We all are familiar with the invoice. All of us deal with invoices during our day-to-day business. Many of us know about invoice processing. but, what is invoice management? This may be an unanswered question for many. So here is the answer. In the following paragraphs, we will be learning about invoice management.
Before moving forward it will be better to take a look at the basics.
An Invoice is a time-stamped document that records a commercial transaction of provision of some goods/services by one party to another against some amount. Invoice is drawn by the seller of goods/services upon the buyer for the same. Parties in an invoice can be individuals as well as businesses. From a next-door grocery store to an online purchase, we come across invoices as a buyer. Usually, invoices are not much important for an individual buyer acquiring goods and/or services on cash but when it comes to business, the invoice becomes very important. As with the other aspects of the business, most of the invoices are meant for a deferred payment/receipt. This makes it important for a business to properly manage the invoices in both roles, of a buyer and a seller.
In the case of businesses, the seller is mostly known as a supplier or vendor whereas the buyer is often referred to as an organization.
Invoice is an important document from both seller and buyer’s perspective. In business, most of the invoices are generated against deferred payments, that is why it becomes very important for a business to adopt proper practices of invoice management. Usually, a business is simultaneously acting as a buyer or a seller.
Invoice processing is the process an invoice goes through at the buyer’s end. It begins with the reception of the invoice and ends up with the payment of the same. Payable invoices are treated as short-term liability and recorded as ‘Accounts Payable’. Invoice processing can either be manual or automated. Depending upon the organizational hierarchy and workflow the process may be spanned to multiple individuals/desks/designations or may be dealt with by a single person. Core functions/elements of invoice processing are:
Now that we have a clear idea of invoice and invoice processing, let’s take a look at invoice management.
Invoice Management is a broader term that covers more areas in the invoicing domain that goes above and beyond conventional invoice processing. Invoice processing is the function of accounts payable performed by the buying entity whereas invoice management covers the functions of both buyer and the seller.
Let’s take a deep dive into the concept of Invoice Management
Invoice management is comparatively a new term but the practices it covers already existed. It is an umbrella term that covers almost everything done with an invoice within a business. Invoice processing is also a component of invoice management. Let’s take a look at the components of invoice management. We have divided these components into two major classifications.
From a seller’s point of view, invoice management components can be categorized as:
From a buyer’s point of view, the following are the invoice management components
In a more strict definition, Quotations, Purchase Orders, and Delivery Receipts may not be considered as a part of invoice management but for efficient and effective invoice management, it is a good practice to include those. A business invoice is incomplete without these supporting documents.
Automated invoice processing has already become a must-have for almost any business irrespective of its size and volume. The evolving business practices have created a demand for a unified invoice management system that is capable of handling the pre and post invoice processing requirements of a business. A complete invoice management system not only adds great value in terms of efficiency and cost-effectiveness but also enables the business to attain a new level of productivity.
InvoiceMate by MateSol is a pioneer invoice management system on blockchain that not only solves the legacy invoice processing issues but also addresses shortcomings of the conventional invoice processing approach. By utilizing contemporary technologies like blockchain and Artificial Intelligence, InvoiceMate brings trust and efficiency at all stages of the invoice journey. More about the features of this next-gen invoice management solution can be found here.
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