Whilst entering all purchase invoices into the accounting software is necessary, there are several downsides to this process.
- It is labour intensive – many invoices these days arrive in an electronic format – as a PDF attached to an email for example. What happens to these? They are printed out, approved and passed for rekeying of the data into the accounts software before being filed away.
- It is expensive – what is the direct labour cost and the other overhead costs – employer’s NI, pension etc. of employing someone to do the boring, repetitive task of processing purchase invoices?
- It is prone to error – whilst these errors probably surface later in the accounting process, it can be time consuming to track them down and correct them. Common errors are posting invoices twice, posting to the wrong supplier account or miskeying the figures.
- Inconsistent analysis – the expense last year may be coded to Sundry expenses, but this year may be considered Subscriptions is the right code, but then it goes to Sundry expenses again in the following year.
- There may be delays in processing the invoices – when bookkeeping staff are away on holiday for example, they can soon mount up.
- Printing and storage costs – add up all the costs associated with firstly printing them out, and then filing them away and keeping them for six years – printer toner or ink, paper, files, racking or filing cabinets, rent of storage space etc.
So what is the alternative?
Electronic processing and data extraction
- Paper invoices coming in are scanned or photographed and uploaded to a web site. Those coming in electronically can simply be forwarded to an email address.
- Data is extracted – invoice number, supplier name, date, gross, net, VAT etc. The transaction can be allocated to an expense code (or allocated between different codes in fixed sums or percentages). This allocation can be “remembered” for future similar transactions.
- The data is downloaded in a format suitable for import straight into the accounts software. No more keying in.
- The paper invoices can be thrown away – really! The scanned versions are readily available and searchable within the software.
Want to discuss further? Or perhaps have a demo – or a trial? Contact us now.
