While invoicing errors are a fact of life, the way in which you handle them with suppliers can make a big difference to the overall process. Read this blog to learn the benefits of communicating status description, and much more.
In any buyer-supplier relationship, there may be times when a supplier’s invoice approval is delayed. Further, invoices may be rejected for various reasons. Maybe the relevant goods are defective, or haven’t arrived yet – or maybe the price given on the invoice doesn’t match the price on the purchase order. Whatever the reason, suppliers need to know why an invoice hasn’t passed muster so they can correct the error and, if needed, submit a new invoice.
But all too often, suppliers simply aren’t made aware of why an invoice remains unapproved until the expected payment fails to materialize, meaning the payment may be significantly delayed. The supplier experience can also be hampered if invoices are rejected without a clear reason, potentially leading to frustration and wasted effort as the supplier tries to fix the error.
Both of these situations can lead to late payment of invoices and unpredictable cash flow. For small suppliers, the consequences can be particularly dire: a report published in 2016 by the UK’s Federation of Small Businesses (FSB) said that 50,000 companies would have avoided going out of business in 2014 if they had been paid on time. Other small businesses said that the impact of late payments included cash flow difficulties, slower profit growth and being forced to use an overdraft facility. All in all, it’s clear that late payments can seriously damage the buyer-supplier relationship.
Keeping suppliers up to date
The good news is that Taulia has a feature called Invoice Status Description that allows you to inform your supplier about the reason for the invoice status. The feature is most commonly used for invoices with “In Process” or “Rejected” status:
- Suppliers can go into the portal and check the status of any invoice – including the expected payment date. This gives suppliers valuable knowledge about their future cash flows and enables them to forecast more effectively, without the need to chase you for updates.
- If the invoice has a payment block or approval delay, there is a risk that the payment may not be made on the expected due date. If you use the Invoice Status Description feature, the supplier may hover over the status to reveal the customized reason for the payment block or approval delay. If the invoice is approaching the due date and remains “In Process”, this information will help the supplier understand why there may be a delayed payment.
- Just as important is knowing when – and why – an invoice has been rejected. Again, you can use Invoice Status Description to keep suppliers informed. When an invoice is rejected, your supplier receives a notification via email prompting them to log in to the portal. They can mouse over the status to view the reason for rejection and submit a new invoice. The portal also enables suppliers to filter invoices so that any rejections can be easily identified.
The ability to customize reasons for “In Process” or “Rejected” status may be particularly valuable if you are using a workflow tool, which may require multiple levels of approval or query invoices over a certain value threshold. This includes ERP-integrated workflow solutions: by harnessing the codes included within the solution we can provide suppliers with meaningful information via our portal – thereby avoiding time-consuming communications with suppliers.
Benefits of communicating status description
For suppliers, this facility is invaluable: the sooner they know that an invoice is rejected – and why – the sooner they can submit a replacement invoice and get paid. They will also be better placed to ensure replacement invoices are correct if they are given meaningful reasons for rejection.
For buyers, likewise, communicating status description brings clear advantages. For one thing, it can improve relationships with suppliers. And by giving suppliers better information about why an invoice is in process or rejected, you can also help them reduce the likelihood of future errors.
Furthermore, if you use Taulia in conjunction with an early payment program, speeding up invoice processing means you can leverage supplier invoices sooner within your working capital strategy – thereby improving your ability to unlock working capital within your supply chain.
Making the most of the tool
Buyers and their suppliers both stand to benefit from clearer communication – so how can you make sure you are using Taulia’s capabilities to communicate with suppliers as effectively as possible?
- Not using the tool yet? If you are not yet using this facility, contact our support team to get the ball rolling and we will provide further details of the process.
- Already using the tool? Even if you are already using the tool, there may be opportunities to communicate with suppliers more effectively. Evaluate whether the status descriptions you are using are as meaningful as they can be from your suppliers’ point of view – is it clear where the error lies, and what the supplier needs to do to fix it? If not, you can contact our support team for suggestions about logic and wording.
Taking full advantage of this tool can make a real difference to suppliers – indeed, we’ve received numerous testimonials for suppliers about the benefits of receiving invoice status information from their customers, praising Taulia’s “ability to view invoice status at any time” and “simple and clear reasons for non-payment”.
How else can Taulia help?
Invoice Status Description is just one of the ways that Taulia supports seamless sharing of information between buyers and suppliers. Buyers can also exchange messages with suppliers on our platform, ensuring that all communications are kept in one place. And we’re continuing to invest in technology that can streamline and speed up invoice processing, while supporting collaboration.
A recent milestone was the announcement of our new partnership with Google to build an end-to-end AI-powered solution, Cognitive Invoicing. Harnessing the OCR capabilities of Google’s Document Understanding AI, the solution will capture information from all types of invoices, including machine-generated PDFs and scanned image PDFs. Cognitive Invoicing will also enable buyers and suppliers to resolve any queries collaboratively – further enhancing the buyer-supplier relationship.
The bottom line
While invoicing errors are a fact of life, the way in which you handle them with suppliers can make a big difference to the overall process. Clear status information keeps suppliers better informed about cash flow, helps suppliers fix problems faster – and, potentially, reduces the likelihood of future errors. What’s more, by highlighting errors proactively, we can minimize the impact of invoicing errors or approval delays – meaning your suppliers can still be paid promptly.