Have You Considered A Centre of Excellence For Invoicing?

Invoices are a critical factor in any finance and accounting (F&A) set-up on a global level, where the smooth functioning of accounts payable and accounts receivables processes requires there to be minimal concerns with invoicing. There are multiple delivery models (process based, hybrid, region based etc.) adopted by F&A shared services centres and outsourcing providers to service their respective clients. A lot of effort is invested by senior leadership and stakeholders to devise and implement these models. Yet frequent process outages continue to haunt these models impacting service delivery. In my professional experience the initial analysis hints at underlying issues with invoicing, either from the payable or the receivable perspective. Which begs the question: How about creating a Centre of Excellence (CoE) on invoicing? To begin with it makes sense to map the type of invoices associated with the respective industry vertical. For example, there will be a difference in invoices generated for professional service firms compared to logistics and shipping companies. On top of that, analysis should be conducted to identify and eliminate any duplication of invoice types. This is likely to benefit the downstream processes when work is migrated to F&A shared service centres. "Defect free invoices have a bearing on spend analytics in procurement, which leads to robust data analysis." The next step should be adoption of invoicing technology. A majority of onshore finance teams in different countries still abide by paper invoices. This is more pronounced in Africa, Asia, the United States, Latin America, the Middle East and Asia-Pacific, as there are legal regulations to be complied with. Yet these countries could draw inspiration from the European Union, which has mandated electronic invoicing for countries within its borders. According to a recent study by the E-Invoicing Platform, $1.2 trillion dollars is owed to businesses by other businesses at any given time, in the United States. Many payment delays can be linked to the fact that a majority of companies today still process their invoices on paper. Technology solutions reduce processing time and free up cash flow, thereby helping the economy overall. There are a whole range of substantial underlying benefits – like cost savings, a greener environment, elimination of errors, better utilisation of time and stronger cash flows as a result of embracing technology.For example, while it takes 17 days to process the average invoice, e-invoicing reduces the entire process to an average of three days. An element of visual management needs to be incorporated in the invoicing Centre of Excellence. Creating dashboards on invoice generated, paid, and outstanding will provide the transparency that is otherwise missing. In this context, the concept of vendor portals needs to be replicated and extended to the customer side. Doing so would reduce the tedious efforts currently invested to locate and clear outstanding invoices. How to Set Up an Invoice Centre of Excellence From a process perspective, you should centralise the COE to avoid multiple hand-offs. The COE should include expertise in terms of talent from country finance teams along with resources from the shared services/outsourcing service providers. A strong control mechanism should be deployed to minimise any risks. For example, there should be zero deviations in refusing to accept requests to amend invoices (under invoice or over invoice). To drive this process through the enterprise will require strong endorsement and sponsorship from executive leadership. The invoicing team should also collaborate closely with the accounts payable and accounts receivable processes. Plus, the set up should aim to standardise the invoice lifecycle and thereby minimise opportunities for client complaints. Benefits A streamlined invoice process has a beneficial impact on how ERP systems and platforms function, as well, especially where there is an ongoing deployment of ERP across the organisation. If the invoices are clean, the ERP will be more effective post deployment. For example, accurate invoices will lead to higher match rates on the receivables and enable timely payment to vendors on the payables. So the organisation stands to reap a better return on investment (ROI) on the implementation of the ERP system. Furthermore, defect free invoices have a bearing on spend analytics in procurement, thereby resulting in robust data analysis. [inlinead] By establishing a dedicated Centre of Excellence for invoices, the focus on metrics associated with invoice lifecycle will be accentuated. While most F&A shared services centres measure accuracy and timeliness, measures like cost per invoice, turnaround time for invoice lifecycle, ageing of invoices, percentage of invoices not paid right first time, etc., will benefit the larger organisation. The adoption of these metrics will likely generate additional cost savings. A big advantage is the higher rate of customer satisfaction that will accrue on both the customer and vendor side. A better quality of invoices is likely to contribute to healthy and safe books of accounts. The finance and accounting landscape will be spared multiple follow-ups and rework, thereby allocating existing bandwidth to more strategic deliverables. Summary As big data and technology re-define the contours of finance and accounting, a Centre of Expertise for invoices will further streamline the source of financial transactions. [Note: if you liked this article, please use the buttons on the left side of the screen to share it across your LinkedIn groups – and contribute to this discussion by posting your thoughts in the comment section, below. Thank you for being part of SSON's community - Barbara Hodge]

Have You Considered A Centre of Excellence For Invoicing?

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Have You Considered A Centre of Excellence For Invoicing?

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