Top tips for improving your invoice process

Senior Product Marketing Manager

According to Basware’s SMB Finance research, 51% of SME owners in Europe and 61% in the US believe finding new markets and customers is the greatest challenge they face in the challenging economic climate.

Yet, the research also reveals that SMB employees are currently spending an average of two days per month on financial processes – tasks which may be completely unrelated to their role. This resource drain appears to be down to inefficient financial processes and manual systems that are preventing small businesses from transacting successfully with suppliers and buyers, issues that need to be addressed if the required growth and a healthy cashflow is to be achieved.

Basware’s SMB Finance research surveyed 558 business owners and 1,368 employees with financial responsibility within small to medium enterprises. Here we share key insight from the research, and take a look at the measures that SMBs can take to ensure that their invoice processes are a help rather than a hindrance as they aim to grow.

1. Automate: Central to building supplier relations is ensuring that all employees have a standardized and automated format for which to handle invoices. Basware’s SMB Finance research found that employees spend a staggering 16 hours and 53 minutes on financial processes per month. The biggest time wasters include responding to supplier/customer enquiries (2 hours 19 minutes), creating and sending invoices (1 hour 55 minutes) and reviewing invoices to be paid (1 hour 45 minutes). By automating their invoice function, SMBs not only reduce operational time, but also ensure that they transact in the way preferred by bigger companies.

2. Set procedures: The SMB Finance research also indicates that small companies need a much more regimented approach to handling company activity. In Europe, almost half of SMB business owners (46%) don’t believe their company has a clear procedure for approving invoices to be paid (38% in the US). Similarly, 52% of US employees and 50% of European employees do not believe these is a clear process for chasing unpaid invoices, leaving the SMB vulnerable to cashflow challenges. There is clearly a need for those with financial knowledge to set stricter guidelines and procedures for dealing with invoices, which will allow all employees to engage with finances in a productive manner.

3. Set mutual targets for completing activity: Basware’s research also suggests that companies require a collectively agreed timeline for finalizing financial tasks. Currently, a lack of understanding is causing a disconnect in expectations between business owners and employees in the invoice payment process. According to business owners, it takes European businesses 8 days and US businesses 4 days to complete a payment after receiving and processing an invoice. Yet, according to employees, it takes European businesses 10 days and US businesses 7 days to complete a payment after receiving an invoice. Left unattended, these issues are likely to begin impacting strategic planning, with businesses uncertain about the status of their cashflow.

Given their relative size in comparison to large businesses, SMBs cannot afford a trial and error approach to their finance function. Given the overall importance of money to all businesses, SMBs must establish automate and set agreeable procedures for their invoicing function – freeing up employee resources and enabling growth. 

Category: Accounts Payable