In today’s economic ecosystem taking hold of progression and innovation isn’t just a suggestion. It’s a necessity. While this is true for every area of your business, the digital revolution has set its sights firmly on invoicing and bill payments, changing the way people pay, and businesses get paid.  

 But what does that mean, and what exactly should business owners know about billing management solutions? Now, if it seems as if there are dozens of obvious answers, that’s because there are, and they become more by the day.  

 That said, discerning which actually has value, also gets more challenging daily. Luckily, the heavy lifting has been done. So, let’s dive into a value-packed and actionable guide to understanding the new landscape of invoicing.  

A quick introduction to invoicing solutions and bill payments 

Before getting to the whys of billing solutions, it’s incredibly important to do a quick background check of the basics behind invoicing. 

What is an invoice payment, and what is it used for? 

Essentially, an invoice (or bill) is a payment request from a service provider or the seller of goods to a buyer. This demand is issued after the sale or rendering of services, indicating a breakdown of the costs associated with the items or work done. 

 These invoices can be used as a once-off payment demand for a project while also being usable for recurring payments for ongoing work. The ideal goal of invoicing is to foster an ongoing relationship between businesses and customers. 

How invoicing and billing solutions have changed 

The saying goes, “Out with the old, in with the new”, and when it comes to generating invoices and requesting payments, this couldn’t be more true. Not too long ago, invoices were issued via postal service and would typically involve a bit of waiting. 

 That said, invoices did prove to be an easy, largely reliable, and cheap way to interact with customers considerately and civilly. Time doesn’t wait, however, and the digital revolution has changed the way customers receive bills and pay their invoices. 

 The same goes for businesses’ methods to generate, deliver, and record invoices. This is strikingly true in South Africa, as the need for seamless, easy-to-use, and speedy invoicing systems has evolved the local billing landscape. 

What makes an invoicing solution stand out? 

Keeping in touch with advances in billing solutions is one thing, but what genuinely makes an invoicing system stand out? There’s no shortage of viable choices out there, but here’s a run-through of some criteria you need to keep in mind, especially in the digital age: 

• Intuitive programming: Invoicing systems should be able to understand and adapt to your business’s unique needs, ultimately streamlining your daily operations without a steep learning curve. 

• Functions in a scalable way: As your business grows, so should your billing software, and digitally speaking, the sky is the limit. Integrated into your accounting and billing, the right system should quickly scale alongside your business. 

• Legal and regulatory compliance: Compliancy is king, and that means your invoicing and billing systems need to meet legal and regulatory needs.  

• Easy customisation: Being unique, diverse, and expressive isn’t normally associated with invoices, yet creating a lasting impression wherever you can, will help your business stand out. 

• Seamless flexibility: Your business operates within a dynamic financial world, which demands flexibility in every aspect of your company. An invoicing solution should function without any rigidity, meeting fresh challenges head-on. 

Why is having an efficient invoicing system so important? 

So, with the foundations of modern invoicing laid, why are future-forward billing management systems so valuable? Far more than simply sending an invoice online or being paid on time, having these solutions in place plays a deceivingly larger role.  

 To remain profitable, a business must keep attracting and retaining new customers. Retaining customers once you win them is essential to building customer lifetime value and long-term profitability. Attracting and onboarding a new customer usually involves sales, marketing, advertising, and administration costs. 

 But once they’re on board, the costs of cross-selling and upselling to customers are lower than those of winning new prospects. One celebrated study found that increasing customer retention rates by 5% increases profits by 25% to 95%.  

As a business owner, you probably wear many hats — from pricing of products, chasing debtors, paying creditors, and most aspects involved with running your company. If there’s one task that undoubtedly takes a lot of time, it’s invoicing.  

You’re likely to be familiar with the painstaking steps of generating, scheduling, and sending an invoice (or processing invoices received) — all the way up to capturing it in your accounting software.  

If the sound of this stresses you out a bit, you’re not alone.  

Invoicing is a necessary but time-consuming task. But there’s a solution that can simplify the process and won’t have you pulling your hair out. By integrating an automated invoice system, which is basically a function of your accounting system, with your payment platform, you can save yourself and your employees time in the billing process, reduce errors, and improve your business’s cash flow.  

Are you ready to focus on working on your business and not in it? This guide on invoice automation will provide you with what you need to know about automated invoicing. 

Automated invoicing system for suppliers 

With suppliers, automated invoicing works differently.  

In this case, you or your accounts payable clerk scan the invoice so it’s captured in your online accounting system, and the invoice process unfolds from that point.   

Let’s examine how the automated invoice processing software works its magic for suppliers: 

• Receive invoices electronically from suppliers: This is typically done via email or the cloud.  

• Invoicing software automatically imports the invoice: Your invoice software will then extract data from the invoice onto its system. The data includes details like your suppliers’ banking details, your customer information, and transaction details, like units and prices.  

• Automated invoicing system automatically matches the invoice to a corresponding purchase order: Your invoice processing software will then match the invoice to the purchase order to ensure that it’s properly accounted for.  

• Invoice processing software automatically sends approval notifications to the relevant party: Before your business can pay its supplier, payment will need to be approved by the accounts payable team and entered into your business’s ERP (enterprise resource planning) system as an expense.  

• Once approval is received: If you have a third-party payment system integrated, then you can easily pay your suppliers in bulk directly from your Netcash account. Once that payment is made, if using Netcash, the invoice will automatically be marked as paid and reconciled back into your integrated accounting package. 

What is automated invoice processing? 

So, what exactly are automated invoices and the processing thereof?  

Invoice processing automation entails using technology to automatically generate, schedule, and send an invoice with minimal human input.  

It works a little differently for your business’s customers and suppliers, but the invoice automation process can still help your business save time, minimise errors, and improve cash flow. 

Automated invoicing system for customers 

Automatic invoicing allows you to conveniently input customer and product or service information at one time. It then populates the invoice for you with that information, your banking details, your VAT number, and other information you wish to add.  

The invoice processing system automatically schedules the invoice for a specified event (e.g., after a customer places an order) and thereafter sends it to your customer. 

A few examples of accounting software that offer this, and that Netcash is integrated, can be found on our Accounting Partners page.

Here’s a step-by-step breakdown of this process (which differs from system to system): 

• Set up the automated invoicing software: First, you’ll need to enter your business information (e.g., VAT number), business address, and payment terms. 

• Create your business’ invoice template: You’ll set up a template of your business’ invoice and ensure that it includes the required information. This includes the invoice date and number, customer details, quantity, unit price, product or service information, and total amount. 

• Generate and schedule to send invoices: Once you’ve set up your invoicing software, you’ll get to easily create and send invoices to your customers. 

• Integration: Integrate with a payments system, like Netcash, where the invoice can be sent with a payment link to easily pay online via multiple payment types. 

• Tracking: Track the status of your invoices, such as whether your customers have paid them or not. 

• Reconciling: Once payment has been made, the payment can be reconciled. If you integrate Netcash’s payments system with your software, the payment will be automatically reconciled back to your accounting software. 

 

Benefits of automated invoicing 

We’ve spoken quite a bit about how the invoice automation process saves your business time. But how exactly does it do this, and what other benefits are there to automated invoicing? 

Increased productivity 

Businesses are constantly looking for ways to improve productivity and output. When you automate invoice processing in your company, you’re freeing up the time you and/or your employees spend on manually processing invoices.  

Depending on the size (and nature) of your business, you could be dealing with hundreds or even thousands of suppliers. Implementing automated invoice management allows your employees to work on other tasks, which can lead to improved productivity and generate revenue for the company.  

It takes the average SME about 25 days to complete the invoice cycle for one invoice. Imagine how much time, productivity, and profits your business could unleash by automating the creation and issuing of invoices, as well as the recon of payments made.

Improved efficiency 

By automating the process of sending, receiving, and processing invoices, your employees can get more work done in less time, saving you time and money. 

Reduced errors 

Manual data entry can be a slow, tedious task. It requires focus and attention, which dwindles by the hour when one is manually processing large volumes of invoices.  

When you automate invoice processing, you help reduce the risk of human error. And if you use Netcash, then your invoices are automatically reconciled when payment is made. So there is no chance of human error.

Improved customer service and supplier relationships 

Automated invoicing can help foster better relationships with your customers and suppliers. It makes room for faster and more efficient invoice payments from customers, especially if you offer multiple convenient ways to pay.   

In addition, relationships with suppliers are improved if your invoices are always paid on time, and always correct. These are all things that make our suppliers happy.   

If you have Netcash, you have all this and automated reconciliation. Less opportunity for mistakes means a frictionless relationship.

Better insights 

Often, manually sorting through printed invoices doesn’t give you the whole picture. If you were to try to see the whole picture (i.e., without using the filters on an automated invoicing system), it could require a lot of time manually sorting through invoices to try to glean insights.  

With all customer and supplier information in one place, you can have immediate access to the data you need to make informed decisions. An example of this includes being able to determine which supplier you pay before settlement dates and how long you’ve had a relationship with them. Your business can use this information to negotiate early settlement discounts.  

When looking at customer data, you’ll be able to identify which customers are struggling to pay you and which ones you could offer trade discounts, for example. 

Improved cash flow 

By helping you speed up the process of paying invoices and collecting payments from customers, automated invoicing can help you manage your cash flow better. 

Improved compliance 

A lesser-known benefit of using invoice processing systems is potentially being more compliant with regulations.  

Making use of invoicing automation could help your business comply with government regulations by providing you with a secure trail of your financial transactions. 

Final thoughts on automated invoicing 

Automating certain business processes can give you a leg up in the competitive business landscape. It’s also clear that automated invoicing can transform your business operations by allowing you to reduce errors, improve customer and supplier relationships, and improve cash flow management, which all positively contributes to your bottom line.  

Manual data entry shouldn’t hold you back; it’s time to introduce efficiency and improved productivity into your invoice cycle by streamlining the process.