The hidden cost of incorrect invoices

The costs associated with invoice disputes very quickly stack up.

Contrary to popular belief, late payment often isn't due to finance leaders not wanting to pay invoices. In fact, more often than not, they can't due to errors and inaccuracies. However, this still leads to impact to their reputation and a drain on resources.

Almost 40% of companies in the UK spend up to four hours per week chasing outstanding payments, while 12% specifically employ at least one member of staff to chase invoices. This is a huge problem for sellers awaiting payment, clearly. But it has a big impact on buyers too.

Invoicing in the hire sector is particularly difficult. The paper trail for the order process is convoluted: sourcing suppliers, comparing products, confirmations, awaiting approvals. And then when it comes to off-hire, dates easily slip in the chain between site, central team and seller.

One of our customers told us that while hire was 5% of his company’s overall spend, it accounted for 45% of their invoice queries.

While that disparity seems extreme, it’s not uncommon.

Common reasons for late payment of invoices.

There are a number of reasons for disputes and late invoice payments. And usually, they’re rooted in inefficient processes.

A few of the common reasons for late payments are:

• Unclear off-hire dates. Despite everyone’s best efforts, it’s difficult to track off-hire dates when the process is managed through spreadsheets and phone calls. A site contact sending an off-hire request to a central team does not mean the equipment is actually off-hired, and costs still rack up until the central team has managed to reach the seller and confirm.

• Lost or damaged equipment. Again, the process for reporting damaged equipment or lost kit is prone to error. Having to report back from site, to central teams, to sellers creates opportunities for miscommunication or misreporting.

• Unclear payment terms. When you’re managing multiple sellers through different communication channels, payment terms can get confused. Further complicating this issue is the potential for invoices to reach the wrong person - perhaps the site contact gets used instead of an Accounts Payable contact. Not a big deal, until the payment terms are missed and late fees start to build.

These shouldn’t be difficult challenges to solve, but previously they would require a concerted effort from a number of different parties.

If you book equipment through HSS ProService Marketplace, you’ll have access to an invoice management system that gives you a complete overview of all existing orders, POD and POCs. To find out more, book about invoicing and our system, book a no-obligation demo with a member of our team now.

The hidden costs of late invoices.

While we may, on some level, expect late payments as a bi-product of the procurement process, paying people later than expected can do more damage than minimising your project’s ROI.

Some of the hidden costs of paying invoices late include:

• Staff administration increases. The time and productivity lost to raising disputes, checking their status, chasing updates and ensuring confirmation once the issue is resolved wastes days of human resource every year.

• Damaged relationships. It’s never nice to chase a payment or receive a chase, and even when it’s no one's ‘fault’, frustrations arise. A good relationship between seller and buyer is in everyone’s interests, so that future payment terms or new regulatory asks can be handled quickly and clearly.

• Slipping project timelines. In construction especially, there is huge pressure to get more projects completed on time and on budget. Managing payments is a big part of this.

How can I make sure project invoices are paid on time?

Research shows that four in five companies are overwhelmed by invoice volume and formats.

This is because a significant amount of companies still rely on manual processing. This is often slow and requires a significant amount of time to ensure they’re processed correctly.

Not only this, but they’re subject to human error, whether that means being misplaced, wrong codes submitted, or simply overlooked, as another email with “urgent” in the title has been sent.

To overcome late payment challenges, businesses need to consider digitising these processes.

New online marketplaces have emerged that can help contractors and businesses of all shapes and sizes remove the headache of invoicing and payment terms.

When used to their full advantage, these platforms allow you to:

• Have a complete view of existing orders, POD and POCs.

• Store invoices in one, searchable location.

• Raise disputes in the tool.

Utilising technology like this, however, doesn’t and shouldn’t come at a significant cost to your business. A good provider should allow you to access goods at minimal cost.

At HSS ProService Marketplace, we believe that accounts should be free to use, always. Create your free account now, or book a demo with a member of our team. We’d love to show you around and hiring, buying, and managing equipment online can be stress-free.

Overcoming late payments.

Incorrect invoices aren’t just frustrating and costly to your business. They can cause significant reputational damage, and result in increased administration.

Whether the reason the invoice was incorrect was due to unclear off-hire dates, or unclear payment times, your business still needs to find a way to minimise human error and maximise efficiency.

One way modern businesses are achieving this is with digital technologies.

More equipment suppliers are providing digitised ways to manage invoicing. While for a lot of suppliers this simply means emailing you a digitised invoice, at HSS ProService we provide an automated invoice management system as standard with each and every free account. This gives our customers complete scope into their orders, without the hassle of chasing members of staff to understand where kit is or how much it costs.

Regardless of what solution you choose, it’s vital that modern construction businesses move away from a traditional spreadsheet and migrate to some form of digitised management system. Without it, your business could face significant reputable damage.

Let us show you around.

Built on the heritage, expertise and verified seller network of HSS Hire, HSS ProService Marketplace is reshaping the way businesses buy and hire equipment, building materials, fuel and more.

It’s free, easy-to-use and ready to explore now.

Simply book a no-obligation demo with a member of our team at a time and date that works for you, and we’ll show you around.