Sending an inaccurate invoice might not seem like the worst thing in the world. Yes, it’s true that people can make mistakes. However, sending inaccurate invoices can be doing a lot more damage to your accounts receivable and credit department than you realize. Outright, inaccurate invoices seem like a simple mistake that is righted by simply fixing the error, but the data often proves otherwise.
According to research cited by Credit Today, 80 to 90 percent of businesses make up for inaccurate invoices by issuing a credit. Additionally, if the invoice discrepancy works in the customer’s favor, they likely aren’t going to say anything either. Below are a few soft costs associated with invoice inaccuracies that many tend to forget about:
- Dealing with invoice discrepancies take up additional resources in the accounts receivable and credit department, which could be spent on speaking with customers who are past due or keeping an eye on risky accounts.
- It typically takes customers longer (30 to 60 days) to pay invoices when there are issues because they have to be matched to purchase orders and warehouse receipts.
- Customer relationships suffer when they continually see invoice discrepancies and it becomes difficult for them to do business with you.
All in all, it is a lot more costly than one thinks when they make an error on an invoice. It may seem like a harmless mistake, but more repercussions can be seen in the long term. So, how do you keep from making these little mistakes on invoices? Below we have some steps you can take to ensure better accuracy on invoices.
Pay attention to the details when creating and sending out invoices. Make sure that the purchase order is attached to, and matches the amount on, the invoice. Check the sales agreement to be sure that the amounts match. By double checking all these details, you can avoid having a customer come back with a discrepancy and be prepared to refute it if they do.
USE INVOICING SOFTWARE
Invoicing software allows you to keep an electronic record of all the supporting documents associated with the invoice. This makes it easier for you to check the details, as stated above. Additionally, it can help to eliminate any manual keying errors from simply entering in the wrong data on accident. The invoice software should be able to automatically pull in the correct numbers as stated in your ERP system.
OFFER A PAYMENT PORTAL
Instead of sending paper documents or trying to scan or fax information over to the customer, offer an online payment portal where they can access their invoices, purchase orders and sales agreements. From here they can instantly see if there really is a discrepancy or not. Additionally, they will be able to send a message right to the accounts receivable and credit department to clear up any issues quickly.
KEEP TRACK OF EVERY INVOICE ISSUE
If a customer reports an issue with their invoice and you’re not keeping track, it can easily seem like a one-off issue. However, once you start tracking each invoice issue and assigning it to a category, you can easily see if you have some trending issues. Maybe missing purchase orders occur over and over again, so you will want to ensure every team member is always attaching these documents. Invoicing software makes this task extremely easy.