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If your business invoices aren’t being paid fast enough you might benefit from today’s invoicing tips so that you can improve your cash flow and get money rolling in sooner rather than later.
And you’re in luck, today’s guest, Mary Schaeffer, puts the “payable” into accounts payable and her practical invoicing tips will have you running to see if you’re invoices reflect best practices.
What You’ll Discover About Invoicing Tips (highlights & transcript):
* Invoicing tips to avoid payment delays [05:16]
* Why invoicing tips apply equally to paper and electronic invoices [08:27]
* Invoicing tips regarding invoice automation solutions [11:25]
* Invoicing tips best practices [15:42]
* And MUCH more.
Hanna Hasl-Kelchner: [00:00:00] If your business invoices aren’t being paid fast enough, you could probably use some invoicing tips so that you can improve your cash flow and get money rolling in sooner rather than later. And you’re in luck because today’s guest puts the payable into accounts payable and her practical invoicing tips will have you running to see if your invoices reflect the best practices. So stay tuned.
Announcer: [00:00:25] This is Business Confidential Now with Hanna Hasl-Kelchner helping you see business issues hiding in plain view that matters to your bottom line.
Hanna: [00:00:37] Welcome to Business Confidential Now, I’m your host, Hanna Hasl-Kelchner, and today I am delighted to welcome a heavy hitter in the accounts payable community to the show. She’s Mary Schaeffer.
Hanna: [00:00:50] Mary is the founder and publisher of AP Now, the author of more than 20 business books and an accounts payable Best Practice Trainer, a course and content creator, not to mention the host of the AP Now podcast. Oh, I almost forgot. She’s also been named a top 50 influencer in accounts payable by the Accounts Payable Association.
Hanna: [00:01:12] So, yeah, when I say that she puts the payable in accounts payable, I am not kidding. She’s explored every nook and cranny of it and I’m thrilled to have her join us.
Hanna: [00:01:22] Welcome to Business Confidential Now, Mary.
Mary Schaeffer: [00:01:25] Thanks for having me, Hanna, and I’m thrilled to be here. I was also quite impressed with that resume that you read about me. I’m going to have to take some notes because you made me sound you made me sound impressive.
Hanna: [00:01:37] Who is that person? Right.
Mary: [00:01:39] Yes, exactly
Hanna: [00:01:39] No, it’s you and you have a distinguished resume and background. And so while I am dying to get straight to invoicing tips, the do’s and don’ts that make for a tidy little list, and we’ll have information at the end of the program about how to download a list like that. I appreciate that those tips don’t come out of the blue. All right.
Hanna: [00:02:02] Invoices don’t go to the leprechaun with the pot of gold. And your tips are a response to the potential pinch points and bottlenecks on the customer’s side of the desk and how invoices get processed. So help us understand what customers do when they get an invoice and where the these pinch points and friction can occur.
Mary: [00:02:24] So Hanna when I talk about this stuff, sometimes it’s pretty, pretty easy. Everybody can do when I’m about what we’re going to talk about today and people will say, oh, that’s not true, I don’t do that and I don’t do this. But I’m here to tell you that the information that I’m going to share comes from my readers. I have a free e-zine that goes to over 10,000 people. And I ask questions in it.
Mary: [00:02:49] And the information that we put together for this tip sheet that you’re talking about, for what we’re going to talk about today, and I also give much longer talks on, this comes from things they told me, accounts payable professionals told me this is what happens.
Mary: [00:03:05] So anyway, I’m off on a little bit off on a tangent, but let’s get back to what you want to talk about.
How understanding the invoice process provides insight for invoicing tips
Mary: [00:03:11] I think it’s important that people understand what happens to their invoices when they send them in to be paid, because if you understand what happens with those invoices, then you’ll know how you can address the issue. So when an invoice shows up in accounts payable to be paid, what happens is the invoice processor takes that invoice and they do what we call the three-way match.
Mary: [00:03:35] They match the invoice against the purchase order and against the receiving documents, assuming that those documents exist and it’s that type of a purchase. And then if all three match and it’s a big if, the invoice is then sent over to whoever initiated the purchase, I call the requisitioner for approval.
Mary: [00:03:57] Now, if anything doesn’t match, if they can find anything, if there’s a piece of information missing, if they don’t know who ordered it so they don’t know who to get the approval from, it goes and it gets pushed to the side and it goes on the, you know, what we call the discrepant pile. So they have to do some extra work.
Mary: [00:04:16] Now, think about yourself. When you’re doing whatever you’re doing in your life and you’re going round and you’re processing, you’ll go through and you’ll do all the easy stuff first and the easy stuff in this case, some invoices that match and then you can send them up to be paid. And the ones that require all that extra effort, they get put to the side and they get worked on after the easy ones are processed and on their way.
Mary: [00:04:41] And those discrepant invoices, they may get worked on at the end of the day. They may get worked on at the end of the week. And in extreme cases, they make it worked on, you know, two, three, four weeks down the road. So what you want to do as a vendor who’s sending in an invoice and let’s face it, what do you want? You want to get paid. You want to make sure that your invoice does not get put on a discrepant pile. OK, so does that make sense?
Hanna: [00:05:07] That makes a lot of sense. I like the name of that pile, too. That’s really just . . . That’s a great pile.
Invoicing tips to avoid payment delays
Hanna: [00:05:16] So what are the common invoicing errors that delay payment?
Mary: [00:05:20] So when people think about this, they think, OK, so what commonly what’s the common problem? And everybody thinks, oh, the price that’s on the invoice probably is higher than the price that’s on the purchase order. And that happens sometimes. Don’t get me wrong. It does. But customers make a lot of mistakes when they put together their invoice that they can avoid and keep themselves out of the discrepant pile.
Mary: [00:05:46] So let me give you an example. I’m going to go through a few things and there’s more things like this on the list. And like I’d like to say to your listeners, who are probably going to think as I start talking, I don’t do that. I don’t do that, that this information comes from accounts payable managers who process invoices. And when I ask them about this, they wrote to me in droves. So this is things you should have on your invoices and people leave off.
Mary: [00:06:15] Number one, have the name of the person who placed the order. Why is that so important? Because remember, the invoice processor has to send that invoice out to be approved. And if you don’t have that name of the person on the invoice, then they have to figure it out. So they’ll put it aside and they’ll figure it out later. OK, so either the name of the person who placed the order or the company’s purchase order number. If you put the purchase order number down, it’s pretty easy for the process to figure out who purchased, who placed the order. So that’s number one. Make sure that’s on your invoice.
Mary: [00:06:52] The next thing, and this is really simple, you want to have a statement on your invoice that says “make check payable to” and put down who they’re supposed to make it payable to. I don’t know about you, but have you ever sat there paying your bills, trying to figure out who to write the check to?
Hanna: [00:07:10] Oh, yeah. Sometimes that happens. Right. And it goes to the wrong person then. Right.
Mary: [00:07:15] Or you just put it aside. You’ll think about it later. So the next thing and I’m willing to bet that most people listening to this don’t do this. You want to have on your invoice a contact name and an email address and or phone number so that someone can call if there’s a problem, because, again, let’s say the price is off, the price is different. You want that accounts payable processor to be able to call somebody quickly so that they can get it resolved. If not, if that information isn’t available, it’s going to sit on that pile forever while they try and find somebody to call when they get around to it. So it’s simple stuff like that that everybody can do.
Hanna: [00:08:01] Well, yeah, it sounds like “make it easy for them to pay you.”
Mary: [00:08:06] Oh, I always like to talk about the KISS method.
Why invoicing tips apply equally to paper and electronic invoices
Hanna: [00:08:10] Yeah, yeah, definitely. So let me ask you this. Some listeners might be saying, ‘oh, man, you know, paper invoices are just so old fashioned. You know, we could just eliminate this with electronic payments.’ What do you think about that?
Mary: [00:08:27] So, yes. Yes. And what we’re seeing and in fact, I won’t bore you with the statistics, but I’ll tell you that over two thirds of all invoices now and probably more since the pandemic are emailed in. So, yes, electronics is the answer. And there’s a lot of invoice automation solutions out there that companies are using. But we still are seeing a lot of invoices.
Mary: [00:08:53] And I would urge everyone, if you possibly can, don’t put that invoice in the mail, email it in, because when you email it, assuming you have the right email address and you’re sending it to the right person, that gets your invoice there immediately instead of however long the mail is going to take two, three, four days or worse in some cases. So, yeah, electronics here. And so you want to deliver that invoice electronically if you can, and electronically just may mean emailing it in.
Mary: [00:09:26] And then you want to also think about, and this is the big bugaboo, you kind of put your finger on it, is start accepting electronic payments. By electronic payments I mean ACH. I’m embarrassed sometimes, Hanna, when I talk to my colleagues in Europe and I have to say that we talk about paper checks because in other countries they just don’t understand why we’re still doing that.
Hanna: [00:09:53] So I understand how emailing an invoice bypasses that you have to open an envelope and that type of thing, which might happen in a mail room if it’s a large organization, but still the extra handling that’s involved with paper. But what about the actual elements that are, you know, in the invoice itself, the information that’s necessary? Does it really solve that problem or does it maybe create additional pinch points?
Mary: [00:10:24] So by emailing the invoice in or using an invoice automation solution, it typically doesn’t create additional problems because that invoice let’s say . . . . Let’s talk about email first. Basically what that is, is the same paper invoice that was created is now printed to a PDF and emailed in. So it’s literally the same document.
Mary: [00:10:51] Now, the fight that we have going on in accounts payable and this really is not the vendors problem, but it’s an internal problem within the company, is in many organizations. What they’re doing when they get those emailed invoices is they’re printing them. So that’s kind of like defeating, you know, part of the purpose. But that’s really not the supplier’s problem. That’s the company’s problem, that’s an internal problem.
Invoicing tips regarding invoice automation solutions
Mary: [00:11:25] But if your vendor has an invoice automation solution, you want to try and use it. I know that there’s some resistance to using that on the part of suppliers, but really, it just makes everything flow so much easier. And by using it, it kind of necessitates putting in the right information. So putting in the purchase order number, etc..
Mary: [00:11:48] And then also there’s no fighting over the date. What was the invoice date? That’s another area where sometimes the supplier and the customer don’t always see eye to eye. And the invoice date is really important because that’s where your payment terms come from. So if it’s dated, let’s say April one and you have terms net 30, then you’ll get paid on April 30th. But if the invoice date is a tenth, then you don’t get paid too much May 10th. So that’s another area to take into consideration.
Hanna: [00:12:23] Yeah, the date is always important, the date of receipt, the date on the invoice. So tell me more about these invoice automation solutions. Some of our listeners may be smaller firms that aren’t familiar with them. Maybe they don’t have the big customers that have these types of things. Is that a standardized entry system for invoices?
Mary: [00:12:45] So it’s not standardized. We call them solutions. Do you like that? We call them solutions. And there are probably over 50 of them on the market right now. And some of them are quite sophisticated. And, you know, some of them are more Plain Jane, and they will process the invoices.
Mary: [00:13:06] They take the electronic receipt. Many of your listeners customers may be using them and they may not realize it because the better solutions can actually go into the email account and pull the PDF in and read them. So we’re seeing a move towards this.
Mary: [00:13:28] These solutions have been around at least 20 years, probably more. In the beginning when the first solutions came out they were proprietary. They were very expensive. They cost one, two, three million dollars to put in place. So needless to say, the only people who had them were the big companies. But over time, this has evolved.
Mary: [00:13:51] There are now third-party models. In fact, I don’t know of any company, there’s probably one or two out there, but for the most part nobody creates their own. They buy these third-party solutions and depending upon the functionality that’s in it will depend upon the price. And they can be as cheap as, I know of one solution probably the only one, that is cheap that costs 500 dollars a month. Some of them are in the thousand dollars a month range will depend upon how many invoices the customer has; how many they’re processing. But you can see that makes it affordable for almost every company if they so choose.
Hanna: [00:14:30] What kind of volume would a company need to have for invoice processing to justify one of these invoice solutions?
Mary: [00:14:39] Not very high. A few hundred invoices a month. Think about how much time somebody is spending processing invoices and if somebody is spending, I’m making up numbers, you know, an hour, you know, two hours a week, they’re probably not a good, perfect solution, although I’m sure some of the solution providers would disagree. But once you’re talking about you have, you know, a person spending half their time doing it, there probably are solutions out there that will help because, as I said, some of them are really inexpensive. And, you know, I hate to say this, Hanna, but, you know, computers are a lot more accurate than humans, even the best of us.
Hanna: [00:15:26] I understand computers don’t get tired. Now they crash. But that’s another story. Oh, that’s another story. Right. They don’t need vacation and all that good stuff.
Mary: [00:15:36] Right. Right. They don’t get sick. They don’t you know; they don’t fight with the person sitting next to them.
Invoicing Tips Best Practices
Hanna: [00:15:42] Yeah. They have their advantages. But when they crash, they crash. And then you realize just how dependent you are on these automation tools. But, you know, we work around that and there are ways to do that. So if there was one thing that you would want listeners to take away from as far as their invoice practices go and the best practices that you’re familiar with, what is the one takeaway that you would want them to, like, put on their wall?
Mary: [00:16:13] So I would tell them I have two things. Number one, what they would want is I would tell them, we’re going to give you, we’re going to offer this invoice preparation I call a cheat sheet. I would say take it. Don’t assume, don’t say, oh, of course we’re doing our invoices right. Take it. There are, I don’t know, 12 or 15 things on it and take your invoices and go through item by item and make sure you were doing everything that it says. So something as simple as “make checks payable to” that’s one thing.
Mary: [00:16:45] The other thing is, can I tell you a dirty little secret that some vendors are doing?
Hanna: [00:16:49] Oh yeah, we love them. We love dirty secrets. Go for it, Mary.
Mary: [00:16:55] All right. So and this creates a lot of havoc in the accounts payable departments at customers, which I know some people they don’t care, but it really aggravates the customer.
Mary: [00:17:08] Now that we’re sending a lot of stuff by email, including our invoices, e-mail course, practically nothing, so instead of just sending one invoice like we would do during if we sent it through the mail, because, you know, mail costs, I don’t know, 50 cents, whatever it costs to send an invoice, to send an email course, nothing. So instead of just sending the invoice to one person, they’re sending it to two, three, four different people within the company. And so the AP department is getting these invoices by email, but they’re getting multiple copies from vendors.
Mary: [00:17:44] Also, some will send a reminder copy of the invoice a few days before the payment is due. And this just creates a ton of extra work in the accounts payable department. So the AP folks would like me to say to the billing community, please stop that. One invoice is enough.
Mary: [00:18:08] But really take your invoice. Take this check list. It may seem silly about some of the things we’re talking about, but go through and make sure you’re doing your invoices. Include all the information that we talk about. There’s a saying in accounts payable, “a good invoice gets a good check.” And so if you can prepare a really good invoice, assuming the customer has the money to pay, you’ll be at the top of the list to get paid.
Hanna: [00:18:35] Awesome. Because we all want to be at the top of that list and not a different kind of list. Yes. So if you would like to receive those email tips, those invoicing tips, I would encourage you to look at the show notes at BusinessConfidentialRadio.com, because not only will we have those tips, but we’re going to have information on how to contact Mary to learn more about the amazing resources that she has on her Web site.
Hanna: [00:19:05] I’m not kidding. She puts payable in accounts payable. There is a ton of information on her Web site as well as her AP Now podcast. All of that is in the show notes at BusinessConfidentialRadio.com. And if you found today’s program helpful, tell your friends, let them get paid on time, too, and leave a positive review on your podcast app or at LoveThePodcast.com/BusinessConfidential.
Hanna: [00:19:32] And yes, you’ve been listening to Business Confidential Now with Hanna Hasl-Kelchner and I hope you have a great day and an even better tomorrow.
Guest: Mary Schaeffer
Mary Schaeffer is the founder and publisher AP Now, the author of more than 20 business books, an accounts payable best practice trainer, a course and content creator; not to mention the host of the AP Now podcast.
Mary has also been named a top 50 Influencer in accounts payable by the Accounts Payable Association and is the author of 127 Best Practices for Accounts Payable.
She definitely puts the payable in accounts payable.
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