Invoicing presentment and payment is the crucial process by which a customer receives an invoice from you, and pays it. While some businesses might be more transaction-heavy than others, every single one can benefit from a well-defined invoicing process.
As a small business owner, finance officer or back office director, you’ll already be familiar with Key Performance Indicators (KPIs) and why they’re important for your business.
Let’s look at the KPIs that you can improve using automated invoicing, and why this should be an area of focus – if it isn’t already.
Why Monitor Invoicing KPIs?
Invoicing is a necessary part of doing business. Introducing KPIs to your invoicing process is beneficial for SMBs for the following reasons:
- They can help you monitor your invoice cycle time to cut down on cost and DSO.
- They can give you an indication of whether you’re working with enough suppliers (or too many).
- Allows you to monitor invoices that can be paid without manual intervention to fine-tune exceptions and related processes.
- You can track the average time it takes to process an invoice, helping you to streamline the process by looking for bottlenecks.
- Helps you monitor your top payment methods and payment methods.
The bottom line is that invoicing KPIs, like any other area of business, help you identify shortfalls in your current processes. While all these elements are not unique to invoice processing and delivery, they can be easy to overlook – especially for small businesses. Owners have numerous business areas to monitor, and invoices are easy to disregard because of their repetitive nature.
3 KPIs to Improve with Automated Invoicing
As a small business owner, you’re looking to get paid on time and worry more about your business than the invoices. Here, we highlight three KPIs you can improve upon by using automated invoicing.
Invoice Processing Time
Paper invoices are still favoured by 41% of businesses, despite being the slowest method of sending and receiving documents. From printing to mailing, a paper invoice trail could take a week or more depending on how efficient your company’s billing department is.
For SMBs, this downtime between invoice presentment and payment can be difficult to navigate. Although companies will typically factor DSO into their budgets, delays caused by paper invoicing are almost impossible to predict.
With an automated invoicing platform, you can send invoices electronically through a payment portal. This means delivery and receipt are almost immediate, and clients can make payments right away in the same portal.
In terms of a KPI to monitor, automated AP software allows you to track processing time from invoice upload to payment, which you can convert into stats to monitor which partners pay on time and where you might need to adjust your internal processes.
Invoice Cost
The average cost to process a single invoice is between $12 and $20 depending of your type of company and industry which is a significant cost for SMBs. The costs are in the printing, processing, and sending of a paper invoice. When you factor in the employee time needed to take care of sending a paper invoice, it’s easy to see why it can be pricy.
An automated invoice presentment and delivery platform drastically reduces cost because it doesn’t require the same printing, processing, and sending needs of a paper invoice – it’s all electronic. Also, automating repetitive tasks like generating and sending invoices reduces the amount of time an employee needs to spend on creating invoices. You can significantly reduce costs, and what business wouldn’t want that?
Cost is one of the easiest KPIs to track, particularly for finance departments. For example, you can look at the saved costs from not buying physical infrastructure, or you could monitor the ROI of your automated AP software.
Customer Satisfaction
Customer satisfaction might not be a KPI you associate with invoice presentment and delivery, but it shouldn’t be overlooked. Cost and time reduction – as well as compliance and error reduction – all feed into customer satisfaction. Surveys have found that 54% of consumers would rather do business with a company that uses their preferred communication method.
By 2024, it’s estimated that 47% of business communications will be digital-only. An automated invoicing platform can help improve customer satisfaction by influencing everything from risk reduction to reducing communication delays. These platforms should also be compliant with government legislation, meaning fewer worries on your end.
Customer satisfaction is another easy KPI to monitor. Simply introduce some kind of feedback platform as part of your invoicing process to track feedback from your clients and use this to adjust your processes as needed.
Getting Started with Automated Invoicing for SMBs
An automated invoice presentment and delivery platform make it so much easier to track KPIs and payments. A platform like Impress Invoice can significantly help your SMB improve its payment processes. Download our eBook here to learn more.
