Importance of the invoice processing job description

Importance of the invoice processing job description

Importance of the invoice processing job description

At some point the job needs to be done. There is only so much one can do in terms of planning and thinking and strategizing and organizing, though they often provide scope for dithering and delaying. In simple terms, it is not done till it is done.

In a world of specialized skills, the requirement of people for each type of work is getting sharper and sharper. It is expected that the closer the match the better the performance on the job.

Why should the job of processing invoices be any different?

Granted that digital technology has taken over many of the functions that were carried out manually in the past. But that is true across the board and is not specific to invoice processing. The buttons, however, and perhaps mercifully so, still need to be pressed by human beings in the know. That is where the buck currently stops; with humans.

It follows, therefore, that a company that has a need for processing invoices should either look for suitable people internally and train them, or search externally for people who can do the job for them. An invoice processing job description is perhaps a great starting point when trying to fill a position for processing invoices.

oWorkers has earned a name for itself in the data based BPO services space in a short period of 8 years. It is now counted as one of the top three players in the world, no mean achievement.

 

What is a job description?

A job description, or JD, is a document that defines the essential job requirements, what responsibilities an incumbent is expected to shoulder and carry out, and skills expected to be beneficial in performing the role. It might even cover the measurement scale, or Key Result Areas (KRAs) that will be used to measure the incumbent’s success in execution in a given period of time. It is also variously known as a position description, job specification and job profile in different companies, mostly referring to the same document known as a JD.

Though a JD is expected to exist for every role and provide clarity and direction to an incumbent, one of its most frequent uses is in job postings and advertisements to provide information about the role to interested candidates. Providing the right JD helps in attracting the right candidates which enhances the efficiency of the process by keeping unqualified applicants out.

A JD is an invaluable support tool for the recruitment team of a company, with often even the process of selection through interviews being based on the same. After selection it forms the basis for the employment contract as well as creating the baseline for the employee’s performance appraisal.

An invoice processing job description performs all these functions.

It must be added that a JD is often the result of a meticulous study and analysis of the role over a period of time across multiple incumbents.

oWorkers is adept at creating job descriptions as it hires for a variety of roles requiring a wide set of skills for the many client projects it supports. It helps that it is a preferred employer in the communities it operates in. It serves to attract walk-in talent without having to advertise for it, saving money that gets passed on to clients through the pricing mechanism.

 

Invoice processing job description

As earlier discussed, the job description needs to provide adequate information about the job it pertains to, to an incumbent as well as a candidate seeking that role. Over the course of time, job descriptions have acquired similarities in the way they are presented. A standardized JD template is what we will use to discuss the different aspects and sections.

Overview

This role in the accounts payable team is responsible for processing invoices that are received from vendors and suppliers of material, goods and services to our company. A person in this role is expected to carry out the required responsibilities as per the policies and procedures of the company, along with applicable laws and regulatory guidelines. Processing should result in the most optimum business outcomes while maintaining a harmonious relationship with suppliers. The person should also be on the lookout for opportunities for improvements and efficiencies in the process.

The JD expertise comes in handy even when oWorkers is called upon by clients to hire in a hurry for an unplanned requirement that has suddenly emerged. With the ability to hire an additional 100 people within 48 hours, oWorkers saves clients a lot of money in the form of salary they would have otherwise paid to an idle bench.

Responsibilities

The responsibilities can be vast. The following is an indicative list of what a person in the role could be called upon to do:

  • End to end responsibility of invoice processing from receipt till payment
  • Reviewing each invoice as it comes in, sending it back in case of errors and acknowledging it if in order
  • Creating and maintaining a system of payment before penalties become applicable and at the latest time possible
  • Managing the approval process in a timely manner
  • Ensuring availability of funds in accounts when payment has to be issued
  • Managing the relationship with vendors
  • Identifying and recommending opportunities for improvement of invoicing terms
  • Handling queries from suppliers related to invoices
  • Archiving invoices and other relevant documents
  • Ensure that service level agreements are met as they relate to invoice processing procedures.
  • Creating relevant accounting entries where required
  • Generating MIS and reports for all activities, including control and exception reports
  • Handle multiple projects and client accounts
  • Check purchase order (PO) number before processing of invoices
  • Initiate online data capture for ERP systems
  • Research data trends to analyze future market scenarios
  • Ensure complete accuracy of financial statements and tax data

Other responsibilities could be added to the invoice processing job description from time to time.

oWorkers pays social and local taxes for its employees and is rated 4.6 and above, on a scale of 5, by both current and past employees, on external platforms like Glassdoor.

Technical skills and experience

The following set of skills and experience is expected to aid discharging the responsibilities of the role in an effective manner:

  • Bachelor’s degree in accounting.
  • A minimum of 2 years’ experience in a similar role, where invoice processing was a significant part of the role.
  • Advanced proficiency in invoicing software, such as Tally and FreshBooks
  • Knowledge of bookkeeping
  • Proficiency in standard software applications such as Microsoft Excel, Word, and Outlook Express
  • Advanced ability to collaborate, manage client requests, and answer queries
  • Ability to review invoices and verify tax information
  • Understanding of AP process and AP automation solution
  • Familiarity with the company’s policies and procedures
  • Knowledge of the legal framework governing invoicing and invoice processing

oWorkers is at the top of their game in technical skills and environment. What their invoice processing job description might not say is that they operate from secure facilities & protocols designed to maximize client data security with their ISO certifications (27001:2013 & 9001:2015). Additionally, they are also GDPR compliant.

General management and organizations skills and experience

Additionally, the following abilities are expected to complement the technical skills in the discharge of duties:

  • Ability to coordinate with internal departments
  • Ability to achieve high accuracy standards and right-first-time
  • Willingness to operate in a team
  • Ability to work under pressure
  • Ability to communicate with confidence and accuracy
  • Attention to detail
  • Good interpersonal skills

When the going gets tough, the team you want in your corner is the oWorkers leadership team, that has over 20 years of hands-on industry experience in general management as well as organizational management.

 

Best practices of invoice processing

Many companies might also attach other documents and information pertaining to the role that are designed to assist the incumbent or a new person in doing a good job. An invoice processing job description might also include a note on the best practices of the process.

Establish a Purchase Order process

A Purchase Order (PO) based buying process is often recommended in large companies and can, indeed, help in establishing agreement and clarity prior to the company getting committed to an expense. Further, it becomes an ‘outstanding’ item in the books until matched off against an invoice. Thus, chances of duplicate payments reduce as the PO would have already been extinguished by the first invoice. And lastly, it speeds up processing after receiving the invoice.

The ability to support clients in 22 languages gives oWorkers the strength to issue POs and handle vendor invoices in many languages. They are a partner in growth, not an impediment.

Create a measurement and tracking system

The basics of good management apply to invoice processing equally.

Professional management establishes expectations of performance and output up front in order to avoid surprises at a later point, and is usually done in agreement between the person in the role and the organization, through the person’s manager. These become the measurement standard against which the actual performance is delivered. Development of Key Performance Indicators (KPIs), updating them as needed, and tracking them is an important aspect of the job.

oWorkers takes transparency to what some might call an extreme. They make their pricing mechanism, generally a well-guarded secret in companies, also transparent.

How do they do this?

They make it transparent by offering clients a choice between a dollar per unit of input and dollar per unit of output. Most clients say they have never been offered a choice in pricing methods. And most of them say they appreciate it.

Invoicing and payment terms are best standardized

Since a B2B contract is a unique construct, it needs to be verified and understood by the people responsible for managing compliance with the terms. Language can also create opportunities for interpretation in multiple ways, causing differences. Hence, the invoicing and payment terms for all purchases are best kept standard, greatly reducing the scope for interpretation and misunderstanding. It also reduces the effort of reviewing and understanding that needs to be invested where each contract is unique.

Clients of oWorkers have been quoted as saying that oWorkers has helped them save costs to the tune of 80 percent of pre-outsourcing costs.

Exception reports can identify compromises

No process is foolproof. Exception reports should be defined and run, if automated, or prepared, if manual, at agreed frequencies. Exception reports can help identify processing errors such as duplicate payments having been made.  

Though an invoice processing job description may not specifically say so, as a 24×7 operation, exception reports can be generated and verified any time of day or night.

Dual control mechanism

Dual control over critical processes that have the potential to create a liability or commitment or expense for the company is essential so that the checking and control can be exercised before the compromise has been made and not after. Time and time again it has been demonstrated that a single person with all the controls can cause havoc. It can be through the innocent act of making a mistake or a not-so-innocent one of taking advantage and perpetrating a fraud. Having a dual control in place, with the second level check being commensurate with the value or quantum of risk, is known to substantially reduce the possibility. This is management 101.

Working with employed resources is a decision oWorkers took at the start and have stuck with it. In comparison, some of its competitors rely on freelancers and contractors to deliver. With the help of a loyal, employed workforce, oWorkers has built a supervisory layer from within, through promotions. This layer of staff is effective in supervising transactions.

Leverage technology

While it could create some challenges, not leveraging technology has ceased to be a relevant reason today. With such a wide variety of options being available, it is expected that forward-looking organizations use technological tools to bring efficiencies to their business.

It is possible that some small companies may not find it worthwhile to invest in some areas of processing as their volumes might be low. That is exactly the kind of situation that BPO providers like oWorkers, who specialize in back-office work, cater to. Their ability to aggregate volumes enables them to invest in the best technologies that deliver efficiency to their client processes.

oWorkers has developed deep relationships with technology providers. This enables them to use the latest technologies in many processes, including invoice processing.

Periodic reconciliation

A regular process of reconciliation has been one of the basic tools of checking and control in most financial processes. This could be either viewed as an extension of the ‘exception report’ best practice or a standalone one.

The earlier the identification of a mismatch, the greater the probability of a speedy resolution.

With a team of Quality Analysts (QAs), oWorkers has invested in quality. The QAs act as the eyes and ears of the management and bring to light any issues that may require their attention. They also identify issues before they impact client delivery.

An understanding of what is invoice processing

An understanding of what is invoice processing

An understanding of what is invoice processing

While in somewhat technical terms invoice processing could be described as the process that manages invoices from the point of receipt to their eventual settlement, it has a relevance far in excess of what a definition or explanation can convey.

The slightly strange thing about invoice processing is that it is done not by the party generating it but the other party to the contract who receives the generated invoice and then processes it. 

For the party that generates or issues an invoice, invoice processing is the key to unlocking a supply of a critical resource; cash, which is the central resource in any company, and runs like blood through its various organs and activities. When its client, to whom it has supplied a product or service, processes it, the end result is release of payment which constitutes revenue for them and is the reason for their existence.

For the party that receives the invoice, it is a process that needs to be carefully handled as it ends with having to put their hands in the till and taking out the cash required to honor that invoice. Cash is a critical resource and needs to be carefully managed, as it can be easily misused. Hence, invoice processing often needs to go through approval and authorization processes. Efficient handling can multiply the resources of the company, ensure maintenance of a harmonious relationship with suppliers and get favorable payment terms like discounts and credit periods.

In a critical business process, such as invoice processing, it makes sense to deal with the best in the business. oWorkers, despite its youth, it is only 8 years old in the industry, is already one of the top three BPO service providers in data related processes such as invoice processing, supporting clients from around the world.

 

Types of invoices

An understanding of what you are dealing with can enhance performance and efficiency. While the primary objective remains the same, there can be a bewildering array of invoice types. A part of understanding what is invoice processing lies in understanding the types of invoices. The more common types are discussed here.

Pro forma invoice

A preliminary invoice that is meant to mirror the actual invoice when it is raised later is known as a proforma invoice. It is a way of confirming what the real or actual invoice, when raised, will look like. In that sense, it acts like a surrogate contract. It is also a way of confirming that the supply should be of the goods and services contained therein.

Its ability to attract the best local talent sets oWorkers apart from competitors. It is able to do so because of its reputation as a fair, stable employer, in all its delivery locations.

Timesheet invoice

Many times, the arrangement between a buyer and supplier is based on effort, or the time that they spend doing the defined work. These invoices are particularly popular in the services space where billing for time is common and an important step in understanding what is invoice processing. A lawyer, for example, usually bills an hourly rate and tracks the time he has spent on a particular assignment. Thereafter he will raise a timesheet invoice for the hours and the resulting value.

Commercial invoice

Though all invoices are commercial invoices, this term is used in reference to a document that is used for a declaration at the customs checkpoint, in the case of goods exported across international borders.

Having always followed a policy of working with a multi-cultural and multi-ethnic workforce, has enabled oWorkers to organically build the capability to deliver in 22 languages, which is a great help in all cross-border transactions.

Retainer invoice

A retainer invoice is like a bill that is written for services, generally, or products, occasionally, that are still to be delivered. It is a method through which a client can secure the time and service of an independent contractor by paying him in advance. The payment could also be only a part of the total value. The raising of the invoice before delivering the service, in a way, makes it secure.

Recurring invoice

Subscription services, which are a common form of buying a product or service, are recurring in nature. The invoices periodically raised for the service are known as recurring invoices. If I buy an annual subscription of the National Geographic magazine, I will have to do the same every year if I want to continue my service.

Its global delivery centers are located in some of the most sought-after geographies. All centers are equipped to operate in a 24×7 time window subject to there being a client need.

Credit invoice

Literature on what is invoice processing may not always cover a credit invoice. This is a type of a reverse invoice and used when a supplier needs to give money back to the client. It could be because of faulty products that have been returned or some other reason like an accounting error. The values shown on this invoice will be in the negative.

Expense claims

Employees often spend money from their own pocket for business purposes. It could be for a client dinner or it could be for local travel while on a business trip. These need to be billed back to the company and a reimbursement obtained. The usual method is to raise an expense claim which is in the nature of an invoice.

Volume fluctuations are not uncommon in business. Clients don’t have a responsibility of committing future volumes, unless there is a benefit associated with the commitment. When volumes fluctuate, you want the support of a provider like oWorkers who, with its deeply entrenched community participation, is able to hire additional people at short notice. Without oWorkers, you may have to let go of volumes or follow more expensive options like keeping a bench.

Interim invoice

There are occasions when the contract terms provide for intermittent payments based on certain milestones being achieved. These interim invoices enable the supplier to better manage its cash flows through periodic recovery of dues.

Account Statement

Yet another arrangement is where a contractor keeps a tally of all services provided during a fixed period. At the end of the period a statement of account reflecting the outstanding at the end of the period is presented, for clearance. This is also recurring in nature but the amount varies each period. This statement of account not only becomes a record of transactions but is also presented in the form of an invoice.

oWorkers works with employees, and not contractors and freelancers like some of its competitors. The additional expense is more than compensated by longer tenures and progression in the company to take up supervisory roles, a key pillar in the delivery structure of oWorkers. It pays social and local taxes for its employees and is often rated 4.6 and above, on a scale of 5, on independent platforms like Glassdoor.

 

Why do we use invoices?

Another way to understand what is invoice processing is to make an effort to understand its uses and applications. As we know, a business takes each action for a purpose. If it issues invoices, there must be a purpose behind it. And since it is done, it must be done properly, with adequate checks and balances around it. Hence it consumes time and effort. So, why exactly do we issue invoices?

Transaction record

Not all business contracts are supported by detailed contracts. In many cases, discussions, email exchanges and other communication can also underpin transactions. These distributed records become difficult to locate and assimilate, if required in case of a dispute. An invoice becomes a formal record of a transaction having taken place. It is expected that relevant details of the transaction will be listed on it. This could be classified as the most fundamental answer to the what is invoice processing question.

Notice of expectation of settlement

An invoice often acts as a formal notice, or request, from a supplier to a buyer, for settlement of the money part of the deal, with the products or services, presumably, having already been supplied. Else, there could be delays in settlement of left to interpretation. The invoice sets forth the expectation in no uncertain terms.

With super secure facilities & protocols for client data security with ISO certifications (27001:2013 & 9001:2015), oWorkers brings reliability and technological excellence to processing invoices. It is also GDPR compliant.

Forms basis for accounting

All businesses follow a system of accounting to keep track of their transactions. Registered/ incorporated entities even have legal requirements to the effect. Accounting processes rely on various pieces of documents and evidence, one of which happens to be an invoice, both the ones that are generated for payment by buyers, as well as the ones received for processing. The accounting system, then, also generates a record of taxation and other statutory liabilities.

Legal evidence

In many jurisdictions, issuance of an invoice is a legal requirement to evidence a transaction. Even where it is not, the issuance and delivery of an invoice can be used as evidence, in the event of need, if legal issues arise at a later point.

oWorkers has a leadership team that has over 20 years of hands-on experience in the industry, and is able to steady the ship when it passes through troubled waters.

 

What is invoice processing in a few steps

Every major activity done by a company follows a sequence of activities or steps. Usually these are documented in order that the same thing can be done by everyone and the process does not become dependent on one or two resources.

What are the major steps in processing an invoice?

Verification upon receipt

Upon receipt, it is a good practice to ensure that the invoice has been correctly presented, instead of doing so when it is retrieved for payment. Error correction can take time and the supplier will lose time if done later. Early checking and communication is recommended and is also a good practice for maintaining respectful, harmonious relationships.

The basic details an invoice should ordinarily have include the Purchase Order no. (if applicable), Date, Client Name, Product or Service description, Applicable rate, Reflection of taxes and statutory levies, Tax ID of both parties and indication of how payment needs to be made.

The choice offered to clients between a per unit of output price and a per unit of input price is a feature appreciated by most clients. Many clients also note savings of almost 80% once they engage oWorkers for outsourcing services.

Creating an entry in the system

In most cases invoice processing begins life as a manual process, since the document is received from a supplier either as an email attachment or as a physical document.

If the company uses a software application for invoice processing, such as an accounts payable system, at this stage the invoice will be ‘born’ or created on the software, after which the rest of the journey will be digital. A digital image is also obtained for the digital storage system, which might be in addition to retaining the original invoice in hard copy format.

Companies doing manual processing can skip this step.

Authorization

The authorization, or approval, step is designed to ensure that money is being paid for a rightful purpose and is not a misuse of the company’s resources. Usually, the relevant approvals are obtained before placing an order, especially where the buyer has a Purchase Order issuance process for placing an order. This reduces delays at the time of payment.

oWorkers is able to access the latest technologies for invoice processing, thanks to relationships with technology companies, nurtured over many years. Companies processing manually should consider engaging an outsourced provider such as oWorkers for efficient processing of invoices.

Payment

The accounts payable team, who processes the invoice, is responsible for effecting the final payment after all necessary steps and approvals have been completed.

The payment needs to be made late enough so that the company does not needlessly go out of funds and loses an opportunity to either earn interest on balances or avoid paying interest on overdrafts. It also needs to be made early enough to maintain a good credit standing and ensure penalties are not attracted. This would complete the loop on what is invoice processing.

Once approvals have been received, payment is usually a formality. With modern digital payment systems, it does not take long for the payment to reach the beneficiary, unlike paper processing days when a check was issued, then physically sent, which was deposited in the beneficiary’s bank account after which it was presented by their bank in clearing to the issuing company’s bank.

8 Accounts Payable Invoice Processing Best Practices

8 Accounts Payable Invoice Processing Best Practices

8 Accounts Payable Invoice Processing Best Practices

In May 1954, Sir Roger Bannister became the first man to run a mile, a distance of 1600 meters, in a time of under 4 minutes. Many had tried earlier and failed. It was, then, considered the ultimate athletic achievement, one that could not be repeated. But, guess what, just one generation later, in the eighties, British athletes Steve Ovett and Sebastian Coe were going head to head and already running the mile at under 3 minutes 50 seconds.The current record is 3 minutes 43 seconds or thereabouts, a full 17 seconds shaved off a time once considered impossible. In just two generations.

Take pole vault. Sergey Nazarovych Bubka, who represented the Soviet and Ukrainian, erupted on the international stage in the eighties. In 1983, with a vault of 5.85 meters, he marginally bettered the 5.83 meters mark of Thierry Vigneron of France. Over the next decade, he loomed large on the event and bettered the mark several times, finally finishing with 6.14 meters in 1994. It seemed that Bubka had no peer and that the mark would stay forever. And indeed it did, for 20 long years, when Renaud Lavillenie of France bettered it with a vault of 6.16 meters. Thereafter, the world has witnessed the arrival of Armand Duplantis on the stage, another giant in the sport, who has already bettered it several times and taken it to 6.19 meters. And he is still active.

What does this have to do with accounts payable or invoice processing?

The common link is continuous improvement. Business is not immune to this facet of human endeavor.

Just like flowing water seeks the lowest ground, business always seeks value. Better rates, increased sales, efficient processing, lower costs are different elements it keeps working on in order to move towards its overarching goal of returning a profit to its owners, while competition, choices, regulation and other elements might present challenges in that journey.

Whether in accounts payable invoice processing best practices implementation or elsewhere in the business, it is an ongoing journey for each company, and one which needs attention every moment and every day. The day it stops trying to get better, its slide towards obsolescence will inevitably kick in.

Led by a team with over 20 years of industry experience, oWorkers is constantly challenging the status quo and pushing boundaries in order to deliver the best value to its clients.

 

Best practice implementation

Implementation of best practices in business is an essential step and process that tries to keep it getting better all the time and operating at its most optimum level.

It is essential but not enough.

What does that mean?

What it means is the implementation of best practices is an essential and basic minimum requirement. A company that ignores best practices that stare it in the face, unless there are good reasons for doing so, is courting trouble.

How does one get hold of the best practices to implement?

While it is a good question, the answer is open ended; it cannot be defined by a limited set of situations or circumstances. It can come from anywhere. An aware and connected set of business people should know where to look for best practices. A few places where you could start looking for accounts payable invoice processing best practices:

  • If a competitor is doing exceedingly well, it may be worthwhile developing an understanding of its processes, some of which could emerge as best practices.
  • If within a company, different units have different performance levels for the same practice, learning from each other could create a source for best practices.
  • Repetitive or recurrent issues like delays, penalties, disqualification, could be pointers to processes that are broken. It could initiate the process of looking for best practices.
  • Improvement initiatives have become a commonly used term now in industry. Even if you don’t know for sure that improvement is possible, you strive for it knowing that a small difference can mean a huge gain for the company. Many different methodologies have evolved that help companies structure the execution of these initiatives, such as Kaizen, Six Sigma, DMAIC and several others. These initiatives can result in best practices emerging.

oWorkers has implemented the model of an independent team of Quality Analysts (QAs), which in itself could be called a best practice. It is an independent team that reports directly to the senior management. In a way, it serves as their eyes and ears on the operations floors and enables them to intervene if the situation requires. The QAs also monitor the delivery team and ensure that poor quality is identified and corrected before it becomes visible to a client. This team also identifies areas for improvement and supports and leads improvement initiatives.

 

Accounts payable invoice processing best practices

Invoice processing is a critical business activity that is done in each and every organization that has something to offer and sell, which really means all. Though processes and applications used are likely to vary from one company to another, as a result of repeated execution of an activity, companies do learn what works and what does not. This results in the establishment of best practices that enable efficiency enhancement and optimum use of resources. The following section will discuss several such accounts payable invoice processing best practices.

Prioritize payments based on terms

There is a tendency in some companies to follow a First In First Out (FIFO) policy and maintain a clean desk in others. This results in invoices being processed as they come in. While these are good practices to follow, in case of processing of invoices, these could prove to be financially hurtful to your company.

How is that?

Most payment arrangements between companies include a credit period. What that means is that the payment does not need to be made immediately. If you are making payment immediately, you are needlessly letting go of your cash that could be put to other productive uses in the interim. In a worst-case scenario, it could even just sit in the account and earn some interest, or reduce the amount of overdraft interest.

Hence, payment prioritization based on the terms is a good practice.

With access to the most suitable manpower, on account of its position as a preferred employer in the community, oWorkers is able to further train its staff to execute sensitive jobs such as payment prioritization.

Payment terms are best standardized

A B2B contract is unique. The terms of the contract are negotiated and agreed between the two contracting parties. The accounts payable team then has to track the payment based on the terms agreed. The greater the variety in payment terms agreed upon, the greater will be the requirement of understanding each unique set of conditions, and the greater the probability of misunderstanding and misinterpretation.

Accounts payable invoice processing best practices require companies to follow a practice of a standardized set of payment terms. This enables easier tracking by accounts payable and substantially reduces the chance of errors. Even if errors in interpretation are made, it will serve as a learning experience for future similar issues. If terms keep varying, the chance of error will stay high.

Should there be a need for additional resources at short notice, oWorkers is the partner all companies want to have, with their ability to produce an additional hundred resources within 48 hours, an impossible task for most other providers.

Run a list of checks to identify duplicate payments

Even in automated invoice processing systems, the possibility of duplicate payments cannot be eliminated. Once made and identified subsequently, it would then depend on the vendor and the payer’s relationship with the vendor to recover the money.

But why reach that stage?

Through repetitive processing of invoices, it is often possible to identify the weak points in the process which could result in such an eventuality. It is also often possible to consolidate such areas and run a set of reports, or exception reports, to identify possible ‘at risk’ payments, which could then be scrutinized additionally. These could be run on a daily or weekly frequency based on the processes of the company.

oWorkers offers secure facilities and systems that are built around its ISO certifications (27001:2013 & 9001:2015) for payment processes to be conducted. The company is also GDPR compliant.

Accounts payable invoice processing best practices recommend establishing a Purchase Order process

Many companies have a process of issuing a Purchase Order (PO) to a vendor as an authorization for them to supply the material or service. A PO process usually entails a thorough pre-processing of the transaction in advance, including approval for purchase and spending the money that it will cost. A PO gets created in the invoice processing system and stays as an ‘open’ item until the corresponding invoice has been received.

Since most/ all of the approvals have been obtained at the time of issuance of the PO, the processing at the time the invoice gets presented is swifter. Besides, if there is no PO ‘open’ when an invoice is presented, it could also act as a safeguard against duplicate payments.

With access to the latest technologies thanks to its deep relationships with technology companies, oWorkers can switch between systems with ease. For companies open to it, oWorkers offers cutting-edge invoice processing services.

Create a measurement system

“What can’t be measured can’t be managed,” say many management gurus. Indeed, most professionally managed companies have taken this on board and make an effort to create metrics for every material activity along with a transparent system of measurement, so that the data collected is beyond dispute and means the same thing to everyone.

There is really no reason to leave the invoice processing system out of the ambit of measurement. Suitable Key Performance Indicators (KPIs) need to be developed that are applicable to the unit as well as the people working in it, so that performance can be measured and they know whether they are doing a good job or not. Some recommended measures for the unit are:

  • Payment accuracy
  • Duplicate payment made number
  • Days payable outstanding
  • Number (and %) of invoices paid late/ that incurred a penalty
  • Number of cases of disputed payments

Their reliable and transparent measurement systems allows oWorkers the flexibility of offering a choice between different pricing options to clients, something they love. Most even speak of saving almost 80% of ore-outsourcing cost when they outsource invoice processing to oWorkers.

Establish a dual control mechanism

This is actually management 101. And what better department to implement this system of control than Accounts Payable. Dealing with the cash resources of the company, and having the authority to spend them, makes it a sensitive area. The same person writing a check and signing it and passing the accounting entries and reviewing reports for exceptions can create havoc.

Dual control becomes an important method of control. In very basic terms, in a dual control system, one crook cannot inflict financial damage on the company. It will require at least two people acting in concert to be able to do so. A related control is for the approval authority to be vested at a suitably senior level, or approval levels based on the amount. In a check-based system, the processing clerk would have the check leaves but not the signing authority. The senior person would have the signing authority but no access to the check leaves.

It becomes an even more potent control system considering oWorkers offers services in 22 languages. Whatever the language of the invoice, oWorkers will process it for you.

Leverage technology

In the age we live in, there is really no excuse for using the marvels of digital technology we have at our disposal. Having said that, invoice processing is perhaps one of the very few areas that is still not fully automated, as the starting point is based on a document that is received from a vendor who generates it from a different system or even manually.

However, barring the initial creation of the document’s identity of the application, the remaining steps can still be handled digitally. Apart from the obvious benefit of efficient processing, automation can help remove errors that can be made in manual processing, especially where the processing is repeated and recurring. Additionally, as payment systems are mostly digital now, it can result in a straight-through payment instead of a separate payment process being created. Even record-keeping is becoming digital.

As a pure-play data based BPO player, the niche where it has been identified as one of the three best providers in the world, oWorkers provides access to the latest in invoice processing technology for companies who may not be able to invest in them.

Frequent reconciliation

Frequent reconciliation, especially if processes are manual, and reviewing exception reports, where processes are automated, is an important part of accounts payable invoice processing best practices.

It will help early identification of mismatches and issues, aiding resolution and recovery. The frequency, ideally should be daily, but could be adjusted based on the organization’s requirements.

As a 24×7 operation, reconciliations can be done any time of day or night.

Processing paper invoice is a business need

Processing paper invoice is a business need

Processing paper invoice is a business need

Reading a book on an electronic device is not for everyone. Many people prefer to stick to reading the traditional way, in the form of a printed book. They like the rustle of paper, even the smell, and the joy of manually placing a tag to come back when they stop midway. Equally, there are many others who like the convenience of reading on a device. They like the ability to carry many books together on the device and its handiness and smartness.

There should be no judgment on these choices. This is how people are; different. Work with a digital format or work with a traditional paper format. To each his or her own.

As a data based BPO service provider, oWorkers is able to work with client processes regardless of the format and the level of automation. In eight short years, it has built a reputation for itself and is now regarded as one of the top three providers in its chosen space of work, leaving behind many established companies.

 

Processing paper invoice

There are many developments in business where the choice is taken out of our hands. If, for example, the cheque clearing house stops processing because there just aren’t enough people using cheque-based payments now, then the remaining users of cheques will, perforce, need to adopt the technology that is widely used and supported.

Equally, there are many other situations where a choice presents itself in a business environment; whether to adopt software based digital technology or continue with time-tested paper-based processing. Processing invoices is one such. In fact, invoice processing is a unique business process that, despite all the advances that have taken place in technology, begins life as a manual process.

Why is that?

The reason is that the basis for invoice processing is a document, called an invoice, that is generated outside the systems of the processor, by another party. That party is a supplier of goods and/ or services to the company who needs to process it for eventual payment to the supplier. The method of communication from the supplier to the buyer for this document is either in the form of paper that is sent across or as an attachment with an email. In either case, the beginning of the process is manual.

Paper or software, people will be required for processing to be done. People are one of the key differentiators in the BPO industry. Being known in the community as a preferred employer helps. oWorkers attracts job applicants all the year round, setting itself up for success in client projects by hiring the right people for the right jobs.

 

Better or worse?

Processing paper invoices or processing digital invoices; which is better?

It must be clarified that whether the processing is digital or in the form of paper, the initiation of the process is similar and gets triggered by the receipt of an invoice from a supplier which could come in the form of paper or as an attachment with an email. The discussion is more about the rest of the journey, whether on paper or digital.

There is a view in some quarters that tends to favor anything that is in a digital format and looks down upon any process or transaction that is not.

It should be remembered that companies have relied upon paper processing, or manual processing of transactions for many years, decades and even centuries. They have built processes, systems and controls over long years of usage. Even automation of hitherto manual processes is done as a mirror of the manual process, with the additional ability of workflows, faster retrieval, reporting systems, triggers and other features. So, it must be understood that there is nothing wrong with the manual process since the automated process takes almost the same steps.

The question for a business always is: Does it make sense to digitize this process? Does this investment deliver a positive ROI (return on investment)? That would usually be the call that would need to be made by the business.

It is no secret that the practice of processing paper invoices continues in many small companies. It is possible they do not have the volume to justify investment in a software for doing which only takes up a small portion of their time and attention.

Whether processes are manual or automated, real life is always different from expectations and business projections. Occasionally, an unexpected volume spike can create an opportunity but without resources to handle, it can go abegging. If the company plans for staffing at a higher level, it is spending money on resources who are not required most of the time. What should it do? If it has a partner like oWorkers it does not need to worry. oWorkers is equipped to cater to such spikes and has the ability to hire an additional hundred resources with a lead time of just 4 hours. Which business would not want this flexibility?

 

What are invoices used for?

It is perhaps a good idea to understand the purpose of an invoice in order that you may be able to take an informed view on whether to go digital or not.

Notice of payment becoming due

This is the most common function of an invoice. It seeks to inform the buyer that a certain payment, either interim or final, has become due as a result of the transaction, subject to the other commercial terms mentioned therein and agreed between them. There is no going back once an invoice has been issued and delivered.

Recording

An invoice serves as a record of the transaction for both the seller and the buyer. It is the document that binds them together since the same version is used by both. In case of a discrepancy on an invoice, the buyer is likely to send it back for correction before making payment. Hence, the last updated version is what both would have on record.

Accounting

An invoice is used as evidence of a transaction. The date of the invoice is used as the date of the transaction for all material purposes, including liability of taxation that may arise out of it and entry into the accounting system of the company.

Tracking payment

An issued invoice also triggers steps that eventually lead to settlement of the transaction. Settlement usually involves payment being made by the buyer to the seller. In the event of any dispute regarding payment, an invoice serves as the primary record for tracking.

Generating MIS

While companies today use all data points available to them for the purpose of getting some competitive advantage, an invoice becomes particularly useful as it serves to capture a client’s consumption pattern. Hence, for a supplier, it provides invaluable information on clients and their preferences over time.

Whatever the use, companies look for financial benefit all the time. Working with oWorkers gives them just that. Many clients of oWorkers, particularly from Western Europe and the US, note savings that can often stretch to 80% of pre-outsourcing numbers.

 

Steps in processing paper invoices

The steps remain the same whether the processing is on paper or on a software system. This is so because the underlying principles that led to the development of the process do not change. What does change is the tools and techniques.

What, then, are the main steps in invoice processing, paper or digital?

1. Verification

When an invoice is received, as a first step, it needs to be verified for accuracy. Accuracy can mean many different things:

  • Is the invoice meant for our company or has it been sent to us in error?
  • Is the quoted Purchase Order (PO) number accurate? If not in response to a PO, has the right reference been quoted?
  • Has the rate been quoted correctly?
  • Has the tax been calculated correctly? Is the Tax ID quoted correctly?
  • Are the financial calculations correct?
  • Are the payment terms as per the contracted terms?
  • Has payment information, where it should be sent, been provided?

It is considered a good business practice to do this verification up front and, in case of any discrepancy, send it back to the supplier for rectification and re-presentation. If done later, it will cause delays in processing, leading to the supplier receiving payment later than expected, causing needless hardship.

oWorkers operates from three of the most popular delivery locations in the world through locally registered units. It pays social and local taxes for all staff. Staff, both past and present, rate them at 4.6 and better, on a scale of 5, on independent platforms such as Glassdoor.

2. System entry

In most cases, the second step would usually involve setting up an entry in the software used by the company for processing invoices.

However, in the case of processing paper invoices, this step may be sidestepped.

What does it mean?

What it means is that the software, that usually has rules defined based on which the workflow happens and approval authorities get involved, will not be used. Instead, a manual approval process will be used through which the invoice will need to be routed manually (physically) across the different stages like approval and payment.

Of course, if the company uses systems for other processes, they may need to be complied with as per requirement. For example, if entries are created in an accounting software, they will still need to be done. It is only the invoice processing section of the journey that is manual.

Though oWorkers has many technology companies as clients, its relationships go deeper and have been nurtured over many years. As a result, oWorkers can access the latest technologies which are often also available to oWorkers for the processing of client transactions.

3. Approval of invoice

Approval of the invoice for payment could be considered as one of the major steps in the process, for processing paper invoices too.

As money is a key resource, usually approval levels are defined based on the amount that needs to be paid out. A sometimes implicit and at other times explicit step in this process is to seek confirmation from the person or unit raising the requirement for the material and/ or service that has been purchased and to which that invoice pertains, that delivery to the extent claimed in the invoice has taken place. Thereafter, the financial approval process takes over.

In some cases, companies might even have a process whereby the approval process is gone through while placing an order only. At that stage the person/ unit raising the requirement has to justify its validity to the approver. Once approved at that stage for purchase, the later stage when the invoice comes in the approval process need not be gone through again, and the earlier approval is treated as the authorization to pay, subject to receipt confirmation by the person/ unit requisitioning.

oWorkers delivery capabilities are available when you need them. Their delivery centers are equipped to operate on a 24×7 schedule. This facility extends to the ‘work from home’ environment they created soon after the first wave of the pandemic hit the world. Today, their employees have the flexibility of operating either from home or office, depending on the situation on any given day.

4. Payment

Eventually a payment needs to be made, or settlement reached with the supplier.

Processing paper invoices does not mean that the payment process is also paper based or manual. In fact, as stated earlier, while the processing of the invoice may be manual, it does not automatically mean that other parts of the processing will also be manual. If electronic payment systems are used by the company, and if that is the most efficient and suitable way to make payment to the supplier, then it will be used by the accounts department subject to the other parts of the processing being complete.

If, of course, the intention is to issue the payment as well in a paper format, most jurisdictions continue to use cheque-based payment and clearing systems, hence it should be possible.

 In some cases, however, additional processing may be required. An example could be where a payment of an invoice needs to be made in a different currency.

oWorkers operates from super secure facilities & protocols with ISO certifications (27001:2013 & 9001:2015). They are also GDPR compliant. This not only ensures the security of client data but also enables safe execution of financial transactions.

 

Why oWorkers

Outsourcing to a capable partner remains a viable and preferred option for many companies and oWorkers remains one of the most trusted and sought-after among partners.

Led by a team of professionals with over 20 years of hands-on industry experience, oWorkers can support clients in 22 languages.

oWorkers operates with employed staff, and not contractors and freelancers like some of our competitors. This has enabled oWorkers to strengthen delivery with a supervisory layer of staff grown through promotions.

Your work will enable oWorkers to employ a few more people from the communities we work with, and give them their start in the global digital workplace.

Invoice processing steps for an organization

Invoice processing steps for an organization

Invoice processing steps for an organization

Invoicing is one of the most important processes in a company.

Why is that?

Because it is a culmination of the many different things a company needs to do to reach the point when it can start earning money for its efforts. After all, that is why it exists; to generate revenues that will exceed its costs and return a profit to the owners.

It may need to create an organization. It may need to hire people. It may need to invest in machinery and a workplace. It may need to go through a sales process. What for? For reaching a point where its efforts start bearing fruit in the form of revenue.

While that is the focus for any business activity, our focus in this discussion is business to business, or B2B, transactions, where each transaction is like a custom transaction and invoice processing steps and follows a reasonably standard and well-defined path.

As a leader in facilitating the transition from workplace-based support to operating from anywhere post the Covid-19 pandemic that swept across the world in early 2020, oWorkers stays ahead of the curve so that its clients can be supported in their efforts at staying ahead of the curve.

 

Invoices and invoice processing

Invoice processing is actually a counter-intuitive term.

How is that?

Processing is generally used in connection with an effort that has an input and results in an output, or a transformation of some sort in the subject. For example, coffee beans processing could mean that raw coffee beans were the input on which processing in the form of roasting was performed and roasted coffee beans, ready for the next process of being ground into powder, are the output.

Booking processing in the context of travel arrangement might mean that processes are being performed that will transform a booking desire into a confirmed booking that matches the requirement of the booker or the customer.

Invoice processing is different.

Firstly, it does not refer to processes that result in the production of an invoice or transforming an invoice from one form into another through processing. As we will see later in the invoice processing steps, invoice processing starts with the invoice already in its final form.

Secondly, the party actually taking steps that result in the generation of an invoice, and the steps taken, are not referred to as invoice processing. Those steps are generally included in the operational or production procedures of the invoice issuer. The invoice issuer is the supplier of goods or services.

The reference therein is to the steps that will be taken once an invoice has been generated. These are performed by the client, or the purchaser of the goods and/ or services supplied by a vendor.

Led by a team of professionals with over 20 years of hands-on industry experience, oWorkers is able to replicate and improve client processes for data-based services such as invoice processing.

 

Invoice processing steps

Invoice processing starts with a received invoice and does through a sequence of activities culminating in payment being released to the initiator of the invoice, usually, or settlement being reached in some other manner.

It is a process that is critical for the processing company as it results in the outflow of money, a critical resource for all companies and all people. Hence, it needs to be ensured that the outflow is towards a justified cause.

Like many critical processes, invoice processing could also be viewed as a composite of many sub-processes.

With the help of its long relationship with technology providers, oWorkers has the wherewithal to bring in the most updated technologies to support client transactions.

Receipt of invoice

Like the first line of the mythical cookbook which starts a description of cooking delicious hare meat with “first catch your hare,’ for processing to be initiated, an invoice has to be received.

Why this is an important step in the larger set of invoice processing steps is that this is, for all practical purposes, a manual starting point of the journey.

Why is it manual?

It is manual because the document that initiates the journey has been prepared in the accounting system of a supplier, and not your own. And that is a best-case scenario. It could also be a manually prepared invoice that has been presented to you.

Moreover, the presentation of an invoice can happen in multiple ways, with (snail) mail and email being the most common.

Technologies for electronic receipt have emerged. Some of the larger corporations are able to get their smaller vendors to raise invoices on their systems, but it does not yet seem to be widespread. What is, however, happening is that instead of invoices being received in email or mail, suppliers are uploading invoices under their account directly into the client system. While data entry may still be required, this saves the step of moving the invoice from one environment (say email) to another (the software) as it gets directly received on the software it will be processed on. 

Whether a process is manual or automated, people are essential. This is where oWorkers stands a cut above everyone else. As a credible employer, it attracts a consistent traffic of jobseekers, enabling staffing all projects with the best resources, including replacements for the ones leaving. This is made possible by the respect it has earned in local communities.

Verification

To a great extent, on account of the need for a manual transition from one system to another, a verification of invoice details is important.

It ensures that correct details are being captured, especially if the purchaser is using the received invoice to initiate the digital journey of invoice processing. If incorrect information is permitted to be captured, it will create a lot more downstream impact than if it is captured and corrected at the start.

Verification involves the following information to be checked:

  • Name and details of the supplier – is it where we placed the order?
  • Name of the client – is this really meant for us or sent to us in error?
  • Tax ID information
  • Description of goods/ services supplied
  • Calculations
  • Payment terms – as per the agreed terms?
  • Payment information – how is it to be remitted?

Many companies take a few days to weeks to even months to release a payment based on an invoice. Verification also ensures that this timeline has started and will end with a payment, rather than an error being found at the last step and the cycle beginning all over again. It is a measure of respect the client has, and perhaps should have, for the supplier.

The third aspect of verification is to ensure that the invoice matches a requirement that was raised by the company. This can be done either by matching it with the Purchase Order (PO) issued if the company has a PO process, or the internal requisition based on which the supplier was given an order. Multiple payments being made for the same order has been known to happen, because the supplier raised another invoice, either in error or out of malicious intentions.

oWorkers has begun to reap the rewards, along with its clients, of its practice of promoting a multicultural and multiethnic workplace. One of the outcomes of this philosophy has been the organic development of a talent pool that can support clients in 22 languages, thereby becoming an enduring partner as they grow.

Data entry and imaging

As the invoice has come in from a system that is external to the system on which it will be processed, a necessary step is that of creating a record or identity for it on the appropriate system. This step is to make it amenable for digital processing, which is what most companies do. This is a manual process and done as a type of data entry into the system used by the purchaser.

Once an identity of the invoice received from a supplier has been created on the system, the journey thereafter will be digital, with relevant checks and balances. An image of the physical invoice is also captured, for digital storage, even though the hard copy received should also be filed, as it is the original document.

However, there are companies who prefer to retain this as a manual activity. They would skip this step and directly go on to the next. For any company, usage of an accounts payable or invoice processing system is a question of value. Will the investment create a justifiable ROI (return on investment)? Hundreds and thousands of small companies and businesses do completely manual processing of invoices and have no issues in doing it this way. It is a supporting process for their business and needs to be set up in a manner that adds value to it, whether manual or automated.

Invoice processing steps, at this stage, also provide for an image of the invoice to be obtained, especially in cases where the filing is digital.

It is a company adapted to its times. Just like payment requirements can arise any time, oWorkers can also support clients on a 24×7 schedule. If clients have a need, oWorkers is at work. 

Approval

Money is involved in this process.

Whichever way you approach it, the denouement of invoice processing steps is only one way; by making a payment to the supplier. Hence, care and caution are advised.

How?

Some parts of the process would have already been done by now, such as verification for ensuring the invoice is genuine and has not already been paid.

The other material part of caution is ensuring that the fulfillment of the contract, for which the invoice has been received, has been done. It should not be the case that the invoice has been received in response to a PO and has been matched against the PO to ensure that the products were, indeed requisitioned, but actual delivery has not taken place.

For this, the accounts payable team would need to go back to the team that requisitioned the material to ensure that fulfillment, to the extent required by the contract and claimed in the invoice has happened and the money claimed in the invoice has, indeed, become due.

Once that is done, if the company has a financial approval process for authorization of payments made to external parties, that would be triggered. This could be workflow based if on a system or it could also be a paper approval process.

Some companies dispense with this step and, instead, prefer to do the authorization only at the stage when material is being purchased. The logic is that once an order has been placed, and the supplier has fulfilled his obligations, payment cannot be held back.

oWorkers is also able to effectively support temporary peaks and troughs with its ability to hire almost a hundred additional people at a short notice of 2 days. This allows its clients the freedom of staffing only for essential requirements and obviates the need to maintain buffer staff to cater to unexpected spikes. This saves significant dollars for clients.

Payment

Eventually payment for the goods and services purchased needs to be made.

Once the verifications are done and approvals are in place, this is more of an operational activity for the accounts payable team.

Traditional check-based systems could cause a further delay in releasing payments, as it was based on physical signatures for which people need to be available in person. However, modern digital payment systems, now widely used, can be accessed from anywhere, anytime, and authorizations requested as well as provided. Moreover, once triggered, the payment gets delivered into the supplier’s account almost within no time.

Against this method, legacy payment methods took longer for the supplier to realize the money as the check would first need to be deposited for clearing and only after a day or two it would be realized.

Of course, certain types of payments may require more processing effort. As an example, if a payment of an invoice needs to be made in a different currency, one would need to ensure that the exchange rates available are not extortionary.

Clients advise savings of close to 80% when they outsource to oWorkers. They also appreciate the choice offered by oWorkers between output and input-based pricing models.

 

Invoice processing steps – last word

Recognizing the importance of people, oWorkers has chosen to operate with the employment model, instead of the freelancer and contractor model preferred by several other BPOs. While this model places greater responsibility on the employer, it promotes loyalty and allows creation of a supervisory layer through promotions. It is also reflected in the consistently high ratings we get from staff, both past and present, on independent platforms like Glassdoor, which is always in excess of 4.6 on a scale of 5.

The secure ISO certified (27001:2013 & 9001:2015) facilities and networks of oWorkers promote security of client information. They are also GDPR compliant.

What are the fundamentals of business process outsourcing?

What are the fundamentals of business process outsourcing?

What are the fundamentals of business process outsourcing?

Today we take the business process outsourcing (BPO) industry to be a given, a fact of life, much like electricity and buildings and oceans. And we start from there, whether we are a provider who delivers on client requirements or an outsourcer looking for a solution.

Which is not a bad place to be. After all, one cannot always start with first principles. One has to trust other people enough to take many things as given. You are not going to build the internet from scratch, will you? You have to take it as a given resource that you can leverage, like so many millions of others, for your own unique requirements, in this case of running a BPO engagement.

While that may well be the position you adopt as you go about creating value for your company by either exploring opportunities for outsourcing business processes, or identifying potential clients your outsourcing business can support, an understanding of the moving parts of the business equips you to handle various challenges that are bound to arise in any human endeavor.

The same should be the case for participants in the BPO industry, whether client or provider. An understanding of the fundamentals of business process outsourcing will equip you to take the right decision when faced with a challenging situation.

oWorkers has come up the curve in the last eight years since it launched operations, rooted in the fundamentals. It should not be a surprise that it is now, already, recognized as one of the three top providers of data based BPO services in the world.

So, what are these fundamentals?

 

Free Market

We often take it as a given, and we must, but the free market that is prevalent in most societies has unshackled opportunities for large sections of the population. It is often said that the prosperity of the western world is underpinned by the free market that exists in these societies.

What is a free market?

The economic definition of a free market according to Wikipedia is that of “a system in which the prices for goods and services are self-regulated by buyer and sellers negotiating in an open market. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority, and from all forms of economic privilege, monopolies and artificial scarcities.

Of course, this is a theoretical, or ideal, definition. There is some amount of intervention from the government in these societies, mostly for making efforts for uplifting the lot of the underprivileged. But, by and large, it is a free market.

What that means to a business is that it can seek value in any way it wishes to, of course within the boundaries defined by law and society. This has permitted organizations to explore innovative ways of doing business, providing the impetus for BPO to grow and spread across the world.

oWorkers enables free market participants to break their shackles and seek exponential growth by focusing on their core business and letting oWorkers do the rest. The 24×7 support that oWorkers support works has the capacity to magnify outsourcing benefits for its clients.

 

Fundamentals of business process outsourcing include an enforcement framework

Rules are of no use if they cannot be enforced. An enforcement mechanism and a legal framework are necessary for rules to be enforced, otherwise they remain a paper exercise.

Societies that practice a free market, also have a legal and enforcement system in place that creates laws and defines penalties for violation.

From the perspective of business, this creates an environment in which companies can work with other companies, individuals and government entities under the auspices of the legal framework that operates in their jurisdiction, without having to worry about creating a parallel enforcement system that protects their company against the misconduct of the other party.

Business to business (B2B) engagements, which BPO engagements usually are, often rely on a contract between the two parties that defines the responsibilities of each and needs to be agreed by both parties before performance can be initiated.

It is this legal and enforcement framework that gives confidence to the two contracting parties to engage without fear of being cheated by the other party. It is particularly important in the BPO environment because the engagements often happen across countries and continents. They work on creating value for the business with the right to resort to the authorities in case of need.

The leadership team of oWorkers, with over 20 years of hands-on experience between them, takes upon themselves the task of worrying about contracts and enforcement, should something go wrong. They leave the operations staff to do what they can do best, deliver services to the requirements of their clients.

 

Economic differences

Though we have established a free market as one of the enabling fundamentals of business process outsourcing, the truth is that it does not make everyone equal. Far from it. It often tends to exacerbate the gap between the haves and the have nots with their different abilities to leverage the opportunities in the environment.

We know water always flows from higher ground to lower ground.

Similarly, BPO work tends to flow from higher ground to lower ground, or, from greater prosperity to lower prosperity.

What is the reason?

BPO vendors provide operational support. They do not propose to take over the entire business of the client, who continues to handle what he would consider to be their core activities. BPO vendors have excelled in converting client work to small packets of repeatable work. As this work may not require the same kind of education, skills and experience as the core business might, it is often migrated to locations where one can find adequately skilled resources at a lower level of cost.

The result is that work flows from the more expensive location to less expensive locations, creating employment there and taking a step towards reducing the economic disparity between the two. This is one of the great benefits BPO delivers to developing economies and one of the reasons political reasons make efforts to get BPOs to set up shop in their catchment area.

oWorkers locates its delivery centers in some of the most work-conducive cities in the world. With its policy of working with a multicultural and multinational team, it is able to provide multilingual support to its clients, a key concern for growing companies.

 

Technology and telecommunications

The reason BPO today has reached all corners of the world today is the explosion in telecommunications technologies, including the internet and computing devices. There is more computing power in the device in your hand than used to exist in a room full of machines in the sixties and seventies. Advances in digital technology have made BPO the global force that it is today.

Just as it liberates, technology can also create challenges. With increasing volumes of data being transacted over telecommunications networks, the security of data remains a concern for companies, data being a key asset and differentiator in today’s world.

On the one hand, the large complement of clients being technology companies, keeps oWorkers on its toes with regard to technology adoption.

On the other hand, their relationship with technology companies, nurtured over many years, gives them access to the latest technologies which they can even use for client projects.

 

Access to deep talent pools

Eventually, the business needs people to run it.

It is no doubt true that BPO vendors are skilled and resourceful. As BPO work is their source of revenue, they make efforts at improving the underlying processes and technologies. Some vendors have even been successful in creating platforms that clients themselves could not create.

But all said and done, if it could be automated by the client, he has already done it. What he now needs the vendor for is work that needs to be done manually. And this can only be done if the vendor has access to talent pools that are capable enough for doing the work that clients wish to outsource, and inexpensive enough for the client to find value in the outsourcing. This, after many years, has remained one of the fundamentals of business process outsourcing.

A corollary requirement that arises for most BPOs is that of backfill; the requirement to again hire for the same position on account of staff attrition. Attrition continues to be one of the bugbears of the industry and a drain on resources.

With its prominent position in local communities, oWorkers gets a steady stream of applications for jobs. This not only provides them a choice of talent for client projects, but also provides flexibility in covering unexpected spikes in client volumes, with an ability to add almost a hundred additional resources within 48 hours. This creates a big cost advantage for the client who would otherwise need to retain a bench.

 

Ability to train

Having access to the talent pool is one aspect, making it ready for client work is quite another. BPO providers have, over the years, excelled in preparing raw talent to handle the most intricate transactional and operational requirements of clients from across the world.

Training has emerged as an unlikely hero for the BPO industry. Not only does it polish raw talent, it also keeps ensuring that experienced resources keep their saws sharpened at all times.

oWorkers controls resource input by instituting strong screening checks designed to ascertain IQ, EQ and language skills of candidates. The training team then takes over and works on them to make them job ready.

 

Flexibility to work from home

We may not have been talking about it a couple of years back. Work from home may have been on the wish list of many, but never implemented. However, the onset of Covid-19 shook the fundamentals of business process outsourcing and forced the industry to go where it had not gone before. In other words, start working from home, to overcome the lockdowns and restrictions placed by governments worldwide to halt the march of the pandemic.

To the credit of the industry, it turned on a dime and stood tall when most needed. Its readiness to adapt during the stressful times enabled many a supported business to stay connected to its customers. They put together a technology infrastructure that was needed to support people working from home and implemented it, even while the pandemic was raging across the world.

It is now a given.

oWorkers has been at the forefront in the race to equip staff to work from home and ensuring that clients are on board with the approach. The fact that it is ISO certified (27001:2013 & 9001:2015) and GDPR compliant also creates confidence amongst clients.

 

Managing the external environment

While technology and human resources are must-haves without which a BPO business will not survive, there are many other pieces in the jigsaw that need to come together at the right place for the business to be successful. To that extent, these could also be considered as fundamentals of business process outsourcing.

What are these pieces?

Location – A BPO enterprise, with its need for people, works best with the support of the local communities. It is helpful if the community is supportive of the unique requirements of a BPO job, such as a 24×7 shift. It is also helpful to have a community that is supportive of female employment, as that substantially enhances the hiring pool.

Infrastructure – For a business to operate there are many infrastructural elements needed. There is a need for space for setting up an office, grid supplied power to run the computers and cooling or heating devices depending on the climate, food and water for workers, local transport through which people can commute, etc. Some may have alternatives but some may be essential.

oWorkers embeds itself into local communities and works with them for mutual benefit. The results are there for all to see. Kit pays social and local taxes for its staff who, incidentally, are employees, and not freelancers or contractors.

 

Cost saving

All roads lead to the Income Statement.

Fundamentals of business process outsourcing mandate that the client should achieve a cost benefit by doing so.

And he does. While the many other advantages of BPO may be difficult to measure, the cost advantage is not. It emanates from the inexpensive locations that the partner operates from. It emanates from the resources they hire. It emanates from the many operational innovations through process and technology improvement they do that delivers a benefit of cost to the client.

Clients of oWorkers often note saving almost 80% of their original costs once they have outsourced to oWorkers. This is especially true for clients from Western Europe and the US. On top of that, clients are delighted by the pricing choice they get from oWorkers. They can choose to pay by output, or by input. They decide what works better for them.

What are the advantages of business process outsourcing

What are the advantages of business process outsourcing

What are the advantages of business process outsourcing

The business process outsourcing industry, BPO in short, has grown and grown and grown. Most analysts with a crystal ball predict the industry to continue its strong growth over the next few years, even as models change and requirements change.

The consistent growth demonstrated by the industry cannot be an accident. It has to be the result of value created for its various constituents. In a world of private enterprise, the primary constituent is perhaps the customer, the one who pays for the services of the industry. It has to be of value to the clients who use BPO. The other constituencies to whom the industry delivers benefits are the regulators and governments of the various geographies they operate in as well as the workforce they employ through whom their services are delivered.

It is quite a varied set that BPO appears to be delivering benefits to. While discussing the advantages of business process outsourcing, we will begin with the difference they are able to make to regulators and governments, as that, perhaps, is not merely an economic benefit but could be classified as a social benefit as well.

Innovative BPO providers like oWorkers are creating value in areas legacy providers have been slow to enter into, like content tagging for AI models and social media moderation. In its eight years of being of service to global clients, oWorkers is already counted as one of the top three providers globally, not a mean achievement.

 

Generating employment

In today’s world, in most cases, economic activity seems to be driven by urban centers. Non-urban centers and communities often get left behind in the development march. The gap appears to be even more acute in developing nations which is where BPO centers get set up in most cases.

Business process outsourcing has the capacity to make a substantial impact on this status quo. BPO has a unique model through which it creates jobs that require limited skills that can be replicated. In other words, these jobs do not require advanced qualifications or skills but the numbers of people required are large. This becomes an almost ideal combination to hire people from disadvantaged communities who do not possess advanced skills and qualifications but, with the training provided by the employer, have the willingness to learn and commit to the job.

While these jobs are not highly paid, they do create employment in large numbers, which is why many administrations and governments seek out BPOs to set up delivery centers in their constituencies.

Working closely with local communities sets oWorkers up as a credible employer and draws a steady stream of candidates looking for a career in BPO. It helps that oWorkers follows a policy of working with employed resources, and not with freelancers and contractors like some of its competitors do. Being a magnet for talent supports a low-cost hiring model as it does not need to spend on advertising to attract applicants.

 

Cost advantages of business process outsourcing

Moving on to the business advantage, every business seeks to increase revenue and decrease cost. No other method has been discovered that increases profits, the final goal of a business, as effectively as increasing revenue and decreasing cost.

While a business has many initiatives it undertakes to enhance revenues, one of the strategic goals business process outsourcing enables it to move towards is cost containment.

How is that?

Revenue being the driver of a business, costs are set up to feed into the revenue generating opportunities the business locates. They may not be geared to be most optimal for the business.

Efficient delivery being the leitmotif of a BPO, it sets itself up in an economical manner. It is nowhere more evident than in its staffing, since most work is handled through people. While the client may be handling delivery through similar highly qualified, and expensive resources that it hires for the revenue side, a provider gets down to the basics and employs people with just enough to deliver effectively.

This, coupled with not needing to locate in downtown areas or even major urban centers, creates a significant cost advantage. Additionally, with outsourcing costs can be handled as variable costs to an extent, and reduced when requirement reduces.

Most clients of oWorkers talk about saving numbers that go all the way up to 80%. This is the saving when measured against their cost pre-outsourcing. The efficient management, like negligible expenditure of advertising for talent, eventually finds its way into the pricing offered to clients.

The pricing choice between dollars per unit of output and dollars per unit of input offered to clients is another unique oWorkers offering that is appreciated by many clients.

 

Focus on core activities

Businesses could be set up because of the skills and interest of a core group of people, or based on the opportunities available, or other reasons. Whether you are a maker of microchips or a retailer, there are many activities your business needs to perform that are not necessarily related to the core business.

Why is that?

There are two main reasons.

One is that the business is a participant in a competitive marketplace and has to put its best foot forward when it needs to interact. For example, it needs to hire resources. Being in a marketplace, there are many other companies who are trying to do the same. Hence, it becomes competitive. To navigate these marketplaces, which may have nothing to do with your core business, requires time, effort and skill.

The second reason is regulation. Most regulated economies will have laws that require you file your tax returns, keep accounts in a certain manner, ensure your workplace is not hazardous for staff members and others, and a host of others.

While the company’s staff may have the skills, or may be able to develop them, it will mean that they are not focusing on their core activities for that much time. Engaging a partner ensures that the focus of key personnel does not waiver from their core business.

With its approach of working with a multicultural and multinational staff, being multilingual is a natural by-product for oWorkers who is able to support clients in over 20 languages, and be a partner as they grow across geographies.

 

Advantages of business process outsourcing include specialization and expertise

Another advantage that is based on the same set of circumstances as described above is the access to expertise for these activities through a BPO provider since engaging in them, hiring of resources, filing tax returns, might not be the core competence of your employees.

Engaging a BPO provider gives you access to specialized talent that is geared to that very task. It is their bread and butter. Since it is a source of revenue it receives management attention. They are also likely to keep themselves updated on the latest developments so that the job that is done by them is accurate and compliant.

This instead of having to ‘make do’ with unenthusiastic resources, you get skilled and enthusiastic resources for whom it is core work.

Not only enthusiastic resources, oWorkets will also be able to provide them at short notice, to support unexpected volume peaks for clients. As an example, oWorkers is normally in a position to provide a hundred additional resources in 48 hours.

 

Investments in technology and processes

Not being on the revenue side of a company’s income statement has some disadvantages, the main one, seemingly, of not being able to get adequate attention from senior management. Your non-core function is a core business process for your outsourcing partner and the source of revenue, the reason for their existence.

They want to do their core job in the best possible manner, like any other company. They have the ability to invest in technologies and process improvements that their clients may be loath to. The BPO also has the added advantage of being able to aggregate volumes across clients for the same, or similar processes, which, perhaps, facilitates the investment decisions. In fact, there are examples of providers investing in platforms that have enabled them to win clients and their clients to get the benefit of superior technologies.

oWorkers has nursed relationships with leading technology providers for the purpose of being able to access the latest technologies for client projects, that clients otherwise may not have access to.

 

Business continuity

One of the advantages of business process outsourcing, especially when you work with an established player, is that of business continuity.

Whether the client had a business continuity plan or not, they can certainly ask that the partner provide it to them. Established BPO providers usually operate through a network of delivery centers. For contracts that are critical, they can distribute volumes in a way that the entire business does not need to shut even if one of the centers is unable to operate for reasons of a natural event or a strife of some sort.

The recent Covid-19 epidemic is a stellar example of how BPOs rose to the challenge placed on all businesses because of restriction of meeting and travel. It is thanks to the efforts of BPO providers that many businesses managed to stay afloat during the period and were accessible to customers.

With its geographically distributed delivery centers in some of the most sought-after locations, oWorkers is able to provide business continuity for situations that may impact one of their centers making it inaccessible or inoperative. By splitting volume across sites, clients can be reasonably assured of at least one site being up and running.

Additionally, as a pioneer of ‘work from home’ since the Covid-19 pandemic struck, all oWorkers staff members are able to operate from home or office, as per the situations obtaining at any point in time.

 

TAT improvement

The global delivery model that has bloomed over the last two decades, maybe more, in itself is one of the inherent advantages of business process outsourcing.

One of the advantages is the time difference.

How does that help?

If the time difference is large, it could enable work to be carried out by the partner while the client is sleeping after a day’s work. When they begin work the next morning, they will find that the assigned work has been completed by the partner overnight. Seemingly magically.

Additionally, as a part of their flexible DNA, most vendors are equipped to operate on a 24xy schedule, where client work requires it. Thus, going beyond the time difference advantage, this helps the required work to be completed faster.

While time zone differences might naturally improve response times, oWorkers’ operations machinery is geared to work on a 24×7 schedule, if required by clients. This can significantly reduce cycle times and improve turnaround times.

 

Skilling and opportunity opening

For many people in disadvantaged communities, BPO often turns out to be a gateway to the digital economy of the world. Through its rigorous process of selection and training, BPOs pick out trainable candidates and put them through a training program designed to hone their skills and make them ready for an identified client project.

BPO continues to be one of the highest creators of white-collar jobs around the world. It has made a significant contribution to the GDP of some nations that are popular delivery centers.

oWorkers leads with its best foot forward. It leverages its expertise in data based BPO work to create opportunities for work around the world. Its leadership team, with a combined hands-on experience of over 20 years, are at the forefront whenever new ground is broken.

 

Disadvantages of business process outsourcing

Data security – Business data needs to be shared with the vendor without which many processing activities cannot be completed. Data being compromised is an ever-present risk.

Alignment with brand – Every company has a unique identity. Can employees of a BPO partner ever fully align with the client identity? This becomes important in situations when the vendor interacts with customers of their client.

Hidden costs – Some outsourcers do not give adequate attention to the processes and expenses that might result from their outsourcing decision. Sometimes costs are not adequately factored in, leading to some nasty surprises.

Loss of control – In cases where the complete process has been outsourced, there could be some issues of lack of control. You may want to do something but the partner might push back citing the contract. The partner could also leverage change requests to make the conditions of the contract more difficult.

Though we have discussed several advantages of business process outsourcing, an overview of the disadvantages provides a more complete perspective.

 

The oWorkers advantage

For the security of client data, oWorkers operates out of super secure facilities and protocols and is ISO certified (27001:2013 & 9001:2015). oWorkers is also GDPR compliant. It has a rigorous selection and training process to make employees fit for client projects. It is not a surprise that it is chosen as a partner by large corporations around the world, which includes several unicorn marketplaces as well as a healthy proportion of technology companies. They consider working with leading organizations around the world an honor and privilege.

The role of accounts payable invoice processing

The role of accounts payable invoice processing

The role of accounts payable invoice processing

Invoice processing is an integral part of the accounts payable function in a company or organization.

Accounts payable is the generic name of the account which represents the amount that needs to be paid, in other words, is payable, to suppliers of goods and services and other creditors who may have not supplied goods and services but other resources like money. It is shown under current liabilities in the Balance Sheet as it is generally of a temporary nature and is extinguished within a short period of time. The Account Payable, or AP, team, is responsible for ensuring that payment is made early enough so that the company does not attract overdue charges like penalties levied by the supplier, while paying it late enough to maximize and extend the beneficial impact of reduced funding requirement to that extent, and hence lower interest costs.

So closely is invoice processing identified with accounts payable that it is often referred to as accounts payable invoice processing, even though the two are also unique terms with their own connotations.

Being deeply embedded in the business-critical processes of our clients around the world, such as invoicing, enables oWorkers to play to its strength in consistently delivering back office BPO services of the highest quality. Being recognized as one of the top three in the world is no mean achievement considering that we have been in business for just over 8 years.

 

The role of accounts payable

As it is classified as a back-office function, many times it flies under the radar. However, for the business it serves, accounts payable provides invaluable services.

Accounts payable in a company usually operates along with the procurement function. The procurement function is responsible for making purchases for the company and for identification and appointment of vendors and suppliers. As this eventually leads to payment of money to suppliers and vendors, on account of the possibility of misuse of company money, the procurement function sometimes gets an unjustified, bad image as being corrupt even though they provide an invaluable service, of ensuring a consistent supply of high-quality input materials and services that are required to power the engines of the company’s production facilities, enabling it to manufacture and sell and earn revenues. Some of this occasionally reflects on the accounts payable function as well, even though they are not responsible for the purchases or appointments. However, an efficient accounts payable team is able to ensure good relations with suppliers and vendors, by releasing payments when due and, in other cases, operating in a transparent manner and keeping them informed.

It must be remembered that quality vendors are a key ingredient in the success of a business, hence they need to be handled professionally and well. They are the ones who will ensure that there is a well-managed supply of input materials and services.

While it is understood that the accounts payable team will, first and foremost, protect the interests of the company it works for, it does not need to be at the expense of a supplier. Both can be done together.

The accounts payable team is one of the key players in the efficient management of a company’s cash flow, making sure there is enough to meet requirements while not being so much that either incurs an interest cost or forces the company to sacrifice interest earnings.

With the help of strong systems and processes, they are also able to identify and head off frauds and the misuse of the company’s money.

Accounts payable invoice processing is the central activity around which most of the other functions of this team are carried out.

All processes in accounts payable require knowledgeable resources. oWorkers has ensured that it has access to the best resources, one of the keys to BPO success, through their engagement and commitment with local communities encouraging them to offer themselves for employment with oWorkers. Through local communities, oWorkers accesses a perennial supply of fresh talent, enabling them to staff all client projects with suitable talent.

 

Challenges faced by account payable

Companies always try to do more with less. And increasingly more with increasingly less. Accounts payable is no exception and gets caught up in the company’s desire and ambition. At times, the results could be disastrous, if inadequate controls lead to a payment being made to the wrong party or of a wrong amount. Being a cost center, as against being a profit center, also puts the focus on accounts payable as one of the departments where the company could reduce expenses.

But that is, in many ways, the nature of the beast. One has to learn to operate within the natural boundaries defined.

Accounts payable is also the department which is likely to be the most manual, or non-digitized, in its processes.

What is the reason?

It is fairly straightforward, really.

Account payable invoice processing is done on the basis of a document that has been generated by another company through their own systems and processes. The generated document is then sent across, either in paper form or as an attachment to an email, which is equivalent to being in paper form, to the client. Hence, the client’s process begins upon the receipt of a physical document and hence it needs to be manual, at least the initial phase, where it might be data entered into their own invoice processing software. From that point onwards, it could become a digital process, or stay manual till the point of release of payment. As systems for processing invoices are designed as B2B systems, even where the client and supplier are using the same software, on account of differences in the way they have been set up, it is quite possible that the output of the supplier system may not be accepted by the client system.

It also faces issues that are related to paper transactions, such as those related to filing and retrieval, and relative lack of visibility and control.

Among the challenges most businesses face is the cyclicality in volumes and actuals turning out to be different from forecast volumes. It impacts clients of oWorkers too. But, with oWorkers as a partner, clients have an additional tool up their sleeve for handling volume spikes, which is the unmatched ability of oWorkers to hire almost a hundred additional resources within 48 hours. With this ability of their partner oWorkers, clients can choose to dispense with expensive ‘just in case’ benches.

 

Processing steps in accounts payable invoice processing

The sequence of steps from the receipt of invoice through to the release of the payment followed by most companies are usually fairly standard, and could be summarized as follows:

1. Verification

The received document needs to be verified, as per good practice for conduct of business, not merely good practice for processing of invoices. This enables the recipient to ensure that it has been received by them correctly and that the information contained in it is accurate.

Usually, the following information would need to be checked:

  • Supplier details, including Tax ID
  • Description of goods and/ or services supplied
  • Rate, quantity and value of supplies
  • Applicable taxes and levies
  • Payment information like due date and mode of payment

If there is an error, it would require the client to communicate the issues with the supplier sending the invoice so that the errors could be corrected and the right one presented. This is an example of treating vendors professionally and with respect. Checking and communicating up front upon receipt, instead of when the payment becomes due, saves precious time for the supplier. Sending an incorrect invoice back when it is due and claiming that the payment period will only begin when the corrected one is received is an example of disrespect and sets back the relationship.

If the invoice has been received against a Purchase Order (PO) issued by the buyer, it would need to be checked against the PO with the PO being marked as fulfilled; in other words, the relative task having been completed and the invoice received.

oWorkers serves clients in 22 languages through their delivery centers that are registered as local companies in three of the most sought-after global locations. They pay social and local taxes for their staff and are proud to be rated at 4.6 and better, on a scale of 5, on independent platforms such as Glassdoor, by both existing and past employees.

2. System entry

Since we have established that accounts payable invoice processing is a manual process, the next step is to make it amenable for digital processing, which is what most companies do. The logical first step here is to do data entry into the software that is used by the company for this activity.

Once an identity of the invoice received from a supplier has been created on the system, the journey thereafter will be digital, with relevant checks and balances. An image of the physical invoice is also captured, for digital storage, even though the hard copy received should also be filed, as it is the original document.

However, there are companies who prefer to retain this as a manual activity. They would skip this step and directly go on to the next.

With its deep links with technology companies, nurtured over many years,

oWorkers can access the latest technologies, thanks to its relationship with technology companies. These technologies are often available to oWorkers even for the processing of client transactions like accounts payable invoice processing which clients will never get on their own.

3. Approval of invoice

Approval of the invoice for payment is the next material step. Approving authorities are defined based on the policies of the company and their rules pertaining to delegation of authority.

The purchaser of the supplies, the person or department who raised the requirement for them, has a role to play here by confirming that the supplies requisitioned have been received and were as per the requirement, and that the supplier has fulfilled their obligation in this respect. Once that has been confirmed, the invoice can be sent for approval of the designated person.  

Some companies have a process of pre-approval. When the approval process is navigated at the time of raising a requisition, implicit on that process is the approval to pay subject to the confirmation of delivery and fulfillment from the manager raising the request. A separate financial approval for payment is not required at the invoice processing stage.

oWorkers deliver centers are equipped to operate on a 24×7 schedule when required. This mirrors digital systems that have the capability of being ‘always on.’ Whether it is for making a payment or for accounts payable invoice processing, their teams will be available. 

4. Payment

With the plethora of digital payment systems around the world, making the payment is a fairly straightforward process and can be initiated electronically any time of day or night. Depending upon the payments systems and technologies in use in the jurisdiction, the transfer can get effected instantly or after a brief delay or during specified working hours.

Legacy systems also continue to be used simultaneously. The system of cheques, particularly, may require additional processing, including ensuring availability of adequate finds in the account when the issued cheque gets presented.

In some cases, like where a payment of an invoice needs to be made in a different currency, additional processing may be required.

For the security of your data as well as to ensure financial transactions are executed safely, oWorkers operates from super secure facilities & protocols with ISO certifications (27001:2013 & 9001:2015). They are also GDPR compliant.

 

Making the accounts payable invoice processing system efficient

An efficient system will reduce errors and consequent financial losses and present a wholesome image to the external world which will create more opportunities for the business with more companies being inclined to work with it.

Using digital technology for this process is an obvious starting point. Many processes and systems have been transformed through the use of technology. Though not yet widely prevalent, some large companies have attempted to create platforms with which the invoice generation systems of suppliers can be integrated in order to make the process seamless.

Defining roles and responsibilities clearly facilitates decision making in general and that benefits this process too. Approvals will be faster as time will not be lost in going back and forth.

Centralization is often preferred by most organizations that use software for processing invoices, since transactions get routed and approved with the help of the workflow rules that are set up. 

Whatever be the efficiency of the application, human oversight will always be required. Setting up reminders and reports for tracking the process will help in ensuring it stays efficient and enable the company to navigate the risks and threats that might arise from time to time.

Most clients of oWorkers note savings of almost 80% when they outsource work. This is particularly true for clients from Western Europe and North America. They also love the pricing choice they get from oWorkers, between paying on the basis of input material or paying on the basis of output produced.

Defining the invoice processing flowchart

Defining the invoice processing flowchart

Defining the invoice processing flowchart

Before we go deeper into the subject of an invoice processing flowchart, let us understand the key words and concepts that constitute the phrase.

An invoice is a commercial document that is used by a seller of goods or services to itemize the goods and services sold, along with their unit rates, number of units and other agreed commercial terms agreed between the buyer and the seller. It is usually meant to indicate the amount due from the buyer to the seller as a result of the transaction mentioned therein, and the payment terms. It is also commonly referred to as a ‘bill.’

A flowchart is a diagrammatic or visual representation of the series of steps that need to be taken or performed in order to complete a particular transaction or task. It depicts the sequence in which the actions need to be performed and usually includes elements like:

  • Responsibility – who is responsible for a particular step
  • Timeline – Within how much time should that step be performed
  • Dependencies – What needs to happen before a particular task is performed
  • Resources – what is received as the input and what goes out as the output of that step
  • Decisions – if any are required to be taken along the way

A flowchart is a widely used document and seeks to present the relevant information in a concise manner reducing the room for interpretation that textual documents could have. Flowcharts have come to develop a vocabulary all their own with shapes like ovals and diamonds and rectangles assuming different meanings. They are amongst the most commonly used documents in organizations.

With a leadership team that has over 20 years of hands-on experience in the industry, oWorkers is able to navigate the flowcharts of different processes for a variety of clients from around the world, with ease.

 

How is an invoice processing flowchart generated?

There are countless processes used by companies to serve the purpose they exist for and to enable them to achieve their vision and mission. Many of them probably have flowcharts for the support of practitioners carrying out tasks required by these processes. Invoice processing is one of these processes.

An invoice is generated by a supplier of goods or services and seeks to formalize a transaction that has taken place between a buyer and a supplier. Through an invoice the supplier confirms details of the transaction, converts it into a monetary value that then becomes payable by the buyer, or client, to the supplier, or vendor, as per the terms agreed between them, which are also replicated on the invoice.

The invoice processing that is often referred to, however, is not the process of invoice generation. It is the process of the invoice by the client, or buyer, once they have received it, leading up to the point when money is paid to the supplier in exchange for the goods or services received, that is referred to as invoice processing. Though the process could differ in the detail from one company to another, the overarching steps are similar and would be the subject of an invoice processing flowchart that is developed to guide people responsible for the various parts.

Thus, the need for a flowchart emanates from real transactions that cause an invoice to be generated by a supplier and processed and eventually paid by the buyer, and from the buyer’s desire to ensure accurate and efficient processing.

oWorkers supports clients in 22 languages, thanks to a diverse talent pool that is multi-national and multi-ethnic. The language of flowcharts is, however, universal, and understood regardless of native language.

 

Types of invoices

Invoices can be of many types. While the broad workflow defined on the invoice processing flowchart should be the same, users may need to make adjustments depending on the type of invoice they are dealing with. Though there is no finite, statutory list of invoice types, some common ones are covered here.

Pro forma invoice

A pro forma invoice is in the nature of a preliminary invoice that is meant to mirror the actual invoice when it is raised later. It is a way of confirming what the real or actual invoice, when raised, will look like. It is also a way of confirming that the supply should be of the goods and services contained therein.

Commercial invoice

A commercial invoice is a document used for customs declaration in the sale of goods that are exported across international borders.

Timesheet invoice

Instead of billing for material or goods or services supplied, a timesheet invoice bills a client based on the number of hours of support or service provided by identified personnel or types of personnel. Many services, such as consulting services, are invoiced through timesheet invoices.

Retainer invoice

In many cases, an advance amount needs to be deposited before the product or service, or any part thereof, is delivered to the buyer. The invoice issued in such a case is known as a retainer invoice and the amount collected is deducted from the final invoice that is sent for settlement of any outstanding dues.

Recurring invoice

As the name suggests, many services are purchased in the form of a subscription for which periodically a payment is made. These are known as recurring invoices. As an example, if a company buys a paid Zoom subscription, it may need to pay for the service on a yearly or monthly basis, depending on what it chooses.

Credit invoice

This is a type of a reverse invoice and used when a supplier needs to give money back to the client. It could be because of faulty products that have been returned or some other reason like an accounting error. The values shown on this invoice will be in the negative.

Interim invoice

There are occasions when the contract terms provide for intermittent payments based on certain milestones being achieved. These interim invoices enable the supplier to better manage its cash flows through periodic recovery of dues.

oWorkers works closely with communities around its three global delivery centers. A by-product of these efforts is a steady stream of walk-in applicants at our centers which gives us the flexibility of choice for all our client projects. It also keeps hiring costs low as we rarely need to advertise for talent. 

 

Invoice processing flowchart – key steps

The receipt of an invoice initiates the process which ends with money being paid out, or a settlement being done in some other manner, for it. As it results in money, a key resource for any organization, being paid out, it needs to be monitored for ensuring that the money is being paid correctly and for furthering the goals of the organization.

Verification to ensure the basics are right

Resolution of issues upfront can prevent a lot of downstream issues from happening. Though true for all processes, it is applicable to the processing of invoices even more so, since successful suppliers typically deal with multiple clients and orders simultaneously and issue a large number of invoices. As one of the most basic checks, since the method of communication of invoices is usually offline, there can be issues even in sending to the right party.

While that may be a rare occurrence, it is good to validate the basic details on an invoice. These usually are:

  • Date
  • Name of the client
  • Specification of goods or services supplied
  • Rate charged
  • Calculation of taxes and statutory levies
  • The Purchase Order number, if applicable, or other reference to the order
  • Tax ID of the buyer and seller
  • Payment details – how is the payment to be made
  • Payment terms
  • Other relevant details

This is an important step as the invoice, after verification, is likely to be keyed into the invoice processing system used by the company, and errors, if any, if not caught now, are likely to persist throughout the journey, causing a lot more rework the later it gets caught.

It is also a good practice for a buyer to let the seller know early in the event of any discrepancies as that gives the seller an opportunity to recover and represent without losing much time. It is a gesture of respect for the buyer to do so.

Cyclicality in volumes is a common business occurrence. Clients of oWorkers are not immune to business cycles, even though an invoice processing flowchart may not make a mention of it. Handling business cycles becomes an independent process. Working with oWorkers obviates the need for clients to maintain an unproductive, expensive bench. oWorkers is able to hire almost a hundred additional people with a notice of 48 hours. This is a huge cost saving for clients.

Creating an entry in the system

This is the stage at which the digital journey of an invoice would typically begin. Most companies today use software that has a built-in workflow that is defined at the time of implementation. Thereafter, each time an invoice needs to be processed, once it is input into the system that has already been set up with rules, it takes over and guides the invoice the rest of the way.

This is not to say that there is no manual processing. There certainly is. The level of automation of support processes keeps going up with the size and scale of the organization. Smaller organizations may not find it worthwhile to invest in systems for some support systems such as invoice processing and may choose to carry out the transaction manually. And since the stacking of organizations by size forms a typical pyramid, with the smaller ones at the bottom, there are likely to be a huge number of small businesses that process invoices manually.

Some companies also choose to engage outsourcing service providers for this work. Not only does this save them from doing work that is not part of their core competence, it also often results in a digitization of the process with the help of the software/ platform used by the provider. If that is the approach preferred by the client, then this would probably be the step at which the processing partner would get involved in the transaction.

With a view to the future and possible need for retrieval at some stage, even though a paper invoice has been received and should be retained, most companies will probably obtain an image of the invoice which will go into the digital files. This might be easier to retrieve than a hard copy.

With its deep links with technology companies, nurtured over many years, oWorkers is able to access the latest technologies, even for the processing of client transactions, with the help of its deep linkages with technology companies, many of whom being clients of oWorkers.

Authorization

Judicious use of resources is what all companies seek to do. This does not mean that money should not be spent, but that it should be spent wisely. If a business does not spend money, it will not be able to procure materials and services needed to run the business and will probably not be able to create any opportunity for generating revenue.

Judicious use of resources has an implication which will reflect on any invoice processing flowchart.

How?

By creating an authorization step before payment can be released.

What does that do?

It ensures that the release of money is for a rightful purpose. It ensures that goods and/ or services the invoice covers have actually been received. What the authorization process may also be able to do is validate whether the purchases have been useful for the company or not. However, in case they were not, it cannot be the reason for not refusing payment. The vendor only has responsibility for ensuring that supplied items meet the committed specifications. That part ought to have been checked by the department raising the requirement before the order was placed.

Delivery centers of oWorkers are equipped to operate on a 24×7 schedule when required. This mirrors digital systems that have the capability of being ‘always on.’ Our teams will be available when you need them.

Payment

Once approvals have been received, payment is usually a formality.

It is the responsibility of the accounts payable department to ensure that payment is released at the most appropriate time.

What does that mean?

What it means is that with modern payment systems, beyond a payee set up that needs to be done once, it is usually a question of filling in the amount that needs to be paid, and pressing a button, or two buttons in case a second level of payment release is required. And the payment gets delivered quite fast, in many cases almost instantly.

The gap that used to exist between the issuance of a cheque and the time it got presented and hit the bank account, is a piece of history. That delay provided funds to the payer for a few additional days and also created some excitement for the accounts team in managing the bank account so that there was enough money in it to honor cheques being presented, which was unpredictable.

Hence, the accounts team needs to ensure that the payment is issued as late as permitted under the terms agreed without incurring a penalty.

Operating from super secure facilities & protocols, oWorkers is ISO certified (27001:2013 & 9001:2015) as well as GDPR compliant.

 

The oWorkers advantage

Most clients from Western Europe and the US have often claimed savings that reach up to 80%, after outsourcing to oWorkers. Clients also find our model of offering a choice of billing options interesting and unique. Everything considered, oWorkers provides better value.

The importance of invoice processing

The importance of invoice processing

The importance of invoice processing

Raising an invoice is perhaps one of the most critical processes or actions in a business. In many ways, it is the moment, or set of moments, that a business has been created for. It is in many ways the validation of the existence of a business; it means that the goods or services offered by the company are of value for someone or some other company for which they are willing to pay a price. It is a step that enables a company to generate revenue, which is what it was probably created for. If no revenue to be generated, no need for a business to be created, as simple as that.

All this that we have talked about above is the process of invoice generation, or raising an invoice.

Who raises an invoice?

The company or individual or party that is providing a service or product that has been purchased by an entity outside of the company raises an invoice.

What does raising an invoice signify?

The raising of an invoice signifies that the monetary value, to the extent indicated in the invoice, has become due on account of certain goods or services having been sold by the party raising the invoice to the party purchasing the same goods or services and to whom the invoice has been sent.

While the actual money may only be received later, as per the agreed terms and conditions, the raising of an invoice is the culmination of the business process of the company. The process of realizing the money and accounting for it is usually treated as a financial process.

oWorkers is deeply embedded in business-critical processes of our clients around the world, such as invoicing. Having chosen to focus on our core strengths, we are already recognized as one of the top three players in the world in back office BPO services, no mean achievement considering that we have been in business for just over 8 years.

 

Is this invoice processing?

The invoice raising process that we have discussed so far is, in a way, also a processing of the invoice. After all, there is a business process that is triggered to generate an invoice.

However, the phrase ‘invoice processing’ has come to be associated with the flip side of the process, which receives the invoice raised by a supplier, and makes arrangements to eventually settle it.

To clarify, an invoice raised by someone is also received by someone. The invoice flow follows the direction of the goods or services. If A has sold certain goods to B, then A will also generate an invoice and send it to B. However, the money flow will be in the opposite direction. If the invoice has gone from A to B, the money will flow from B to A.

While your company may be receiving invoices generated by your suppliers for products and services that they have sold to you, the invoices you are generating are being received by your clients/ purchasers/ buyers. They will be doing the processing of your invoice while you will be doing the same for the invoices generated by your vendors/ suppliers/ partners.

Raising an invoice, on the other hand, is generally considered to be the tail end of an operational or sales process of the company and not a distinct one. The one major processing activity that does result from the raising of an invoice is that of tracking through till the receipt of funds and ensuring your books are reconciled.

Whether raising an invoice or paying it, people remain critical in the BPO industry. oWorkers has ensured that it has access to the best through its relationship with the communities it operates in. It gives us access to a perennial supply of fresh talent, enabling us to choose the best while reducing the cost of attracting talent through advertising.

 

What does invoice processing entail?

Receiving an invoice is the beginning of a process that will culminate in the payment of money. Money is a common resource running through the business and one that is well guarded, as it is prone to being misused. It is usually a part of the ‘Accounts Payable’ set of processes in a company.

As a result, though it may look simple and straightforward, the processing of a supplier’s invoice results in a sequence of steps, primarily to ensure that the company’s money is being spent well and in the rightful places.

Verification – ensuring it has been rightly received

Well begun is half done, they say.

Companies raising invoices are often dealing with multiple clients and selling multiple products and services. Even though the process of raising an invoice is generally automated, it does not mean that errors cannot happen. Data entry errors can take place in any system.

You might end up receiving an invoice not meant for you or for a product that has not been purchased by you, or with terms different from what was agreed at the time of the contract.

As a standard process, any claim on your resources, and this is a claim of money, needs to be scrutinized to ensure that it is valid and that your company does become liable for that amount. It is also a measure of respect between partners that if the invoice is invalid for whatever reason, you say that up front and not a month later as in the latter case the supplier would have lost a month before the invoice is sent to the correct party.

The verification of the invoice will entail checking all details mentioned on it, not just the values and calculations, as they could have implications elsewhere.

Large companies usually have a PO, or Purchase Order system in place, which is issued to a supplier as an authorization of agreement for buying the goods and/ or services stated therein. In such cases, the received invoice, if it bears a reference to the PO, would be tallied against the requirements stated in the PO.

Businesses experience cyclicality in volumes. Clients of oWorkers are not immune to these business cycles, neither is invoice processing. With most partners, to handle spikes, clients may need to retain a bench that would be unproductive during normal volumes. With oWorkers, the need for an unproductive, expensive bench falls away. oWorkers is able to hire for peaks and troughs. With a 48-hour prior notice, we can hire almost a hundred additional resources.

Creating an entry in the system

After an invoice has been received, the buying company, assuming they use a software for this activity, would first create an identity for it on that system, so that further processing follows their standard, digital method. This part is manual in most cases as the invoice generated by a supplier is from their own processing system. Being B2B interfaces, even if the two parties use the same software, chances are that they have been set up differently, making it difficult for one to talk to the other. This is the reason why the first step is usually manual at the buyer’s end.

A related process is that of filing or record keeping, for reference in future should a need arise. If a paper invoice is received, while it will be stored, usually a scanned image of the received hard copy will also be stored in the digital archives making for easier referencing and retrieval.

With its deep links with technology companies, nurtured over many years, oWorkers can access the latest technologies, even for the processing of client transactions like invoice processing.  

Authorization

A payment for an invoice being for goods and/ or services received, it needs to be ascertained that that indeed is the case, whether or not the invoice references a PO. There could be a number of different departments making purchases, hence it is essential to tie the invoice back to the requisitioning department for a closure of the loop.

This is then followed by the payment authorization process. There are different ways different companies handle payments. In some, a limited set of people have to authorize all payments. In other, typically larger companies, the approach is more distributed, with budgets of the department driving delegation of authority for payments and other actions on behalf of the company. 

Though traditionally a paper authorization process was followed by most companies, with the authorizer affixing his/ her signature on the document as evidence of approval, increasingly it has given way to a digital authorization process where a workflow delivers the request to the authorizer and then back to the person requesting it once authorized.

A half-way process of seeking and providing authorization on emails is used by some companies. It is neither here nor there and perhaps should be seen as an interim step before the company adopts a process based on workflow.

Delivery centers of oWorkers are equipped to operate on a 24×7 schedule when required. This mirrors digital systems that have the capability of being ‘always on.’ Whether it is for making a payment or for invoice processing, our teams will be available when you need them.

Payment

Finally, the payment needs to be made. This is what the vendor is most interested in, not the internal processes of the client in getting it to him.

Traditional payment processes may have been time consuming but with the advent of digital banking, issuing a payment and having it delivered into the account of the vendor is a seamless process, if there are no other factors, like exchange control, that need to be handled.

Again, in a workflow-based system, most of the work is done upfront. The system will usually have a mechanism for signaling to users when a particular payment needs to be made, in the best interest of the company. This is usually the last permissible time for making the payment without incurring a penalty. By delaying the payment as much as possible, the buyer, if it operates with overdraft limits and advances, is ensuring that its interest cost is minimized.

Traditional payment systems created an additional layer of management, that of managing ‘floats’ or account balances to ensure that there was enough when the issued cheques hit the account and were realized by the presenting bank. In digital payments, that layer of management is not needed as the money is first debited to the account and then delivered to the raiser of the invoice.

For the security of your data as well as to ensure financial transactions are executed safely, oWorkers operates from super secure facilities & protocols with ISO certifications (27001:2013 & 9001:2015). We are also GDPR compliant.

 

Outsourcing invoice processing

On account of invoicing activity being unconnected with the rhythms of the business, many companies find it convenient to outsource it to vendors who specialize in it. By doing so, they get all the benefits of an outsourcing arrangement along with some that are specific to invoicing.

They are able to get the technical expertise of a provider who specializes in the area and does it for a living. Otherwise, invoicing is an activity that is normally far removed from their core business. Meanwhile, their own resources can focus on their own business.

Along with expertise, outsourcers are also able to often get the benefit of digitized processing that a provider, who does it for several clients, is able to invest in.

Often, not only does it deliver better output, it also works out cheaper, what with the higher volumes processed and the provider’s ability to seek suitable resources at price points that are significantly lower.

Most clients of oWorkers note savings of almost 80% when they outsource work. This is particularly true for clients from Western Europe and North America. They also love the pricing choice they get from oWorkers, pay on the basis of input material or pay on the basis of output.

 

Conclusion

oWorkers counts a number of technology companies and unicorn marketplaces amongst its clients. The list is growing all the time, driven by a leadership team that comes with over 20 years of hands-on experience in the industry.

Our choice of working with employees, and not freelancers and contractors as some of our competitors started with, is now validated as we see more and more companies opting for this model. It has given our workforce stability and allowed the creation of a supervisory layer, inhouse grown, that has added teeth to our delivery capability.

We serve in 22 languages through our delivery centers that are registered as local companies and pay social and local taxes. We are rated at 4.6 and better, on a scale of 5, on independent platforms such as Glassdoor.