to work on more important projects. Calculate your overall invoice cost to determine how much money you can save.