Even with all the technology today, many startups still struggle to handle and pay their bills and invoices. Some companies are stuck using paper invoices and doing things manually. While many payments are digital now and data entry can be automated, there's still a lot of paper receipts and bills for organizations to deal with.
For those still using manual invoicing, it’s not unusual for invoices to get lost in the mail or buried in old email threads, disappearing forever. Missing, lost, or wrongly calculated bills and receipts are a significant pain point for business owners, especially when they don't have an optimized filing and processing system.
Automated invoicing can help you eliminate these challenges by generating, sending, processing, and managing invoices using digital invoicing software. It can also streamline your accounts payable and receivable workflow by increasing efficiency and accuracy.
In this article, we compare the pros and cons of manual versus automated invoicing and explore the advantages of automated invoicing for startups.
Why Is Automated Invoicing Important?
When mistakes and delays happen in invoice processing, it hurts your bottom line and tarnishes your reputation. Frequent errors and payment delays could strain vendor-supplier relationships, causing you to miss out on discounts and high-quality supplies.
Automated invoicing is crucial for startups and fast-growing businesses because it helps speed up payments, reduces processing times, boosts productivity, and eliminates manual errors.
Another massive benefit of automated invoicing is that you can schedule invoice payments in advance. This frees up time and resources and relieves you from worrying about who needs to get paid every month.
Invoicing Methods: Manual vs. Automated
Before we delve into the benefits of automated invoicing, it pays to understand the difference between manual data entry and automated invoicing methods.
Accounting team members perform each task manually. It usually involves the following steps:
- Receive invoices from vendors either as paper-based bills, or PDFs attached to emails
- Process the invoice and file a copy in the filing system
- Send the invoice for approval to the business owner or team manager
- Once approved, make the payment to the vendor
Automated invoicing uses digital business systems and specialized financial software to create, send, track, and manage invoices without human intervention.
Though there are many different automated invoicing solutions, they typically work the same way:
- Configure the software to align with your business's specific requirements.
- Capture data from paper-based bills, receipts, and invoices. You can use tools like OCR, machine learning, and QR code readers to extract data from physical and digital invoices seamlessly.
- After data extraction, the invoice processing software validates the information. If the software notices anomalies, it notifies the corresponding accounting team member for manual intervention.
- The automated invoicing software integrates seamlessly with your enterprise resource planning (ERP), customer relationship management (CRM), or other online accounting services and sends the electronic invoice to the correct team member for approval.
- Once it receives the approval, it releases online payments to the vendor.
Benefits Of Automated Invoicing
Automated invoicing handles every step, from data extraction to payment options, with minimal to no human intervention.
This capability offers businesses many benefits. Check them out below.
Time And Cost Savings Through Streamlined Processes
Automated invoicing reduces your team's time and effort in generating, organizing, and processing invoices.
Removing manual data entry and paper invoices allows employees to have more time for important tasks. Additionally, businesses can save money by using fewer resources.
Enhanced Accuracy And Reduced Human Error
Entering data by hand can lead to mistakes like typos, wrong calculations, and repeating or wrong entries. This can cause problems with billing and make customers unhappy.
Automated data entry avoids human errors as it relies on programmed algorithms to create precise results.
Improved Cash Flow Management And Faster Payments
Modern bookkeeping software automates the invoicing process, helping businesses easily send out invoices quickly, which means clients get them faster.
This speeds up payments, reduces accounts receivable, and helps manage money better. Also, automated accounting systems can send out payment reminders to clients, reducing the chances of late payments.
Ensured Compliance And Simplified Auditing
Compliance with tax regulations and other invoicing standards is critical for any business. Manual invoicing processes can make staying up-to-date with the latest changes challenging.
Automated invoicing systems are consistently updated to adhere to legal requirements, ensuring compliance and simplifying auditing.
Seamless Integration With Other Automated Business Systems
Automation allows you to smoothly connect your online invoices with important business software like accounting, CRM, ERP, and inventory systems.
This linking avoids copying things twice and makes a better, more organized financial setup for your business.
Implement Automated Invoicing In Your Business
Elevate your startup with the power of automated invoicing.
You’ll be able to say goodbye to mistakes, boost accuracy, and keep your cash flowing smoothly.
Many successful businesses are embracing automation to enhance their operations. The boost in efficiency and productivity is a clear advantage for those aiming to excel.
So, why wait? Unleash your startup's potential with accounting software and take it to another level with a financial operations platform.
your business in our interactive demo!