Mundane though it may be, invoice management is an important task that every hospitality business must handle in order to remain operational. The last thing a business needs is suppliers withholding deliveries due to late or missing payments.
Plus, no business ever wants to make it slow or difficult for customers to hand over their money. Yet a surprising number still handle invoices manually even though the recent drastic improvements in technology mean that invoice management can now be automated.
This short explainer will walk you through how automation works, the challenges that it helps address, and a number of additional benefits it provides for businesses in the hospitality industry.
Automated invoice processing: How does it work?
Automated invoice processing uses software to perform the steps a person takes when they process an invoice: extracting details, verifying them, entering the data into a computer, and releasing payments.
For a person, this can take hours. An automated system, on the other hand, can do all this in minutes or less. Printed invoices can be scanned and have all their contents and details automatically entered into the computer through a process called ‘data capture.’ It can then send the details electronically onto the appropriate parties for approval, or it can take care of this itself by using predetermined rules.
What challenges does automated processing address?
Automation helps solve several common invoice challenges. These include:
- Inaccuracy: People are more prone to error than computers when checking purchase order details and delivery receipts against invoices.
- Late payments: Computers are less likely to confuse dates than people are, making the chance of accidental late payments less likely.
- Time consumption: Manual invoice processing takes longer, which ties up staff who might have other responsibilities, and means managers must wait longer if they need the information to make important decisions.
The benefits of efficient invoice management
Hospitality invoice management solutions cost money upfront but don’t seem to offer any direct benefits to businesses. They do not start increasing income right away, nor do they directly save much money; those accounts payable still have to be paid.
However, this does not mean that they have no benefits at all. In fact, they have several, but these are less direct. Here are some of the benefits of automating invoice management in the hospitality industry.
- Better relationships: Fewer late or delayed payments means that suppliers and contractors will trust you and appreciate your business more. In the long run, this could result in discounts, preferential treatment, or other business benefits. At the very least, it should result in fewer business headaches, and it could save you money if you are subject to fees for late payments.
- Scalability: More efficient invoice management helps lay the foundations for growth. If your current method of processing invoices is time-consuming and prone to error, things are not going to suddenly improve when you start taking on more business. Already having a good system in place gives you the option to scale up at any time.
- Frees up resources: If you’ve put in the work hiring talented staff, it makes no sense to make them toil away at tasks that a computer could do. Automating repetitive tasks like invoice management frees up people to focus on more important things, such as ensuring guest safety and making sure visitors have a wonderful experience at your establishment.
- Seeing the big picture: If all your invoices are being manually handled by several different people and then filed away, you may be missing out on valuable information that could help improve your business. Automated solutions often come with analytical functions which can help you see where money is being used inefficiently or where fraud might be taking place. The detailed logs stored by software make it much easier to conduct an audit than paper filings.
- Customisation: You can set the parameters of the automated solution to match the needs of your business. For example, if your approval process has multiple steps, you can easily program the software to send the relevant information to the right people and keep track of their responses. It can do this a lot more quickly and accurately than a human.
- Flexibility: When an invoice is received in a different format or with a different layout than what has been seen in the recent past, people may struggle to remember or learn how to handle it. However, automated software can quickly learn how to process new formats and will never forget what to do. This makes it much more flexible if your business receives invoices from many suppliers or through multiple channels, such as email and fax.
Automation is here, and it has a lot of benefits to offer businesses, especially in hospitality. While there is some concern that it may take away jobs, experts have said that it is likely to be routine, repetitive tasks that will be automated away, not people. Invoice management is one example of this, and upgrading your process is well worth considering for any future-oriented manager.
