According to a survey by Wax Digital, 60% of corporate accountants and finance staff hate dealing with supplier invoices. 70% of them find management laborious and time–consuming. This can lead to late payment.
Yet paying your business partners on time remains the foundation of any good relationship. It’s also a requirement that companies must respect.
Poor handling of supplier invoices also exposes you to the risk of fraud and, above all, damages your brand’s reputation. More and more suppliers will be reluctant to work with you. This means fewer supplies, dissatisfied customers and, ultimately, a drop in your sales. It’s therefore important to take a closer look at supplier invoice management to avoid this kind of inconvenience.
- 1 Late payment
- 2 Fraud risks
- 3 A poor company reputation
- 4 Unproductive staff and customer service
- 5 5 tips to improve your supplier invoice management
- 6 Digitize invoice entry and approval
One of the primary risks associated with poor supplier invoice management is late payment. The consequences impact both parties: the supplier and your company.
Impact of late payment on the supplier
¼ of business bankruptcies are the direct consequence of late payment. If suppliers have difficulty collecting their invoices, they can find themselves financially crippled. The risk is even higher with small and medium-sized businesses, which do not have substantial financial resources at their disposal.
Impact on your business
For your company, delaying supplier payments compromises your accounts payable. Your assets will not reflect reality, which can create problems when making strategic decisions.
It can also have an impact on your validation and procurement processes. An unpaid supplier may decide to freeze its services to your company. If it’s your raw material, your entire production and marketing chain will be affected. Customers who can no longer be satisfied will turn to the competition.
In the event of repeated late payment, the supplier may decide to stop offering its services. You need to find a new, reliable partner and build a relationship of trust.
7 out of 10 companies are subject to fraud attempts. 54% of these attempts turn out to be fake supplier scams, and may even originate from within your company.
For example, fraudulent transactions presented as real may be processed by a member of the accounting team. He or she may also create a false supplier account and grant regular payments to himself or herself.
You also run the risk of double supplier payments. A supplier who has not been paid on time may send his invoice back. If invoices are poorly managed, you may end up paying the same partner twice. The invoice handling process is therefore essential to the smooth running of your business.
Not only does this mean a loss of money for the company, but you’re also sending the wrong signal to the supplier, who may take advantage of this malfunction. It’s also a waste of time for your staff who process the invoices. They then have to try and figure out where the extra payments went, which reduces their productivity.
A poor company reputation
Poor management of supplier invoices damages your company’s reputation through :
- Late payments.
- Payments from the wrong supplier.
- Invoices not found in your system.
Your partners can quickly spread the word and blacklist your company. If they publish negative reviews online, you risk losing customers. You’re breaking historical ties with your suppliers, and your competitors may use this as an opportunity to win some of your business. Your company’s survival is at stake.
A bad reputation will be difficult to deconstruct in the long term, and may prevent you from attracting talent to your company. It will be difficult for you to sign a contract with another supplier, or to conquer new markets.
Unproductive staff and customer service
Poor management of invoices from your suppliers puts undue stress on employees and customer service. When the company is at fault and payments are late, your partners contact customer service.
Your employees have to do damage control and engage in delicate discussions, which can have disastrous consequences if they go awry. These situations increase your team’s stress levels and lower their morale. They spend less time on activities that add value to your business.
Late payments, duplicate invoices or settling with the wrong partner can increase the burden on the accounting department. An overloaded team can lead to delays in payment deadlines. This stressful way of working puts accountants on edge and leads to poor productivity and employee burnout. Stressed employees are likely to quit your company.
5 tips to improve your supplier invoice management
Supplier invoices are a tedious task for the accounting department of even the biggest companies. Small errors can lead to major inconsistencies at all levels. This translates into wasted time and money, and even legal complications for your organization: the law requires supplier invoices to be archived for 4 years. Here are 5 tips for improving this aspect of your operations.
Digitize invoice entry and approval
Do you use Excel to manage your supplier invoices? You’re not immune to manual data entry errors. Put an end to manual invoice processing and opt instead for a purchasing management tool like Weproc to guarantee a better management process. Your team uploads invoices, and the relevant information is transmitted to authorized managers at the click of a button. Each employee can also monitor invoice status in real time. Thanks to our e–invoicing software, you’ll benefit from considerable time savings on processing times.
Limit duplication and fraud
It’s hard for your team to spot a fraudulent invoice, especially if you deal with several suppliers.
With automated invoice management, each invoice remains linked to the purchase order. After payment, the invoice is no longer identified as pending.
Speed up the expense approval stage
Another cause of delayed payment of supplier invoices is the large number of people involved in the decision-making process. The more emails you have to exchange, the less efficient your management becomes.
With SRM, the decision-maker is informed of each new supplier invoice and can approve its payment with a single click.
Simplify workflows for accounting staff
Some SRM systems feature an optical character recognition (OCR) function. This automatically detects and copies text in your supplier invoices. This saves time for your team, who can track the progress of invoices.
Employees therefore have relevant information for suppliers who want to know the payment status of their invoices.
Create an invoice management checklist
Develop, implement and enforce a “No Order, No Payment” policy, with detailed descriptions and exceptions to the rule. Provide answers to frequently asked questions and a protocol for dealing with invoices that violate the rules. Keep everyone in your organization, as well as your suppliers, up to date on the latest version of this policy at all times.
Suppliers are the backbone of your business. Properly managing their invoices guarantees a healthy and lasting relationship, and can prove to be a strategic axis in supplier relations. You avoid potential legal sanctions, and protect your employees and your reputation. A purchasing management tool facilitates the entire purchasing process, from requisition to order placement.
Want to learn more about our procurement management software Weproc? Contact us or request your free 15-minutes demo below!
Weproc is a SaaS software specialized in digitizing the procurement process of companies. From purchase requests to supplier invoicing, through the validation process, Weproc is designed to simplify the purchase management of SMEs and mid-sized companies by centralizing all purchase-related activities.