Invoice processing is the whole method for handling a supplier invoice, from its receipt to when it is posted in the system of ERP and when it is ready for payment. An invoice processing can be done in different formats like paper, PDF, e-invoice, etc.
The invoice data must be entered in the recipient’s ERP systems either manually or by scanning. Once it is done, the invoice amounts will be coded to the correct account, project, or cost centre. This invoice will be then distributed to the responsible buyer or the budget owner to review and approve the invoice.
Invoice processing should always be done with accuracy since any mistakes in it can create a loss in the business. Thus, always make sure that you use myBillBook accounting software to process the invoice to avoid any errors and delays.
Steps involved in processing invoice
There are different steps involved in processing an invoice. Below you can find these steps for your reference.
- Receiving an Invoice from a Vendor
When the vendor completes their work by delivering their service or products, an invoice will be sent to you. This invoice is usually sent to you as a paper document via mail or can even email you. You need to add these invoice details to your accounting system.
- Backup of Vendor’s Invoice
Even though you have added the invoice details to your accounting system, make a copy of the invoice or scan the invoice and save it as an electronic file or paper file as a backup. Keeping a backup is essential in case any discrepancies are discovered at a later stage.
- Invoice is sent for approval
The next step is to get the approval for the invoice sent. There are high chances of ignoring the approval request sent by mails or papers in an organization. So, make sure you keep track of it so that the person who is authorized to approve the invoice will never forget it.
- After the approval payment is done
Once you get the approval of the invoice from the authorized person, the payment will be made. You might need to send this to a different department or an employee who deals with the payment. To make the payment at right time, keep a track of it so that the request will not be delayed.
The time required to complete all these steps may differ according to the size, riles, and hierarchy of the organization. You can use myBillBook software to automate your invoice process.
Guide for Small Business Owners to Process Invoice for Payment using myBillBook
Below you can find the details regarding the invoice payment process for small businesses. Since processing invoices for payment requires a lot of work, most businesses look into automation for more visibility, productivity, accuracy, and cost-effectiveness. myBillBook is the best solution we would suggest.
- Verify and Track Information
When a company makes purchases, the purchasing company wants to verify the purchase made to ensure accurate payment. After verifying the company will make the payment according to the agreed terms. So, the invoice must include the following details to assist the vendor and purchaser to track their expenses and update their monetary records.
- The date on which the vendor created and sent the invoice
- Contact information of both the vendor and the purchaser
- Details of purchases including the details and price of the products or service
- Payment details
- Data Entry & General Ledger Coding
When you get the sanction for invoices, it is essential to record the data and code them. It is better to practice an automated system to enter all the details to avoid any human error. Using an automation system also decreases the cost by 75 to 80 percent. If you have the tool to track the data, it improves access to invoice details. This will result in improving the service to vendors which will make the payments quicker.
- Forwarding and Receiving the Approval
Once the Accounts Payable team verifies the invoice details, they must be submitted for approval. Only once it is approved the payment will be made. Here also an automated system helps in making the process faster and can save a lot of time. It helps in tracking the lost documents or can request invoice copies from the vendor.
But, since your business is small and if you have only one or two employees, then a paper document will also work. However, myBillBook automated system is more professional and it can digitally capture the data from paper and electronic invoices and can put them through a custom-designed workflow.
Why Use myBillBook – Invoice Processing Software
Hope you are clear about the invoice processing meaning after reading this guide.
Now, let us see the benefits of using myBillBook to process your invoice, which will make you understand the difference between an automated and manual system.
- Eliminates or Decrease Human Error
We are living in the world of advanced technologies and there is no point in using the old style of using spreadsheets and other types of storing records. Any system that requires manual entry of details will result in making errors.
One of the solutions called procure-to-pay in myBillBook will automate the process to avoid spending time on manually forming all the inward invoices. This method is known as AP Automation. When you receive an invoice, it is easy to store it as an attachment or you can scan the document in the central database. This makes it easier to search and match with the accurate purchase order within a few seconds.
- Save Cash by Evading Late Fees
There are high chances of misplacing an invoice in an organization regardless of the size of the company. When you misplace an invoice the payment to be made will be delayed and the vendor will surely charge extra for late payment. Thus, when you use myBillBook and mechanize your system of saving the details of invoices, it eradicates any mistakes and at the same time, you will not miss the invoices.
- Reduce Unnecessary Costs
When you have an employee to do all this work related to the invoice, you will have to pay the employee for the work he does. The employee might take time to finish the work which will result in increasing the cost but, if you have accurate invoice processing software like myBillBook, you can surely minimize the work for processing the invoice and can save a lot of money.
- Integrate Invoice Processing with ERP
If you are using an ERP system to manage all your business operations, the best way to automate the process of invoices can effortlessly integrate with your accounting system.
- It can protect your Business from Fraud
In any kind of business, most fraud scenarios come with invoices. If it is done manually, you can surely expect some purposeful mistakes. But if you have accounting software, this can be eliminated.
- Reporting becomes Easy
Every department needs to report to its heads regarding all the operations in the organization. If everything is done manually by your employees, it will take a lot of time and at the same time reporting can lag as it comes from one person to another. If you have myBillBook, then the reports can be generated with just one click. Only then you can make your business profitable and run successfully with the great support of vendors.