Setting The Right Foundation An SME Guide To Invoicing

For many founders and leaders of SMEs, setting up internal policies and processes are often the last things that they want to do. Most company leaders prefer to focus their time and energy on building their business and increasing revenue. Having to establish policies and processes can come off as somewhat administrative and not the best use of their time.

- Nick Evered

For SMEs in particular, one of the key areas that these businesses often overlooked is invoicing, with majority of these young enterprises starting out with manual data entry processes when it comes to updating their financial spreadsheets. In the early start up days of a company, it is relatively easy to keep track of invoices with just two or three vendors. However, the limitations of the spreadsheet become inherent when the business expands rapidly and ad hoc expense decisions need to be made on the spot.

While SME owners often do not anticipate getting sucked into the invoice deluge, setting up the right invoice management system automatically helps businesses to streamline and operate more efficiently.

THE HIDDEN COST OF INVOICE MANAGEMENT

The most common challenges for SMEs in managing invoices are lack of visibility into approvals and cash flow, misplaced or missing vendor invoices, duplicated payments and late fees. However, for companies that do not have an automated, easy-to-use invoice management system, the time-consuming and manual nature of the invoicing process usually frustrates finance and accounting teams, and leaves vendors with a less than desirable experience.

According to Concur Invoice data, a typical SME processes approximately 450 invoices in a busy month, and experiences an invoice duplication rate of about six duplicate invoices monthly. The average value of a duplicate invoice received is $2,034. That amounts to a total potential outlay of $12,000 per month if each duplicate invoice were to be paid in error.