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Before taking a look at the features of a perfect invoice management system, let’s go through some basics at first.
An invoice is a document containing a record of a transaction between a buyer and a seller, about the trade of goods and/or services. Invoice is drawn by the seller upon the buyer of goods/services. Invoice is among the most important documents for most businesses. Every business is involved in buying and selling goods or services. This means a mandatory interaction with invoices.
Almost every business comes across two types of invoices, inward and outward. Invoice can either be cash or credit (future payment). Depending upon the nature and size of the business, the invoice volume can be different, but every business dealing with a significant number of invoices needs to adopt some invoice processing mechanism, this becomes even more important for the invoices with some future date of payment.
Conventional accounting systems, though record invoices but lack proper invoice processing capacities. For proper invoice management, the organization needs a proper invoice processing system in place. Invoice processing can either be manual or automated. For most businesses with a significant number of invoices, manual invoice processing cannot serve the purpose.
The automated invoice processing is called ‘Invoice Automation’. The whole ecosystem of invoice life is known as ‘Invoice Management’. There are many invoice management systems available in the market but the basics of these systems are mostly the same but there are some key features that make some of those solutions to be better than the rest. Let’s take a look at eight features of an ideal invoice management system.
Note: Most of the scenarios discussed here are assumed to be involving the credit invoice method
Visibility & Trackability
Cross Organizational Collaboration
Onboarding sometimes called vendor onboarding or profiling involves creating the profile and accounts of the business vendors and customers. It includes the necessary business information of the other parties. It usually includes business contact, account details, and other profiling information required for future reference. This information is very important for contact, correspondence, and payment processing.
Workflow is an essential component of a good invoice management system. As different organizations have different workflow mechanisms, so implementing a default model is not a good approach. There can be multiple people involved in recording, processing, approval, verification, and clearance processes and the number can vary from an organization to another. So a good invoice management system should be capable of allowing customization of workflow.
Capturing, recording, or entering the invoice is the first and a very critical component of an invoice management system. It is where most of the initial errors can happen. There can be several ways of capturing an invoice like manual input, scanning, optical recognition, email, or from another integrated app. The process of capturing the invoice should be very accurate as it provides the foundation for the whole invoice management system.
Acquiring data is one thing and effectively using it is another. For an efficient invoice management system, it is necessary to make all the required data available for the concerned people. Only this way the proper invoice processing can be ensured. It should be properly and safely stored and should be available for retrieval, processing, and collaboration throughout the ecosystem. This is very important for financial decision-making and analysis.
As a majority of the invoice management systems besides being a system on their own also work like an addon or a plugin to the existing legacy accounting system or ERP, so it becomes very critical the way they interact with these systems. There needs to be bi-directional communication with the legacy systems so that data can be sent and received as per requirement. This integration is very critical to ensure the automated processing of an invoice.
For a good invoice processing system, visibility, transparency, and trackability of the invoice is a must. All the concerned people should be able to track the status of invoices to take relevant decisions and steps. The vendors should also be able to know about the current status of their drawn invoices to the principal. It is very critical to ensure the quicker processing of invoices by avoiding unnecessary procedural delays. For this, a transparent, visible, and track/traceable journey of the invoice is a must.
In many cases like non-profit organizations, aid agencies, donors, trusts, and many other scenarios, there can be more than one organization or entity involved in the processing of the same invoice. In the case of invoice financing blockchain, they can be financial institutions. A good invoice management system should be able to give sufficient controlled access to third parties involved in the process. They should be able to perform their assigned functions without risking the exposure of critical data.
An effective invoice management system is incomplete without proper payment processing options. Payment processing can vary from one organization to another. It can involve multiple channels with multiple levels of complexity, from a simple pass-on to the legacy accounting system/ERP to a system involving multiple payment gateways on its own. Bank account, Payment Wallets, Cards, and Crypto Wallets are a few examples of payment gateways.
Many invoice management system /processing solutions available in the market may be lacking some of these components but the growing requirements of modern business requires all of them to attain maximum efficiency. If you are looking for an invoice management system, you should look for all the above features.
InvoiceMate offers a comprehensive invoice management suite that offers all the above features. You can have an overview at the following links
InvoiceMate is the world’s first blockchain-based invoice management system that incorporates all the goodness of blockchain in a trustable solution that brings a lot of value to the business.
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