How Does Your Invoice Process Affect Business Cash Flow?

Having an effective Accounts Payable (AP) process is key to managing your business cash flow. Streamlining invoice processes impact your business by saving time and money, while making life easier for finance teams and enabling them to make better, more informed decisions.   

Relying on manual paper-based invoice processes can be prone to errors such as unauthorised and double payments or matching errors and payment delays, all of which can have a negative impact on your bottom line.  

A common concern when it comes to automation is that employees might lose their jobs, but the opposite is true. Automation helps pick up the mundane day-to-day tasks that keep AP teams firefighting, so they can focus on value-added tasks.  

Another myth is that finance automation is simply too expensive to implement but by using the right technology, it doesn’t have to be. In fact, in most cases, the solution pays for itself within five months! 

Automating your supplier invoice process and creating a clear policy will also help overcome these challenges, as well as present new opportunities that will drive your business forward.  

In this article, we’ll go through the importance of receiving and paying supplier invoices, how to automate the process, as well as how to improve it. 

Why Is There a Need for a Supplier Invoice Process? 

A supplier invoice process is the procedure businesses implement before accounts are paid and ensuring it’s efficient is crucial to the smooth running of your organisation. 

In the past, businesses relied on legacy technology or manual, paper-based invoice processes which caused bottlenecks and frustration for finance and AP teams. These outdated processes often led to paying duplicate invoices, late or even early payments. On top of this, accurately forecasting cash flow was highly challenging.  

It’s therefore no surprise that more and more organisations are turning to spend management solutions to automate this process. 

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How Supplier Invoicing Processes Impact Businesses Cash Flow 

While supplier invoices are integral to the day-to-day running of your business, how they are handled can impact the flow of cash around your business. Let’s have a look at the positives and negatives, which should be weighed up when considering whether your business should automate its AP processes.  

• Positive: Businesses that automate their supplier invoice process and stay on top of paying bills can forecast cash flow accurately and utilise any early payment benefits. 

Best-in-class UK SMBs experienced a 14.3% improvement in their cash-to-cash cycles 

• Negative: Paying invoices before or past due dates can lead to reduced cash flow or late payment fees, which can cause headaches for your AP team. 

60% of UK businesses have been charged a fee for late payments and 23% have experienced termination of goods or a relationship with a supplier because of late payments. 

• Positive: By automating your supplier invoice process, approval times are significantly improved, keeping your suppliers happy and opening the door for more favourable rates or delivery times. 

Best-in-class UK SMBs who are turning to digital technology to automate finance processes, are seeing 24% faster processing times. 

• Negative: Businesses that rely on paper-based supplier invoices or that don’t have a connected process are at a greater risk of exposure to fraud, which can be extremely costly for an organisation. 

56% of finance teams are unable to identify the exact amount of their supplier invoice liabilities at any given time or accurately forecast their cash flow. 

How to Automate Supplier Invoice Processing 

Implementing a connected AP solution, with integrated spend management solutions, will reduce any complexity for your business and enable you to optimise your invoice management process.  

An invoice management solution will typically help a business to:  

• Match POs to protect businesses from being overcharged  

• Identify duplicate and inaccurate invoices 

• Authorise and pay supplier invoices on-the-go with a mobile app 

• Better track cash flow through the organisation 

• Alert finance managers to any compliance issues 

• Create reports to gain a clear view of spend 

How to Improve Supplier Invoice Processing 

Accounts Payable is often the last finance function to be automated, with payroll and expense management taking the front seat. So, when your business is going through a digital transformation, cover all bases to ensure you’re gaining insights and improving every corner of the organisation.  

Seek out a solution which will scale as your business grows – for example, if growing the business internationally is in your long-term plan, will your invoice automation solution pay in multiple currencies?  

Automating your supplier invoice process will help you reach your business goals, while saving time and money and improving employee satisfaction. This in turn will help your business to improve cash flow. You’ll be able to navigate moments of change within the business as you’ll have greater visibility into handling of invoices, telling you when they need to be paid, as well as if they’re overdue. You’ll also have a solution that enables you to grow with confidence and make decisions based on real data.  

To see how Concur Invoice can work for your business, check out our self-guided demo. For more information on how you should protect your cash flow, take a look at our infographic for 11 top tips.