One of the primary ways a business brings in money is through invoicing. So, making sure they’re properly written, formatted, distributed, and accounted for is important for keeping revenue flowing and managing finances. But what happens when seemingly minor aspects get overlooked?
Skynova recently studied invoicing statistics from recent years to find out what invoice processing looks like today. Here, we’ll cover their most important discoveries, such as the time and labor costs of invoicing and how much of a difference invoice templates and automation can make, according to accounting teams.
The Costs of Invoicing
Skynova gathered invoicing statistics from businesses categorized by three sizes (listed here from smallest to largest, by number of employees):
- Small and mid-size enterprise (SME)
- Mid-market
- Enterprise
Most businesses they studied process around 500 invoices monthly, but enterprises seem likely to have handled the most. They tend to have far more employees than SMEs and mid-market companies, so their larger size probably means more invoice processing. But they often require up to six people or more for invoice approval, compared to other businesses (nearly half) that reported requiring just two or three people.
Many enterprises also said this process takes their accounting teams three to four weeks to complete. That’s far longer than the typical time reported by other businesses, 66% of whom said theirs require just five days or more per month.
However, that could be due to many businesses still using paper invoices, or the study’s finding that only 65% of companies have been using automatic data entry to save time. And only just over half of companies (52%) have received their invoices electronically, meaning the rest have had to enter and file the information manually.
Automating these processes not only saves time and employee labor, it can also reduce stress in your organization. One of the top consequences of a slow invoice process was overly stressed accounts payable teams, with the other being supplier relationship issues.
Invoice Payment Problems
It’s bad enough that invoicing takes such a long time to begin with. But when that’s compounded by late invoice payments, the costs can stack up even more. In the U.S., 39% of invoices were paid late in 2022. Most of the time (61%), it was because of errors on the original invoice, but sometimes, it could also have been due to customers never getting an invoice in the first place, which happened 11% of the time.
This illustrates the importance of ensuring invoices are properly tracked and worded to include all the necessary information. And this may be especially important for larger companies. Those with over 500 employees were the ones that most commonly had their invoices paid late. For more than a quarter of them (28%), those payments were more than 30 days late.
Since overdue invoice payments usually require accounting professionals to reach out to the other party (perhaps multiple times) on behalf of the company, this issue can cost businesses considerable labor and stress. Fortunately, many have made improvements to help streamline things; we’ll tell you how.
How To Improve the Invoicing Process
Keeping track of finances is one of the main purposes of invoicing, which explains why data analytics was a key focus of accounts payable teams in 2022. Skynova’s study found that this has been their top priority recently, alongside reporting. A similar number of businesses said it was automating certain accounts payable processes.
Some ways they’ve accomplished this are:
- Automating invoice approval and routing
- Automating the capture and extraction of invoice data
- Implementing electronic invoicing
- Implementing electronic payments
Taking the paperwork out of invoicing can save time, since paper invoicing requires manually scanning and filing documents. Considering more than three-quarters of accounts payable teams still process invoices this way, it’s a good thing that a third plan to switch to electronic invoicing within the next couple of years.
Another way to streamline the invoicing process is to use an invoice template. It seems simple enough, and it is. But by making sure every aspect is included every time — such as the invoice date, payment amount, and payment terms — you can save your business the time, effort, and stress of tracking down or relaying that information later on.
Interesting Related Article: “The Ultimate Guide to Invoice Matching: What is it, the process involved, and what to do if there are any deviations“