Doing business with other companies is a great way to diversify profit streams and create a network of trusted merchants. To do this, companies must adhere to laws and achieve invoice compliance by properly processing, recording, and filing sales invoices. In doing so, organizations show they have what it takes to create lasting relationships with their customers and suppliers.
What Is An Invoice?
A supplier sends a valid invoice to a buyer after delivering goods or rendering services. This is a standard business practice related to requesting payment from a client. Companies also file and store invoices to create records of their transactions for future reference or use.
What Is Invoice Compliance?
For an invoice to be valid, it must contain specific details as required by local regulations. It must also comply with the country’s sales and tax laws where the business is registered and operates. An invoice must bear the value of goods supplied or services rendered to serve as a basis for tax purposes like collecting and remitting.
A typical invoice should carry the following details:
- Has “Invoice” written on it
- Invoice number
- Business name, address, and number
- Client name, address, and number
- Payment due date and terms
- Description of goods sold or services rendered
- Quantity of goods sold or hours of services rendered
- Total amount due
- Mode of payment
Why Is Invoice Compliance Important?
Complying with laws and regulations is essential for businesses to thrive, especially when issuing invoices. Here are other reasons why companies should prioritize invoice compliance:
- Ensures businesses follow local and international trade laws and regulations
- Improves business performance
- Builds good relationships
- Prevents problems like invoice fraud, fines, and penalties
- Reduces company spending in the long run
- Keeps proper documents for auditing and other purposes
- Improves efficiency
Tips To Achieve Invoice Compliance
Following laws and regulations should be at the top of any company’s priorities to conduct business. Adhering to rules showcases commitment to following honest practices and willingness to create good ties with other organizations.
Having unpaid invoices can limit a company’s cash flow and cause problems in the long run. Here are some ways companies can stay on top of their game and comply with their invoicing system.
Follow a Schedule
Paying and receiving payment on time is a sign of good faith between companies doing business with one another. Enterprises should be mindful of payment schedules to avoid issues with suppliers. Proper scheduling and time management are essential to good business relationships.
Companies that utilize an organized filing system for all their invoices will reap the benefits during auditing periods. With everything in order, invoices are easy to follow and track, checking and auditing will be smooth and hassle-free.
Using identifying characteristics will make documents more searchable and accessible. When switching from paper invoices to e-invoices, it’s advisable to use a cloud service to store and file all digital documents easily.
Automation can drive productivity in labor-intensive systems like invoicing. Process automation can also make processes smoother and prevent mistakes such as typos and misread lines. Adopting this method relieves the pressure on invoicing teams, who may get swamped with hundreds of invoices during busy periods.
Follow a Procedure
A well-structured and easy-to-follow procedure for invoicing will make things easier for staff and the auditing team. Businesses should train all accounts payable team members to ensure everyone knows how to do their jobs well. Enterprises can also designate personnel to check and verify all invoices before they are finalized to ensure accuracy.
Check and Verify Information
Following a strict verification procedure should be a priority when dealing with invoices. Companies can fall victim to fraud if they are careless. Checking all invoices for authenticity, accuracy, and timeliness should always be part of the verification process.
Invoice Compliance as a Business Priority
Becoming a trustworthy partner in any business is challenging. Only those committed to good practices and building lasting relationships come out on top of any industry. Being invoice-compliant shows dedication to following industry standards and local laws and living up to partners’ expectations.