Automating Sales Invoicing & Payments
by Lucy Rowlands, Client Finance Manager
Companies providing a subscription-based service can often expect to have a long list of sales for similar values and an increasingly messy aging debtors list without the correct systems and processes in place to manage this effectively.
There are many tools out there that help you to chase the monies owed to you – but how do you manage to sort out the payments when they hit your bank account and ensure correct allocation, maintaining an accurate view on your debtors?
We were recently engaged by a client to resolve this problem for them – they were receiving multiple payments from various customers in bulk receipts, and not knowing how to process the payment correctly and timely. Having not raised sales invoices on their accounting system they were receiving money from customers without having an invoice to apply the funds too.
Having an up-to-date sales ledger not only keeps you on top of what you’re owed, but also allows you to budget and manage your cash flow. Not knowing how to reconcile these payments quickly can cause a huge back-log in your businesses accounting, meaning you are spending more time trying to understand your debtors position and delaying cash receipt.
How did we help?
We decided to run a correction and automation process. We looked in depth at our client’s business model and requirements. We noticed that a lot of the work with their sales invoicing and collection processes could then be automated.
Of course, there were many historical transactions that were processed incorrectly, but would’ve gone unnoticed had we not taken a detailed look into the finances. Correcting historical transactions was extremely beneficial to the company as having a clear view of your accounts is essential to the sustainability of your company.
We manually raised all the previously missing sales invoices, unreconciled the incorrect funds received and systematically went through each payment to make sure the money had been allocated to each customer and subsequent invoice correctly. This meant that we now had correct historical data, and our client then had a clear history of invoices for each customer, and an accurate view of what was still owed to them. If you’re looking into receiving a bank loan for your business, you will need to provide an up-to-date debtors list as evidence of what is owed to your business and when the money is due in.
It’s corrected – what next?
Now that the debtors report is correct, how do we stop this from happening again? We analysed how our client was running their sales ledger function and how it could be improved. We decided that utilising their accounting system to automate invoice generation, emailing them directly on the correct date without any human interaction, would be the easiest process going forward.
We collated this information to then generated the correct entries to put this procedure in place. This greatly reduced the administrative workload for our client and will save them many hours of work month on month allowing them to grow their customer base with full visibility of each customers invoicing and payments.
Now that the invoices were set up to be automatically created and sent, we needed to apply a process in which the money would automatically reconcile to the correct invoice and close it off the ledger. There are many great tools available now for businesses to be able to automate much of their accounting work. Though the tools are great, they still need our skill and know-how to be used successfully. We linked an external tool to our clients accounting system and set up rules and processes so that when their customer paid the money, the correct invoice will be marked as paid and closed off the ledger – effectively saving our client many hours of bookkeeping and reconciliation.
Our correction and automation process has now proved successful. Our client now has more time to focus on growing their business without the worry of extensive bookkeeping to keep their customers accounting correct. At Advisory Gems we look to work with our client’s individual needs and wherever possible implement automated solutions in order to achieve maximum results for them, with the minimum effort.