The 3 Problems with Manual Invoice Monitoring for Growing Businesses
The Institute of Finance and Management reported that human error is a perpetual threat in manual invoice processing. In fact, an astounding 3.6% of all supplier invoices contain errors in them. Manual invoice monitoring demands a great degree of attention to detail and care to ensure accuracy. While people often do their best, sometimes errors still slip through. To deal with the human error factor of invoice processing, getting help from an experienced bill auditing service is recommended. Let’s explore why outsourcing your bill auditing is a better solution.
How Important Is Checking Invoices?
Reports estimate that one in every ten invoices has some kind of error. However, businesses don’t detect half of those errors, and they carry out the transactions as usual. If you often have a cursory look at your invoices before approving them for payment, you are not alone.
It is possible to correct an error after an invoice has been paid. However, the effort it takes is much more than correcting it before making a payment.
If you or another person in your company is in charge of checking invoices for accuracy, how much time does it take? How many mistakes do you find? How would the labor cost affect your bottom line? You can easily see that if your business grows and the number of invoices increases, the time and effort it takes to detect errors in a few invoices will outweigh the benefits it brings.
What Does the Manual Invoice Checking Process Entail?
Most companies use the three-way matching process for manual invoice monitoring and checking for errors. This process involves checking the following documents:
- Invoice from the vendor
- Purchase order made by the company
- Receiving report which details the name, amount, and price of goods received by the company
Reviewers compare all the details across three documents to make sure everything matches. If there are discrepancies, the Accounts Payable (AP) department will contact the vendor to verify and correct any mistakes.
Most paper receipts or PDF files have to be processed manually so that all data is entered into an ERP system. During this tedious process, human errors can occur, especially when the number of invoices to be processed is high.
When Your Manual Invoice Monitoring Process Becomes Too Expensive
While it’s true that three-way matching works, it comes with lots of drawbacks. About 31% of all respondents in the Level Research’s Payable Survey 2020 said that manual invoice checking is one of the top AP pain points.
- Compiling a large number of documents is time-consuming. Reviewing them requires many eyes and a lot of attention to detail. If you want to speed up your AP process, manual invoice monitoring can slow you down significantly, especially when the majority of invoices are correct.
- As your business grows and the number of invoices generated increases, manual data processing can add a lot of complexity to the accounting process.
- In rare cases, errors still slip through a three-way matching process. It becomes difficult to detect them after that, leading to even bigger mistakes.
Invoice Auditing Services to the Rescue
Outsourcing your invoice checking can help you save a ton of time and resources because most auditing services make use of automation technologies to speed up the process. When you switch from a manual three-way process to an automated process, your company can process a large amount of data without any delay. This is because we eliminate the human factor in the equation. The invoices can pass straight through the AP process without any human intervention, saving you time and eliminating human errors.
For example, Grafton Group plc, an international distributor, switched from manual invoice checking to invoice automation. Then they were able to match 75% of their invoices automatically. With a turnover of over £2.2 billion a year, the number of invoices processed is high. But thanks to invoice automation, their invoice approval process was cut down to ten days, compared to 40 days using a manual invoice monitoring process.
It’s estimated that about 80% of all service and utility bills contain errors. Imagine how much you overpay for your utilities over the years if errors are not corrected. Since the problem comes from your electricity, water, sewage, telecommunications, and other providers over-billing you, the 3-way match will usually still match in the AP department. Because many businesses trust their utility suppliers, they simply make a payment without double-checking. It’s a common mistake among AP departments all over the country, costing thousands of dollars annually.
If you overlook the root of the charge, you are still overpaying even if your payables team processes the invoice as normal. Using invoice auditors will help you avoid this costly problem, saving you thousands of dollars annually.
Benefits of Using an Experienced Invoice Auditor
Some of the key benefits of switching to automated invoice processing through a service provider include:
- Better supplier relationships: When you can pay invoices faster, you’ll be on better terms with your suppliers.
- More time saved: An obvious benefit of outsourcing your invoice checking is to save time and money on human resources.
- Fraud prevention: Invoice auditors look at each invoice carefully to detect errors and overcharges.
When your business is growing fast, the last thing you want is to have your invoice checking process get in the way — or worse yet, get your invoices messed up. Contact us today to discover how our experienced invoice auditors can help solve your invoice checking problem. We can develop a solution tailored to your specific needs.