What is Automated Billing?
Automated billing is a system companies use to ensure that they can pay their bills on time. A vendor or supplier will send a company an invoice that states the amount the company owes for the goods or services they bought. The invoice is checked to ensure that it matches the receipt or purchase order and then sent to designated staff members for approval. Once the invoice is approved, it can be processed for payment so that the vendor gets paid—ideally on time and according to their payment preferences.
Some accounts payable departments may still perform this entire process manually. Switching to accessible and flexible automated billing can streamline the billing process flow and save time. The steps of the accounts payable process could be streamlined by utilizing a digital platform, which offers the possibility of reducing paperwork. Such a system can handle most types of invoices in accounts payable. Automated billing can allow businesses to pay their bills more efficiently and effectively and help vendors get paid more confidently, potentially improving the relationships between both parties.
How Does Automation Billing Work?
Here’s an overview of how automated billing typically works in B2B:
- When a new business customer is onboarded, their information is entered into the automated billing system. This includes details such as the business name, address, contact information, and any specific billing preferences or terms.
- The system automatically generates invoices based on the products or services provided to the business customer.
- B2B transactions often involve customized billing terms and payment schedules. The automated billing system allows businesses to set specific payment terms, credit limits, and other conditions. This flexibility accommodates the unique requirements of B2B relationships, where payment cycles and terms may vary.
- In B2B transactions, invoices often go through an approval process within the buyer’s organization. The automated billing system may facilitate this workflow by routing invoices to designated approvers. Approvers, such as managers or finance personnel, can review and authorize payments based on their respective roles and responsibilities.
- Invoices are sent electronically via email, online portals, or other electronic means.
- For businesses that use purchase orders, the automated billing system may integrate with the purchasing system. This ensures that invoices align with approved purchase orders, reducing discrepancies and disputes.
- Payments are sent through a business’ preferring payment method.
- To maintain accurate financial records, B2B automated billing systems seamlessly integrate with accounting software, ensuring that all transactions are reflected in the company’s financial statements.
Advantages of Automated Billing
There are several advantages of automated billing for the typical mid-sized company. Benefits include time savings, money savings, and accurate payments to suppliers. Accounts payable teams can also track each invoice to monitor its status and to determine which invoices are still pending approval.
Other advantages of computerized billing system features include easy accessibility. Systems like AvidXchange offer users 24/7 access to their invoice information via one centralized, digital platform. That means an accounts payable team can check invoices on any device connected to the internet. Employees may not even have to be in a physical office. This feature could prove to be particularly beneficial to employees who work remotely from time to time.
Suppliers want to be paid on time, which an automated billing system may be able to ensure. Flexibility and accessibility are just two advantages of online billing system features that most businesses can use to make their lives easier.
Key Features of Automated Billing
Defining features of automated billing are dictated by the specific needs and priorities of a business. However, four critical features that are generally considered essential include:
- Invoice Generation and Customization:
The ability to automatically generate invoices based on predefined templates or customizable formats is foundational. This feature should allow businesses to include relevant details such as product or service information, pricing, and terms. Customization options are crucial for tailoring invoices to specific client needs and maintaining a professional appearance.
- Integration with Accounting Software:
Seamless integration with accounting systems, such as QuickBooks or NetSuite, is vital for real-time updates and accurate financial reporting. This feature ensures that all billing transactions are reflected in the company’s financial records, minimizing manual data entry and reducing the risk of errors.
- Automated Approval Workflow:
An automated approval process is crucial for maintaining internal controls and ensuring compliance with approval protocols. This feature allows invoices to be routed through predefined channels for review and authorization, streamlining the approval workflow and reducing the likelihood of errors or delays.
- Electronic Invoicing and Delivery:
The ability to send invoices electronically, whether through email or online portals, enhances the efficiency of the billing process. Electronic invoicing accelerates the delivery of invoices to customers, reduces the environmental impact of paper-based processes, and provides a digital record of transactions.
These features collectively contribute to a streamlined, accurate, and efficient billing process, addressing key aspects of invoicing, financial integration, internal controls, and modern communication methods. Depending on the business’s specific requirements, additional features such as security measures, reporting capabilities, and payment processing options may also be crucial considerations.
Automated Billing Examples
Automated billing has the power to streamline your bill payment process and make it much more efficient. There are many kinds of computer billing system you could implement into your accounts payable process, but an automated system comes with some added benefits. Let’s look at a hypothetical billing system project that can serve as a good automated billing example.
Imagine an accounts payable team at a small company that is currently processing bill payments using a manual billing system. This company wants to create room for growth and is looking for ways to increase scalability. Switching to automated billing could be a solution. By implementing an automated process, this company could process payments faster and at higher volumes without sacrificing accuracy.
Billing system examples like these are great for demonstrating the value of automated bill payment software. Scalability and customizable workflows are just two of the advantages of using automated billing. Let’s look closer at a few of the other benefits.