As a small business owner, I am positive you are very familiar with the process of managing your expenses, tracking your profits, and doing the work to make sure your books are up-to-date. One of the best ways to collect your due profits and keep your business afloat is through processing invoices for payments from your customers.
Of course, in today’s fast-paced world, businesses are looking for ways to improve their efficiency with streamlined processes (the smart ones are at least). One of the simplest areas to implement higher levels of efficiency is through your invoice management.
In this article, we will explore the key benefits of automated invoicing and how it can help your business thrive.
Why You Should Avoid Manual Invoices
Even in today’s modern world, the majority of businesses globally–90% to be exact– are still processing invoices manually. Completing your invoices manually can result in wasted time, loss of productivity, errors, and financial hemorrhaging (yes, we will get to the cost of manual invoicing in a bit). So, to avoid all these unnecessary headaches, this is where automated invoicing integration comes into play.
Integrated software can automate the entire invoice workflow. It handles the entire process from customer initiation to customer payment. But why are global merchants doing such out-of-date processes with lengthy paperwork, burdens on staff, and unnecessary costs, when they could be implementing automation?
Below we will go over the considerations that merchants (and their employees) are fearful of when it comes to switching to automated invoices and how to conquer these fears with the actual benefits that automation provides.
Common Fears of Automatic Invoice Processing
It can be a significant change to implement automated invoice processes for a business. This change commonly comes with fears and concerns from both the business owner and the company’s staff. Some common fears of transitioning to an automated invoice process include:
Artificial intelligence (AI) is a wonderful tool and resource. But could it possibly take over jobs that humans need? Many worry that implementing automation will take away the necessary jobs from employees who are handling manual tasks.
Staff concerns are valid. However, in most cases, automation through AI can actually lessen the burden of busy work. Creating an opportunity for new avenues to explore on the job to put their efforts into higher-level tasks that require human intelligence and creativity.
You or your staff, like many who are newer to technological advances, may not trust that technology will do an accurate job. Many have a hard time believing that technology can do a better, more trusted job than a human can.
Many have a hard time letting go of that control, knowing exactly what they are doing versus trusting the software to do the job with precision. The real fear is that these “potential” errors could lead to consumer complaints, financial inaccuracies, and legal issues.
However, automated AI systems are crafted to be highly accurate. Even more so than human intelligence, where errors actually run rampant. Additionally, you can configure automation software with predefined rules to validate data. This allows staff to remain in control and manage certain exceptions to the rules. Making adjustments when necessary.
Beyond the fear of inaccuracy that automation would “potentially” bring, some also fear technical issues. Sometimes technology wigs out on us or stops working entirely due to outages. There may be downtime to wait until a system is back up and running. Or the technology may cause errors that will make it hard on staff, and not more efficient.
However, the majority of automated systems today have a robust design with available support and unkempt maintenance processes. Ensuring that any technical issues are resolved in a timely manner so as not to disrupt a business’s workflow.
One of the final concerns surrounding the adoption of automated invoice processing is the actual implementation process. Implementation being time-consuming or disruptive to business workflow and customer payments are some merchants’ fear.
However, with proper planning, adequate training, and precise communication, the transition process to your new automated system for processing invoices should be a smooth one.
As you can see, there are responses to contradict the fears that merchants may have when it comes to implementing automated invoicing processes in their businesses. Automation is a great and, some would say, necessary tool to adopt in your business if you’re looking for growth, efficiency, and a seamless workflow.
If your staff is still offering their voice of fear, we recommend addressing these concerns to communicate proactively on how the benefits of automating your invoice process outweigh the (not necessarily legitimate concerns).
We will discuss all the benefits of automating invoice processes a little further down. This way you are well-equipped with the knowledge you need to support, train, and communicate with your staff about your advancements in the business.
If you’re experiencing some of these fears, let me put you at ease. Below we will go over the cost of manually processing invoices versus the features and benefits of automatic invoice processes.
Have you ever thought to calculate what it actually costs you to process a singular invoice? I am assuming, either probably not (as would the majority of the small business population agree). Or yes, and that’s what led you to this article.
With invoicing probably being a core function of your business, depending on the industry you are in–but assuming it is, as you have selected to read this article– you may think that there is nothing you can really do about the cost of invoicing. It is something that must be done. Therefore, it’s a cost you feel you are required to tolerate.
With your business, it may be true that you cannot ignore invoicing. But what if I told you that if you were to truly analyze your invoicing process, you might be shocked at the amount of money you may be throwing away? Money that you could put to better use elsewhere in your business.
Calculating the Direct Costs
To start, you can calculate the direct costs. Such as your current accounting software (if any), your credit card processing fees, and any invoicing paper, postage, and envelopes if you are using paper invoices.
Calculating the Indirect Costs
But have you thought to consider your accounting staff or accounts payable department (AP) and accounts receivable department (AR) salaries (if any) and if you don’t have a team to do this work, the sheer amount of minutes or even hours you spend processing your invoice details?
You might believe you have a pretty good idea about how much time you take to write an invoice. But, unless you actually have a stopwatch timing you down to the second you are most likely underestimating.
I am assuming you might feel as though it doesn’t seem like a lot of time, and that’s why you keep manually processing them. But you might find it surprising that it takes, on average, about 12 minutes for a singular invoice from start to finish. So, what does the time it takes to write an invoice look like as far as the expense is concerned?
How Much Does it Cost to Process an Invoice?
According to a 2022 report, the average cost to process an invoice is over $13. For small businesses, however, the cost is significantly more. Adobe researchers actually estimate the cost of processing a singular invoice to be between $15 and $40. If you think about this in terms of profit versus expenses, that compares to a single hourly salary.
So, to process a document manually to collect payment for a job, product, or service, a small business may be spending an hour’s worth of wages for something that could comparatively be done instantly with the right accounts receivable (AR) automation and accounting integrations in their platform. Something that would conversely cost closer to pennies.
Sure, 12 minutes probably doesn’t seem like a lot of time in the grand scheme of things. But depending on the number of invoices you need to process, it will surely add up.
Take this as an example:
Let’s say your business has to send out about 200 invoices a month. That’s 2,400 minutes. In other words, 40 hours. What those 40 hours are worth might significantly vary from one business to the next. However, 40 minutes is a full-blown work week. Just to send out your month’s invoices to customers.
40 hours is a week’s worth of pay. And if your accountant has a significant salary, you are eating into your profit. Or perhaps spending 40 hours on invoices yourself or using someone else in your company could simply just be a time-suck. It’s a week’s worth of time that you or a staff member could have spent doing something more tangible for your business.
Saving Time Means Saving Money Which Means More Profit
As they say, time is money. Because anyone’s time can be used toward productive tasks in their job or life. Your time is worth more than you may think. So if you’re spending your time doing something that could be done more efficiently in a different capacity, you are not only wasting your time, you are wasting your money tangentially.
How are you spending your time? If your time is money, how are you spending it? Are you spending it on manual or processes? Busy work? Innovation? Investments? Brainstorming? Growth projects? All these choices will play a role in how it affects your business.
Small, routine tasks definitely take time away from certain work that would require skills that only human intelligence possesses. AP automation will free up your time to dedicate to more important and demanding tasks.
In fact, recent studies from Levvel Research found that businesses that have introduced invoice processing automation have seen a 60% to 80$ savings or about $13 per invoice.
It removes the burden of manual invoicing because the invoice data generates and sends automatically. Once you decide to take control of your business processes, only then will you truly understand and see the growth and potential of your company.
Is Automation For Processing Invoices Just For Big Businesses?
You may think that automated systems for your business processes including your invoices are an expensive avenue to take. That this is something to be left to large corporations with big budgets and plenty of financial flexibility.
For bigger businesses, it can be a typical procedure to review daily tasks by monitoring various metrics. The results will help to uncover non obvious patterns that can be altered to increase efficiency in their workflow. Specifically with automation and even AI technology.
Small Businesses Can Also Leverage Automation For Processing Invoices
However, did you know that handwritten and manually processed invoices could be hurting your business? Manual work is probably costing you time, money, and resources that could be put to better use.
Sure, big businesses have even bigger budgets. Some of which they can designate toward their automation software tools. However, even with a smaller budget that your small business may have, deciding to adopt automated invoice technology will still be put to good use in saving you time and essentially through that, money.
Yes, there is a cost to utilize this type of service or to have a well-rounded payment processing company that offers this type of integration, but the benefits outweigh the cost, and the financial gain will show its face. In the following sections, we will discuss the key concepts and benefits that processing invoices automatically can provide your small business.
Say Goodbye to CSV Files
If you’re still on the manual accounts receivable train, you are probably very familiar with CSV files. My educated guess would tell me that you (as with most merchants using a manual method) are logging into your payment processing portal to locate your credit and debit card sales, downloading a CSV file, formatting it to match what you need for your accounting process or to upload manually to Quickbooks. This process alone could take hours.
And though you may think this is the easiest and only way for your small business to do its accounting, it is a common misconception. There are more efficient alternatives out there. Integrating automation tools into your QuickBooks accounting software is one way that ECS payments can help you develop seamless business practices for a more efficient workflow.
ECS Payments offer a well-rounded suite of payment processing solutions for your business. But what’s more, with ECS, you have built-in integrations for your accounting processes. From your payment portal, directly into your accounting system, ECS makes it easy to stay on top of your finances.
ECS can immediately reconcile payments for you, right into QuickBooks. No more downloading and formatting CSV files from your payment gateway to upload into Quickbooks again. We take all of your payment data from your gateway the minute the purchase is completed and upload it securely to QuickBooks.
What is GAAP Compliance?
Generally Accepted Accounting Principles (GAAP) are a set of guidelines and standards established by the Financial Accounting Standards Board (FASB). The FASB governs how merchants prepare their financial documents.
Compliance with GAAP principles is intended to ensure the accuracy and consistency of financial statements across all companies. GAAP accounting guidelines include how merchants measure their assets and liabilities, record their transactions, and report all financial results.
Is it Legally Required to Be GAAP Compliant?
If a company is a publicly traded corporation, they are required by law to remain GAAP compliant when preparing all financial documentation and statements. Conversely, privately owned companies are not required by law.
However, many will still choose to adhere to GAAP guidelines to not only be consistent in their books but to also show transparency in their finances. Which could really be a big help when it comes to taxes and audits, for the year.
Additionally, companies that adhere to GAAP principles can provide reliable and accurate financials to not only the IRS but to creditors when looking for a business loan or stakeholders and/or investors in their company.
Businesses that fail to be GAAP compliant can have resulting fines, penalties, and even legal action against them. Not only would they suffer the legal and financial ramifications. But noncompliance can also result in damaging a business’s reputation.
Built-in GAAP Compliance
With ECS’s accounting automation integrations, you can rest assured you will also have built-in GAAP compliance.
Our invoicing automation with built-in GAAP compliance effectively negates two operations:
- No more manually reconciling your transactions and payments
- No more paying for extra time with your company bookkeeper or your CPA to sort through the details to get your books up-to-date and in order with the right guidelines.
As a result, you will have more money and more time for everyone in your company, including yourself to do a more efficient job. One where the need is greater.
As you take back all that extra time, you will be able to pivot, scale, and grow your business’s bottom line. Repetitive tasks waste effort that could have been channeled more effectively into your business.
As a result, you receive payments faster, happy loyal clients, and stronger revenue. That’s right! With a stronger revenue, you actually will pay less, but accomplish much more all around!
Additional Benefits and Features of Integrated Invoice Automation
To provide a seamless workflow, automated invoice processing is a solution that can easily be integrated with your accounting systems through your payment processor, like ECS.
When you automate repetitive accounting tasks in your business such as data entry and reconciliation of expenses, profits, and settlements, you will see drastic positive changes in the structure of your daily tasks and business growth. The benefits of adopting automated invoicing include:
Automation eliminates the need for manual data entry and offers more time for better task management, growth, and innovation. Which creates a more efficient workflow and use of time.
Electronic automation also reduces the costs associated with manual paper-based invoicing, such as paper, printing, envelopes, stamps, and time to mail. Additionally, it reduces costs on staff wages or your time to generate invoices. Reduced costs mean more money in your profits and an allowance for better budgeting designation.
Accurate Data Management
Automated invoicing helps to better manage your data more effectively. Compared to manual data entry, there is less room for human error and discrepancies. By automating the process with AI, companies can ensure that the data is accurate and consistent across all invoices.
You can also integrate automated invoicing processes with purchase orders. This means that when you receive a paid invoice back from the client, the invoice software automatically matches it to the corresponding order.
All of these things can help to improve financial reporting and analysis and reduce the risk of errors. And of course, always providing accurate invoices to customers and reducing duplicate payments or payment requests. Negating any confusion on their bill.
Additionally, automation of your finances makes it easier to analyze the financial performance of your business and identify any areas in need of improvement.
Automated invoicing coupled with ECS’s electronic payment processing online allows for quicker fulfillment of transactions, reducing your payment settlement time for your services. Increasing your cash flow and availability of funds.
Data has shown evidence that customers will pay their bills faster when the process is easy. Automation will send your invoices in a timely manner, with accurate data, and a simple link to click and pay online. A simple process encourages your clients to pay immediately upon receiving the invoice message.
Secure Online Payments
ECS offers a payment vault within your virtual terminal to secure cardholder information. So they can enter a few options, and when it comes time to pay, they can select their choice of payment with a simple drop-down and no need for re-entering their information.
When customers can store account information and payment details in your system, its easy for them to pay their invoice in full with a simple click of a button.
Enhanced Customer Experience
Accurate, timely, and easy-to-pay invoices online give a more professional and positive customer experience for your clients. Happy clients mean loyalty and an increase in your competitiveness.
Manage Vendor Invoices
Not only does automated invoicing organize your customer invoices and payments, but it is also beneficial in your AP department (accounts payable) and procure-to-pay process. What could easily become a complex process of who’s paid, and who still needs to be paid, has been simplified. Especially for businesses that deal with a large number of different vendors.
You can manage all of your vendor invoices from a singular login in a centralized system. Paying your vendor bills on time and accurately will help strengthen your B2B relationship and establish a long-lasting and fruitful relationship.
Automated Invoice Approving
Lastly, some invoices require approval from multiple parties. This can become time-consuming and may even lead to some errors. If your invoice is in need of multiple approvals, ECS’s integrated invoice management system offers the ability to automate your invoice approval process. Set up your approval process with predefined criteria for a more speedy and error-free approval process.
Automation can improve your invoice processing workflow and be a game changer for your business in many ways. Overall, invoice automation can offer benefits to businesses such as improving their efficiency, generating faster payments, reducing costs, increasing accuracy, bettering the management of data, streamlining the approval processes, integrating with purchase orders, and most importantly, enhancing customer experience, which creates growth.
By automating the invoicing process through the utilization of digital technologies, merchants can focus on their core functions, such as delivering high-quality products and impeccable services to their clients.
Ultimately, it is an intelligent decision for your business that can deliver significant results along the way and really, in the long run. So remember, let invoices send themselves and let people do the work that only people can do.
If you’re looking to up your game in the business and create a truly automated and hassle-free payments process, ECS can help set you up with the right integrations for accepting credit card payments and processing invoices.