How do you organize and track invoices? Dealing with hundreds of invoices is no one’s desired job, especially, when you are dealing with various clients. But to get paid on time is perhaps an important aspect for businesses, most probably, for small business owners. It is essential to contrive a strategy for organizing invoices thoroughly.
Well, you may not be the kind of person who is a born organizer, but if you run a business, maybe it’s a peak time to get your paper invoices organized. For many small business owners, managing paper invoices can be a migraine pain as it takes a lot of time for assessing payables and receivables. Your business can bearish if you squander while managing invoices, which will eventually lead to discrepancies in your financial statement. Ultimately, your business profits are going to be crushed with such blunders in invoice processing.
This endless invasion of outgoing and incoming invoices must be organized well, both for the well-being of accounting books and the very business.
Importance of organizing your Invoices!
An invoice is an invaluable tool for accounting. A well-organized invoice not only helps businesses to track the receipts but also provide legal protection for both parties, essentially, for three main reasons: Getting paid on time, shielding legal rights and as Audit evidence. Well-organized invoices can help your business to excel in this dynamic market with accurate numbers.
What issues incurs when organizing invoices?
1. Involved in Multiple Tasks– Why invoices are a real mess for small businesses? Well, being a small business owner you manage various departments and processes. You are always looking for ways to do more in less. But, when it comes to managing invoices you can make blunders due to workload, which is quite obvious; whether you have paper-based invoice system or automated.
2. Not Maintaining an Invoice File– Tenterhooks increases when you have a paper-based invoice system for your small business. As organizing paper-based invoices is difficult; there are high chances of errors, misplacement, accidents, data loss, and more. Although, a well-maintained file for your invoices could be propitious but the fact is, filling each paper invoice on a daily basis becomes challenging.
3. Tiredness– Undoubtedly, managing invoices is a tiresome process for those who don’t penchant. According to researchers, many small business owners said that “If I would know that managing invoices is going to be so tough and boring I may never think of starting a business”. Why it becomes boring? As it takes you away from your passion and pushes you to meticulously verify your invoices.
4. Not Setting a Schedule to Manage Invoices– “Time Management” is the major constraint for the small business owners, yet it is important to maintain a balance in business. Try to analyze which task consumes more time and prepare a checklist of all the tasks according to their time ingestion. So, setting a schedule for each task can help you way too much, regardless, whether it’s accounts payable, receivable, marketing, etc.
5. Complex Invoices– As a matter of fact, small business owners usually face this challenge due to lack of knowledge about various invoices. Basically, for small business owners, there are six different types of invoices including proforma invoice, interim invoice, final invoice, past due invoice, recurring invoice and credit memo. To understand these invoices is tough and time-consuming as there are many other factors to be considered.
6. Non-Sequential Invoice Numbering– Well, invoices should be organized serially for the sake of your business as well as according to your country’s law. As sequential numbering is a law in many countries. Invoices in sequence can further help when filing taxes, tacking income and expenses and a lot more. Non-sequential numbering not only affects the efficiency of your business process but also leads to disdaining the law. For creating a longer, more precise, invoice number is to include month or year when the invoice was issued.
7. Missing Due Dates– When have unorganized invoices this is something obvious. Messed invoices can lead business towards increasing liabilities and impact the relationship with vendors. Sending invoices on time and taking follow-up is important to avoid bad debts in your small business.
What best practices you can adopt for your small business to stay healthy?
While organizational change is hardly easy, nurturing a working capital culture can yield substantial benefits. For instance, refining your invoice management can help enhance the accuracy of your cash flow forecasts, ultimately positioning you to improve liquidity and efficiency among business processes.
So adopt these best practices that guide your business and help you realize goals:
A. Integrate your accounts payable invoice processing across your business through a common platform to make sure all staff member adhere to shared practices and business standards. This has the further benefit of allowing you to achieve more tasks in an agreed timeframe and with available resources, ultimately reducing business costs.
B. Have a paperless processing atmosphere and automate your invoice processing. You can use any of the popular invoicing software available in the market for processing invoices according to your business requirement. QuickBooks, Zoho Invoice, InfoFlo Pay, Freshbooks, and FreeAgent are a few of the best invoicing apps you can use. With this, you can easily scan paper invoices, track delivery process and resolve queries automatically rather than manual process.
C. Implementing more vigorous governance practices can reduce the risk of manual error and consolidate internal controls while processing invoices. Though you have automated system or you have hived off invoice processing, being an owner of the firm, you need to monitor each and every aspect prudently.
D. Prepare invoices promptly to get paid on time. It is a very simple concept. The easiest way is to submit the invoice as soon as the work is completed and ensure that you schedule your tasks properly and don’t lag behind basic tasks like sending invoices.
E. Don’t dawdle and put invoices off for the next day! Instead, make invoice processing regular in your business calendar and stick to.
If you have ever tried to track invoices that have assembled for months, then you can understand what I’m talking about. In the end, precision, reliability, and organization are three ideal procedures that will save your business profits and improve efficiency. Work smarter, more efficiently and save time!