Last editedFeb 20232 min read
How does your business handle supplier invoice management? Manually processing invoices can be a time-consuming task for your accounts payable or accounting team. Yet it’s an important part of maintaining good relationships with your suppliers and customers alike. First things first: what are supplier invoices, and why are they important? Here’s a closer look.
What is a supplier invoice?
Also called a vendor invoice, a supplier invoice is the bill sent from a seller to a buyer requesting payment for goods and services provided. It breaks down these goods and/or services into an itemised list along with any applicable charges. The invoice will also show supplier payment terms including the due date and methods accepted.
As a business owner, you probably send and receive supplier invoices. When you purchase goods or services for your business, the suppliers will send you an invoice requesting payment. Examples would include software subscriptions, professional accounting or legal services, or the cost of parts and labour for production. At the same time, when you provide goods or services to customers, you’d send them your own supplier invoice.
Supplier invoices will contain the payment details of the supplier so you can settle the invoice. Some may simply contain a payment link for you to use to easily make the payment. Opening the link begins a short process where you can review the amount being requested, securely go to your online banking, and confirm the payment. This saves you manually using your banking services to send the payment. GoCardless Instant Bank Pay is an example of this type of service, making it a great choice for supplier invoicing.
What’s the difference between supplier invoice vs purchase invoice?
A supplier invoice is different to a purchase invoice, which is produced by the buyer rather than the seller. It’s issued by the buyer to confirm the purchase order or PO, verifying any goods and services purchased and the amount of money due to be paid. A purchase invoice’s issuing date will match with the purchase order’s delivery date. Its due date will show when the buyer expects to make payment. These should match with the supplier invoice for reconciliation.
Challenges of supplier invoice management
Supplier invoice management is sometimes straightforward, when you only have a few invoices to process each month. However, larger businesses deal with hundreds of vendors – if not more. They also make purchases on credit, which must all be tracked by accounts payable. Any mistakes made with payments and invoicing can have a knock-on effect to your business’s cash flow. At the same time, supplier invoice processing is time-consuming particularly during peak seasons. Any missing purchase orders or typos incurred during data entry could lead to costly delays. These also jeopardise your working relationships with important suppliers.
The benefits of supplier invoice automation
Due to the numerous challenges mentioned above, many businesses have now switched over to using automated invoicing software. There are plentiful benefits to supplier invoice automation, including the following:
Improved efficiency: By reducing the risk of human error and missing files, you’ll keep everything securely in one place using automated, cloud-based software. This cuts down on processing times as well.
On-time payments: Use automated bill payment methods like Direct Debit for payment collection on the day it’s due. This helps eliminate awkward conversations between businesses and vendors, protecting those important working relationships. Digitally tracking invoices also helps you improve your cash flow, without any surprises.
Finally, automating the AP process ensures compliance with all tax and accounting regulations. If your business is audited, you’ll have everything in one place for digital retrieval. GoCardless partners with top accounting software like Xero,QuickBooks, and others to take the hard work out of supplier invoice management. Streamline your workflow with on-time, prescheduled payments, and automated reconciliation.
We can help
GoCardless is a global payments solution, setting people and businesses free from the frustrations and cost of outdated payment methods. Find out how GoCardless can help you with one-off or recurring payments.