Invoice Processing

Accounts Payable Invoice Approval Process

When an accounting department processes payments, it may seem like a relatively simple process that does not involve a lot of red tape. However, there are some areas that can arise that warrants the need for an invoice approval processing system to be put in place. Putting an invoice approval system in place and maintaining it is a way that the accounting department can assist with a company’s overall internal controls and minimize over-payments.

What is an Invoice Approval and Invoice Approval Process?

An invoice approval involves the authorization of a check before it is approved for payment. Before the check can be approved, it must go through a verification process that often involves a variety of documents.

Invoices are paid for goods or services performed on behalf of the company. It’s also used to pay for on-going administrative expenses to vendors, such as rent or lease expense, telephone expense, business loans, insurance, and other business expenses.

The invoice approval process can often involve many different departments, as requests for payments are generated from different internal (as well as external) sources.

Various departments have their own workflow and procurement processes. For example, the sales department may require that some items are purchased by utilizing workflows within their sales and purchasing department. Sales orders may be fulfilled using inventory items currently on hand, whereas other orders may require that a new purchase be made to fulfill a sales order. Each of these methods could require approval for payment:

  1. A payment for inventory currently on hand that may still have an outstanding balance.
  2. A payment for the recent purchase made to fulfill the new sales order.

A different department may be required to purchase office supplies for the entire company, which would require a completely different workflow. That’s why it’s important for the invoice approval process to be properly integrated with other internal departments.

Why an Invoice Approval Process is Necessary

It’s important for a company to have an invoice approval process in place for a variety of reasons. For example, it is necessary because it:

  • reduces errors
  • reduces under, over, and double payments
  • reduces or eliminates payments for unauthorized products or services
  • helps to manage cash spending by allowing invoices to be paid based on the monthly budget
  • helps to the accounting department monitor due dates and reduce late fees
  • allows the payable department to take advantage of discounts for invoices with certain payment terms
  • prevents or reduces invoices from being overlooked and slipping through the cracks

In addition to the items listed above, the invoice approval process also allows companies to have checks and balances in place. Oftentimes, the accounts payables department is the last line of defense with respect to ensuring that all invoices are processed with accuracy.

Many people do not consider all of the areas that could be impacted without having an invoice approval process in place. Accounting departments that do not have an invoice approval process in place tend to have less control of their cash flows.

Create a Paper Trail

When processing payments, it’s very important to create a paper trail. In doing so, it allows management and members of the accounting department to visibly see each step of the approval process. It also allows them to determine whether or not a step has been overlooked and missed altogether.

When invoice approval systems are set in place, it makes it easier to refer back to any part of the process should additional information need to be verified. This is particularly important during an audit. It allows companies to refer directly to various documents upon request.

Enhancing and Streamlining the Invoice Approval Process

Managing and processing invoices for approval can be streamlined if the following three areas are implemented:

  1. Automation
  2. The use of Purchase Orders and Receipts
  3. The use of Contracts

Automation

Whenever automation is added to a system, it speeds up the process significantly. It allows others to access information at various stages of the invoice approval process. Having an automated system in place also reduces the accounting staff from being interrupted by other staff members, vendors and independent contractors regarding the status of outstanding invoices.

When considering automation to approve invoices, features such as email notifications, the ability to upload and download documents, and the ability to view updated information through computer software programs also enhance the overall invoice approval process as well.

The use of Purchase Orders and Receipts

When setting up automation procedures, you can also include an automation process to generate purchase orders then match them to the proper invoice. Whenever a purchase order has been generated, its an indication that the purchasing department has already approved the purchase and thus the purchase order should be a means to verify authorization for payment at this stage of the process.

Concerning the use of receipts, just as invoices can be matched up to purchase orders, invoices can be matched to receipts as well. Examples of receipts include items purchased using a credit card, plumbing services, computer repair or other services not normally utilized on a regular monthly basis. Although these receipts should still go through the authorization process, automating the system can create a paper trail in addition to significantly reducing the overall invoice approval process.

The approval process can be set up in such a way that receipts that are matched to invoices can be processed a lot faster than invoices without a receipt.

Contracts Agreements

A contract agreement is another source that is used to determine how much a partner, independent contractor or other business associates should be paid. It should spell out the terms of the agreement, which should then be used to create an invoice. The contract-based invoice must also go through the approval process. Based on the type of industry, some agreements involve the payment of royalties.

Additionally, invoices that are less than a certain dollar amount or threshold can sometimes bypass the approval process altogether. For example, invoices that are less than $50 may not need to be approved and can be submitted for payment right away.

What’s Involved in the Accounts Payable Invoice Approval Process?

The invoice approval process involves the accounts payable department is presented with an item that requires payment but that must first be verified to determine it’s legitimacy. Sometimes invoices get crossed in the mail and duplicate invoices are mailed out. Duplicate invoices are one of the major causes of overpayments, which is why it is important to cross-reference invoices prior to making a payment.

After an invoice has been verified and approved for payment, it can then be scheduled for payment. Scheduling an invoice for payment takes place by adding the item to the accounts payables open invoice or aging report. After the invoice has been approved payments can be made during certain times of the month or upon receipt. Payment due dates depend on the accounting policy at each company.

Processing and Approving Rush Invoices

Invoices that requires payment right away may have a different verification process to expedite the payment. A different system could be processed to move a particular request for payment, further along, to ensure the payment is made on time as requested.

How to Reduce Bottlenecks

Sometimes the invoice approval process could become bottle-necked. When this takes place, there should already be manual systems in place to keep processes flowing.

Those who work in the accounts payable department should continue the overall approval process while maintaining efficiency.

To conclude, when finalizing your invoice approval process, it should be designed to implement internal controls while setting up systems to expedite the overall approval and payment process. It should also be set-up based on workflows and how you run your business in general.

How To Improve Your Accounts Payable System

You can’t run a business without spending because it comes with the package. You’ll need to buy stuff to fully operate your business. The majority of suppliers provide invoices whenever you purchase from them. Unfortunately, this can get chaotic along the way especially during busy days. How do you stay on top of things? If you don’t manage your invoices well it could result to unnecessary fees, late payments and quite possibly broken relationships. Avoid these by learning how to improve your accounts payable system.

The following are important steps that you need to do so you can finally take charge of your payables.

Choose To Go Paperless

Gone are the days when business owners had to manage piles and stacks of paperwork because now that we are living in the digital age, you can go paperless and still be able to organize everything. Electronic bills are just the same as paper, only they make the process ten times easier. With paper, there’s a possibility that it can get damaged or lost but with online billing, the invoices will always be available thereby lessening the chances of late payments and lost hard copies. When a vendor asks if you want paper or electronic invoice we encourage you to take the latter.

Create A System For Your Accounts Payable Workflow

The secret to an effective accounts payable system is repetition. Create a system that will allow your business to manage your invoices well from the moment you receive the invoice until the time you are able to pay for it. Find a place to safely keep all of your invoices and streamline them according to priority and date received.

Make Reminders

Busy people can easily get sidetracked and that includes you, especially during peak season. To keep all your invoices organized we suggest that you set up reminders so you can pay for everything before their due dates. These reminders will also let you know how much money you need to prepare for the payments. A majority of business owners use a calendar to organize their invoice dates, creating alerts to let them know when the due date is near.

Document Your Data

It is very important that you develop the habit of documenting your data so you can keep track of your invoices. As soon as you receive a bill, document it and save it in your file online. Examples of such documents include receipts, notices, purchase orders and of course, invoices. Saving these documents will keep you updated on how much money you are shelling out and who you are paying.

Make Sure All Contact Information Is Updated

At some point you’ll need to communicate with your suppliers and your vendors. The last thing you’d want is to spend time searching for their contact number. To make sure the process is smooth and efficient we recommend that you regularly update all of your vendors’ and suppliers’ contact details including their phone numbers, mailing addresses and their email addresses. Keep all these pieces of information in one place. Similarly, your vendors and suppliers also need to reach you so make sure that you inform them if you plan to change numbers, email address and mailing address.

When you are operating a business, especially if you have been in the industry for quite a while, you know that managing invoices and making payments can be burdensome. If you do not have an established system in place, it can get crazy and you might find yourself paying for fees as a result of delayed payments. If you follow these tips mentioned here you can take it easy and feel less stressed knowing that everything is paid for before its due date and every receipt, purchase order and invoice is saved in a designated online folder.

The Benefits of Using a Statement Processing Company

Congratulations, your business has had rapid growth in the last year, and you now have more customers than ever before. The downside of your success is making sure all those customers pay on time, that is if you can get the billing done on time. What is the solution to this welcome, but complicated issue? Using a statement processing service. A statement processing service can help your company not just with getting statements out but can improve other areas as well.

Save on Staff and Operations Costs.

When you outsource your statements to a processing service, you are freeing up valuable employee time and costs. Statement processing services allow you to assign employees to other areas where their skills can be a more significant benefit to your company.  They can focus on the company’s core products or services. Using a statement processing service also allows you not to have to employ a larger staff to process statements, meaning a more considerable profit margin for your company. It also lets your accounting department focus on other details having been liberated from the duty of processing statements.

More Statement Options.

A statement processing service specializes in customizing statements to be what a company wants. They have a number of options available that your company would not be able to offer without using a statement processing service. They can produce statements with colors, font, logos and language all in line with your company’s brand. When your statement is in line with your company’s branding your are building customer recognition with has been shown in numerous studies to lead to long term customer loyalty. A statement processing service can also include inserts which can bring in higher sales. When you add a coupon or loyalty card with the statement is likely to bring a customer back to your business because of a perceived deal. You can include an insert which promotes an upcoming event such as a sale for which the customer may not have seen an advertisement. You can insert a newsletter that tells what is going on at the company and makes the customer feel as if they are an insider.

A customer receiving a statement on time is another excellent way to build your company’s brand. If a customer, especially if that customer is a business, expects a statement on time, it can be frustrating when it shows up months later because your accounting department couldn’t keep up with the work. Customer care has been shown to be one of the most identified aspects of a company’s brand, getting the correct statement to the customer on time is an excellent way to connect your brand with taking care of a customer’s needs.

Increase Traffic with Statements.

A statement processing service can actually help with your company’s SEO efforts. Putting your company’s web address on both the statement and the envelope that is sent to the customer can drive traffic to your website. Be sure that your website has engaging content and eye-catching graphics to get the maximum benefit of listing the site in a statement. If your homepage is not interesting enough and to the point, customers will only stay a few seconds and won’t visit any other pages on your website. You can also drive traffic to your company’s social media accounts by including icons to the various platforms it uses. Again, make sure that you have interesting content on your social media accounts and include links to your company’s website, perhaps a product page if the post is related to that subject.

So, if your company has grown recently, and your accounting department is overwhelmed by the increase in their workload, alleviate the problem by outsourcing your statement processing; your bottom line and brand can both benefit.

Five Reasons Your Company Should Outsource Invoicing.

If you are dealing with a large customer base, you know the difficulty in getting invoicing out every month then outsourcing your invoicing makes sense. You may still be leery of using an invoicing service from past experience. In the digital age, there is no reason to fear invoicing services, in fact, larger companies should be embracing them. Here are five reasons why outsourcing can benefit your company.

Invoicing Services Know the Rules.

Your company must stay on top of compliance when it does its own accounts payable department. Regardless of it’s a state-specific such as privacy laws, or federal law such as HIPPA, your company should be sure that your company is following regulations. When you have a large number of customers, it can become a gargantuan task. Outsourcing your accounts payable process, ensures you do not violate any state or federal laws. Experts you are entrusting your invoicing to know the laws more intimately than a regular accounts payable employee at your company does.

Invoicing Services Get Your Company’s Invoices Out Faster.

An invoicing service is more efficient than your accounts payable department. They are specialized in processing invoices, that means they are in your customer’s hands faster, and your company gets paid more quickly. Invoicing services aren’t using the same antiquated equipment and methods that your company does, that is why it’s essential to make the switch. Getting invoices out faster also increases customer satisfaction, when a customer has the invoice paid, and off their books, it means they can focus on other issues.

Invoicing Services let You Reduce Costs.

Using an invoicing service means that you don’t have to increase your payroll to get invoices out. It also lets you save money on equipment required to get invoices out in a timely fashion and maintenance on that equipment.

Invoicing Services Means Increased Employee Productivity.

Employees are the lifeblood of a company, and when they are tied up with unnecessary tasks, their productivity goes down. Employees steer your company toward a unified goal, making sure things get done. Freeing your employees from processing invoices means that they can be assigned to other areas where they are the most needed. It eliminates tying up your employees with unnecessary meetings and training. They can spend more time collecting from delinquent accounts and focusing on relationships with your vendors.  If your company is seasonal, then you won’t need to hire extra employees just to deal with invoicing, you can focus on hiring for manufacturing or the service your company provides.

Invoicing Services Can Eliminate Mistakes and Protect from Downtime.

You’ve heard “to err is human,” and that applies to your company’s employees as well. Automated payroll processing eliminates under or overcharging on an invoice, or misstating what a charge was for. Processing services have the automation software to ensure there are no mistakes in invoicing. You can also rest assured knowing that employees being out on vacation or sick won’t slow down invoicing. Invoicing services also protect you from not being able to bill from a disaster such as a fire, flooding from a storm, or roads made impassable from snowstorms. Your invoicing will go out at the time when you will need it the most.

These are just a few of the many good reasons to switch from having your company do its own accounts payable to having an invoicing service handle your company’s substantial billing. Contact BMS Direct today for more information!

Why Your Company Should Use a Statement Processing Service

You can save your company a significant amount of employee time and operational costs by outsourcing your statement processing. Your company’s accounting department won’t be saddled with the responsibility of processing and mailing out statements. Once the transition has been made to a statement processing service, it should bring about noticeable savings.

Not only does using a statement processing service save your company money, but it also allows the company to focus on its core services or products.  It also enhances your company’s brand when customers receive easy to understand statements that arrive consistently on time. Statements that come late and are not clear on details can be a frustrating experience for customers. One of the most consistent complaints by consumers is billing problems.  For many customers, statement issues can be enough of a headache that they choose to seek one of your competitors for the same goods and services, even if it means paying more. Conversely, when a customer receives a statement on time, it enhances customer satisfaction rates.

Better Statement Options.

A statement processing company can create a wide variety of statements. They can be specialized as to the product or service and their appearance. A typical accounting department will not produce a statement with colorful, eye-pleasing graphics. They can also incorporate branding into the statement by using colors, language, font, and icons that communicate what your company is all about.  Attention-grabbing marketing inserts can even be included with statements to make customers aware of events or goods and services your company provides of which they may not have known existed.

Statements can also drive traffic to your company’s website and social media accounts by including the web address of your companies site and including the icons for social media on the envelope or statement itself. Marketing departments dedicate a substantial portion of their budget in Pay Per Click ads on search engines in an attempt to persuade customers to visit their website, including the address on the statement is an easy, low-cost way to get customer attention.

If your company has a sub-company, statements can be produced separately for each company which will make auditing much less of a chore at the end of the year.

Savings on Postage

Because statement processing services mail in bulk, they get better rates on postage.  If your company has a large number of customers, the money saved on postage can quickly add up and increase your bottom line. Most statement processing companies will give you the option of holding marketing materials until the next mailing if it will increase postage costs.

More Security.

When a statement processing service runs billing, you can be sure that their security is much stronger than that of a small or mid-sized company.  You can rest assured when a statement processing service runs your billing that your customers private data will remain secure from hackers. The statement processing service is also familiar with medical privacy laws such as HIPAA and can make sure that statements don’t violate those laws. Outsourcing to a statement processing service helps your company to mitigate risks involved with customer privacy. Statement Processing companies are continually upgrading their security measures and hardware technology so they can stay five moves ahead of hackers.

Timely Statements Means Increased Cash Flow.

If your company is always behind on billing, you know that it can create capital shortages that can interfere with things such as expansion, equipment repair or replacement, or employee salary increases. Using a statement processing service means that billing will go out on time, which means your company’s customers can pay you faster.

When the costs and effort of your company sending out its statements is taken into account; it makes sense to outsource it to a statement processing service.

Solutions to Cut Municipalities’ Costs

“We’re Listening” – Needing Solutions to Cut Municipalities’ Costs

Counties throughout the US are hearing the same refrain- CUT costs, Create a balanced budget. Cumberland County PA Commissioners have gone one step further. They have gone online asking residents to take a survey seeking input on cutting costs and improving county government.

Pet Licenses onlineIn looking at mandated pet licensing program, we have noted the substantial benefits to pet owners, and the pets as well as the safety of the general public. Looking from the county’s perspective at the efficiency of pet licensing programs, there is much room for improvement. The pet licensing process involves: notifying owners to license their pet, processing pet tag purchases, collecting and verifying vaccination data, remitting vaccination data to appropriate locality, inputting this data into a system, and easy, immediate access for administrators and Animal Control. For many municipalities this process is done piecemeal; it is time consuming, not efficient, there are inputting errors, no real-time reporting of revenues and licensing volume, and no easy access of data.

When calculating the municipalities’ expense for delivering this service; consider the tasks involved in the pet licensing process, and consider the cost to the pet owner for a tag ranges from $5- $25. Results realized by municipalities for providing this service, is a projected loss on each issued dog tag.

 

 Are You Listening? Attention Municipalities: “We have listened to our clients (municipalities/ counties) and developed Petztrack as an online solution to simplify and manage pet licensing and vaccination data within municipalities. We heard your pain and targeted ways to cut costs and deliver more effective services to your residents. Petztrack, an intuitive new web application to meet the ongoing pet licensing requirements of municipalities throughout Virginia and the US will save time and money, allowing employees to focus on critical work while reducing overall costs.”  ~ Vernon Berry, Vice President Sales & Marketing, BMS Direct

10 Steps to Optimize Invoice Processing [Infographic]

Providing value to its clients has been a priority of BMS Direct. Utilizing their state-of-the art equipment BMS customers receive an advanced invoice processing service that delivers accuracy and productivity.  James E. LaPrade, Sr. President, BMS Direct explains the value to BMS clients.

“We have had a number of client requests over the years to outline how our invoice processing services increase efficiencies and reduce costs. This infographic simplifies the 10 steps BMS Direct utilizes during the production process to ensure our clients’ invoices and statements are processed in the most efficient manner.  As an added benefit, the utilization of our invoice processing services will increase cash flow for our clients. I look forward to learning how our services may help your organization.”

10 Steps for Optimizing Invoice Processing

10 Steps for Optimizing Invoice Processing

With regard to accuracy and efficiency, BMS Direct Vice President, Leif  Aagaard, Jr. explains the expectations of BMS customers,

“Over the years, the accuracy and efficiency of our invoice processing service has been refined to ensure 99.9% accuracy with each mailing. Our SSAE 16 compliance guarantees the privacy and security of your data while our state-of-the-art equipment ensures the most cost effective data processing services obtainable.”

For your convenience, we have also created the 10 Steps to Optimize Invoice Processing [Infographic] in a PDF file you can download. For additional information on our invoice processing services or to find out how BMS can help your organization please contact us.

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