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The Top 7 Challenges Organizations Face When Submitting Invoices to Their Customers

We regularly engage large, small and mid-size supplier organizations and ask them about their biggest challenges regarding order-to-cash processes.  We do this at conferences, spot studies and, of course, our biennial Perceptions Study.  Although we received a good deal of quantitative data through our Perceptions Study, we also asked suppliers to share, in their own words, their greatest challenges when it comes to things such as invoice submission, payment receipt and collections.

When specifically asked what their greatest challenges were when submitting invoices to their customers, we received scores of written responses.  We’ve compiled and categorized those responses and listed many them below in ascending order based on the frequency of the comments provided.  Although we could have created a list of the top 75 challenges, the vast majority fell into 7 specific areas.  The more respondents providing feedback in a particular area, the higher that issue rose on our list.

Following are top 7 challenges organizations told us they face when submitting invoices to their customers.

#7. There are too many invoice submission methods.  Supplier organizations must regularly navigate different invoicing submission methods and preferences based on individual customer preferences.  While there is standardization across some invoice submission methods, there remain too many variations and too many customers leveraging those multiple variations.

Specific challenges to suppliers include:

  • “Submitting via a method [the customer] will consistently receive”
  • “The diversity of submission methods, based on individual customers, is a challenge”
  • “Changing the computer system to handle invoicing on a customer-by-customer basis”

#6. Errors, both technical and human, slow the invoice submission process.  Supplier organizations often run into issues when attempting to submit invoices either via email (email did not go through or the file is too large), EDI or a channel created by a customer or third-party.  Technology has helped streamline a number of invoice submission methods, but some are not without their issues or technical glitches and human error remains a major concern.

Specific challenges to suppliers include:

  • “Human error”
  • “If an error does occur, it’s difficult to correct”
  • “Doing so via email”
  • “Transmission error or failure”

#5. The time and effort to create and submit invoices is sometimes prohibitive.  When supplier organizations incorporate manual procedures into their invoice creation and submission methods, they often find the time it takes to create and deliver the invoice is more than they originally anticipated.  Organizations can also add the time it takes customers to receive, approve and pay the invoice to that timeline.  As a result, real DSO can actually be longer than the measured metric because of the time required “before” the actual invoice is submitted.

Specific challenges to suppliers include:

  • “The time it takes to create [the invoices] and send them”
  • “The manual labor to get each invoice to [the customer]”
  • “Sheer volume and self-billing”

#4. Making sure the correct person receives the invoice is often a challenge.  When creating and submitting invoices via regular mail, email and fax, identifying the correct person to receive and process the invoice can be a frustrating endeavor.  This can also include making sure the invoice was delivered faster, which was the number 2 most important issue – per the quantitative data of our Perceptions Study – suppliers mentioned when submitting invoices to their customers.

Specific challenges to suppliers include:

  • “Making sure the customer has received the invoice”
  • “Getting it to the correct person or department gets the invoice to pay”
  • “Getting the right person to open the envelope.”
  • “Know if they failed to make it to the customer”

#3. Making sure the invoice data is accurate.  A clear challenge for both supplier organizations and customers is standardization.  Standardization facilitates accuracy.  While efforts are underway for developing standards for methods such as electronic invoicing, other methods of invoice submission lack standards as well as initiatives designed to help develop and drive those standards.

Specific challenges to suppliers include:

  • “They don’t understand the data or information within the invoice, so it takes additional time to clarify”
  • “Making sure invoices are sent out accurately”
  • “Clients that do not pay from our invoices but pay from their own records. Payments and invoices cross, are double paid, or they pay for invoices that were cancelled or adjusted.”

#2. Receiving the payment in a timely manner.  In our 2015 and 2017 Perceptions Studies, getting paid faster – per the quantitative results – was the most important issue identified by respondents when submitting invoices to their customers.  Though not number one on this list, making the top 2 shows it remains a very critical concern for organizations who desire improved cash flow and working capital.

Specific challenges to suppliers include:

  • “Getting paid early as opposed to on time/late payments.”
  • “Getting the customer to respond and pay.”
  • “Most of our customers pay promptly, but there are those few that frustrate you and getting paid from them poses a challenge.”
  • “That it’s a 30-day turnaround for payment.”

#1.  Making sure the customer has received the invoice.  As with the number 2 item on this list, confirming the customer received the invoice was a top concern for organizations, as indicated by the quantitative data from our Perceptions Study.  No other issue was mentioned more often by respondents when asked to comment on the biggest challenge they faced when submitting invoices.

Specific challenges to suppliers include:

  • “Customers not receiving their invoices”
  • “Claims that the invoice was never received”
  • “Making sure the customer has received it and is aware of the terms, such as an early payment discount”
  • “They say they don’t get them”
  • “Not knowing for sure if the customer actually received the invoice”

As we see, organizations have strong opinions regarding the issues they face when submitting invoices.  With new technology being introduced seemingly every week, there remain many practitioners who struggle with getting invoices to their customers in a timely manner to facilitate on-time or faster, more predictable payment.  Companies submitting invoices, customers that receive them and solution providers that offer remedies designed to address many of these pain points, still have a great deal of work to do when it comes to streamlining the invoice-to-cash process.

Ernie Martin is Founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. He currently chairs the Vendor Forum of the Federal Reserve Bank of Minneapolis and his resume includes time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.

 

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