Processing a commercial shipping invoice can cost your business time and money. Learn how automation can help you overcome this problem.
The commercial shipping invoicing process remains clouded with repetition. It can be time-consuming, especially when other aspects of your business need attention. To streamline the invoicing process and keep one less thing on your plate, you should consider automating the process.
One of the best methods is taking the help of Intelligent Document Processing (IDP). To get you started, here’s everything you need to know about automating the processing of commercial shipping invoices.
A commercial invoice is a document that serves as the legal proof of sale between a buyer and a seller. It shows the buyer and seller that they have agreed upon the price and quantity of goods sold. The document also indicates that the seller has fulfilled their end of the contract by providing the goods that were agreed upon.
The buyer receives this document along with the shipment. It often comes with other documents like bills of lading or packing lists. The seller uses this invoice to confirm they have shipped all the goods ordered by the buyer and should get paid for the same.
A commercial shipping invoice includes the following information.
o Name, contact details, address, and tax details of the buyer
o Name, contact details, address, and tax details of the seller
o Invoice date
o Invoice number
o Order number
o Goods description
o Quantity of goods and their value
o Payment mode and related details
o Country of origin
o Tax details
o Export route
o Freight charges
o Shipment date
o Gross weight
o Package details
o Insurance costs
Traditional means of invoice processing have always focused on doing things manually. As evident from the above section, a commercial shipping invoice can have around 16 separate fields. The number could vary depending on the complexities of your operations. The higher the number, the more time it will take for your team to process it.
When you receive an invoice from the seller and process it manually, you will need to follow several steps. These include capturing the information, registering the details in your records, seeking approvals, handling exceptions, and finally processing the payment. You may also have to archive the invoice for future reference.
It can take an average of 9.7 days to process an invoice when done manually. Now, that’s a lot of time and resource-consuming activity. Manual invoice processing also comes with a set of challenges. Let’s look at them in detail below.
Here are the various challenges you may face when processing commercial shipping invoices manually.
Manual processing of invoices is a time-consuming process that can lead to delays in payment. Invoices need to be reviewed, verified, and approved before being sent for payment. This process can take several days or weeks, depending on how many invoices need to be processed and how busy your staff is at any given time.
According to a report, organizations can lose around 5% of their revenue to fraud when they process invoices manually. The median loss can be as high as USD 125,000. What makes accounts payable helpless with fraud is the complicated internal processes. Besides external risks, internal threats persist all the time.
Manipulation with financial statements, fraudulent payments, and cash siphoning are some common examples of internal invoicing fraud. Similarly, risks related to external threats include phishing attacks. Cybercriminals usually impersonate themselves as suppliers and issue fake invoices to seek payment from businesses.
Manual processing of invoices leads to matching errors because it is easy to make mistakes. When you manually process each invoice, you have to review it, check it against your records, and enter it into your system. This is a lot of work for one person, which makes the process error-prone.
For example, if the invoice doesn't match what's in your system, you might accidentally delete it or put it in the wrong place—and then you'll never see that invoice again. Or maybe you'll accidentally put the wrong amount on an invoice, so when you try to match up the payment with the invoice number, later on, nothing matches up correctly.
Many companies still rely on manual, paper-based invoice processing. While this method may have worked in the past, it is not an efficient way to handle your invoices today. When an invoice gets processed manually instead of electronically, it's more likely it will get lost or misplaced at some point in its journey through your office.
It will happen because there's no electronic record-keeping system involved in the process. And if there's no tracking system—no way to see where things are at all times—there is also no way to tell when something goes missing. If this happens often, your company can suffer significantly from this issue.
The reason manual processing of invoices leads to duplicate payments is that the invoice has already been paid. If you receive an invoice, you have to manually go through each one to ensure you have paid it. If you miss one, you could pay twice for the same thing.
It can happen if there is a minor difference between two invoices, like a different date or amount. It is vital to have an automated system that can prevent issues like duplicate payments.
When you manually process invoices, it's easy to forget to pay them. Because you have to manually process everything, it is just not as likely that you will get around to paying your vendors on time.
If you do not pay vendors on time, they will get upset. If a vendor is upset with you, they are going to start refusing service. And if they refuse service, you can't get what you need from them.
If this happens enough, your relationship with your vendors will suffer. You will find yourself having arguments about late payments and other issues that you could have avoided if only your business had been able to automate its invoicing system.
While the direct disadvantages of processing invoices are plenty, there are some hidden shortcomings as well that can pull down your organization. Let’s look at them in detail.
We have already seen above that the average time to process an invoice manually is 9.7 days. It means you are losing out on the productivity of that much time every month behind everyone involved in the process.
Not only that, but manual processing is prone to errors—and when it comes down to it, there's just no way around it. If your employees spend all their time manually processing invoices instead of doing their real jobs, they are not going to be as effective at their jobs.
Manual processing leads to increased costs due to the need for additional resources and labor hours. More time spent on manual processing means more people are involved in the process. It means more money spent on salaries and training for new hires, more equipment needed for the task, and so on. All this adds up fast.
The manual process of processing invoices will take up a lot of your office space. If you keep paper records of invoice payments instead of storing them digitally or better not storing them at all, every piece of paper represents an extra physical space.
Most vendors offer a small discount when the buyer pays for the invoice within a stipulated time. If you have a manual process, you will not be able to reap these benefits. It is because you will not be able to meet the payment deadline with manual processes.
The inefficiencies due to the manual processing of invoices will ultimately affect your revenue and profit streams. There can be several issues like duplicate payments, penalties due to late payments, lost productivity, etc. All of these problems can affect the efficiency of your business in the long run.
Invoice processing is a crucial part of your business. It is critical to automate invoice processing because it helps in reducing manual effort and improves efficiency. You can automate invoice processing by implementing an Intelligent Document Processing (IDP) solution. It helps in reducing manual effort and improving efficiency.
In addition, automation through IDP also helps lower operational costs, increase productivity, improve customer satisfaction, and enhance financial performance.
When we talk of reducing operational costs, the IDP solution helps you achieve that by minimizing errors and lowering human intervention in processing invoices. It results in significant savings on labor and other expenses, which you otherwise would have incurred if you processed invoices manually.
According to a report, businesses with advanced accounts payable automation levels paid less processing cost per invoice instead of the ones that were yet to automate their systems. Businesses without automation paid USD 6.20 per invoice, while those leveraging automation had to pay only USD 1.83 as the processing cost for each invoice. There is thus no doubt about why you should automate your invoice process.
IDP is a rapidly growing field in the world of business automation. The ability to process and read documents is critical for automating processes, but it's not always easy to get right. In the past, when businesses needed to automate their document processing, they would typically use optical character recognition (OCR).
This technology was developed for use in scanning documents, but it was limited by its inability to understand the meaning behind documents. For example, if you scanned an invoice into your computer as a PDF file, OCR may be able to recognize all the letters in it, but it wouldn't know what each word means.
Furthermore, businesses had to opt for the services of BPO (business process outsourcing) companies for processing invoices. It was a costly affair that would eat into the profit margins. The solution? IDP.
IDP uses machine learning and natural language processing (NLP) to recognize words and phrases within documents and extract information from them. IDP allows you to automate different processes using intelligent systems rather than manual labor. And because these systems are constantly improving with more data added every day, they're able to process more complex tasks than OCR could ever hope for.
IDP is the best way to automate the process of handling invoices. It’s an advanced form of document processing that allows you to reduce manual processes, automate repetitive tasks, and improve business efficiency. IDP also enables you to process invoices faster and more accurately by automating repetitive tasks such as data entry and validation. Let’s look at some of the benefits of IDP in detail.
IDP helps you make sense of information from various document types. So whether you receive invoices through emails or have physical copies of them, IDP will process them. It will scan those documents and convert the information into machine-encoded text. Besides, IDP systems also offer logic-based rules that ensure you can automate as much as you want with minimal human intervention.
When you process an invoice, there are different ways for human error to occur. For example, if the invoice amount is incorrect or misses essential information like tax or serial numbers. If an invoice does not get processed correctly and on time, there could be consequences for your company, like legal issues.
IDP helps prevent mistakes by automating much of the document processing activity. When you use IDP to process your invoices, your employees won't need to manually check every single detail on each one before they send it off. Instead, they will only need to check what matters most: whether or not the invoice amount matches what was ordered and whether all necessary information has been included on it, like tax numbers.
When you are processing invoices, you need to use a system that can handle the massive amount of data that comes with each invoice. The IDP solution provides a scalable way to process invoices with ease. You do not have to worry about your team's ability to keep up with the work.
The system works by using intelligent algorithms trained on data from previous invoices and uses those algorithms to make predictions on new invoice data. This allows the system to quickly identify errors in an invoice and correct them before they get sent out or processed further into your accounts payable system.
VisionERA is an expert IDP platform that allows you to experience the unmatched capabilities of automation. Backed by advanced AI and ML-based algorithms, VisionERA works to decipher and decode information from documents of all types. The system then generates and extracts meaningful insights that speed up the activity of processing invoices.
VisionERA has advanced de-noise capabilities that help remove noise from documents. It helps improve the scanning efficiencies for better results. Furthermore, it comes with a seamless plug-and-play mechanism without any dependencies on third-party tools. The platform will only get better with time as it features a continuous learning mechanism.
The more documents you process, the better will be the result with each attempt. Offering a customizable workflow, you can automate your process the way you like. VisionERA also comes with an outcome-based pricing model. It means you only need to pay when you start getting the desired results for your business. Now, you wouldn’t want to miss this deal.
Contact us today to know more details about VisionERA.