Invoicing. It’s one of the most unavoidable parts of doing business and yet, invoice processing doesn’t get talked about enough. While it may be one of the more unsexy jobs in the dental industry, invoice processing has more of an impact on a practice’s bottom line than you might expect.
Unless you’re an accounts payable clerk working on the front lines to process hundreds, and sometimes thousands, of invoices each month, the task of invoice processing for dental organizations is one that largely goes unnoticed. In fact, there hasn’t been much change to how A/P teams at dental practices are processing invoices – despite groundbreaking advances in procurement technology, supply chain management, online ordering, and just about every other aspect of dental practice operations, it’s still common for dental practices and DSOs to use manual data entry, paper invoices, hand signed approvals, and snail mail to pay the bills.
In an era of digitization, e-commerce, big data, and the “uberization” of entire industries by mobile applications, invoice processing for many dental practices remains stuck in an analog world. But as practices continue to merge into dental support organizations (DSOs), the pressure to stay competitive is as high as ever, and A/P automation is finally starting to get the respect it deserves. This trend will only accelerate as modern dental organizations begin to realize the value of automated invoice processing for their practices.
Total cost of invoice processing for dental practices
When was the last time you considered the cost it takes to process each invoice for your dental organization?
Receiving, reconciling, and paying invoices is a long, multi-step process that requires dental practices to use labor and materials that quickly add up. From beginning to end, the invoice journey goes something like this:
- An invoice is created by a supplier.
- The supplier sends the invoice via email or traditional mail.
- The invoice is received by the A/P department and data is manually entered.
- The invoice is checked for validity by searching for a corresponding PO, verifying there’s a match, and reconciling the invoice.
- The invoice is sent for approval.
- A check is written.
- The check is mailed to the supplier’s A/R department.
This cycle is repeated constantly for each invoice – which means that as growing dental organizations purchase more supplies, they also incur more costs to process additional invoices. Just how much does it cost to pay an invoice? The Institute of Finance & Management estimates the average invoice cost is around $11, which is calculated by taking the total cost of an organization’s accounts payable staff and dividing it by the number of invoices processed.
To understand the true cost of invoice processing for dental practices, it’s important to consider both direct and indirect expenses. The typical dental organization will need to buy postage, checks, pens, paper, and storage to process physical invoices. There is also the labor cost for employees stuffing envelopes, manually extracting and entering data, validating invoices, and submitting payments. And whenever human inputs are involved, there is potential for error that results in additional staff hours spent investigating and resolving mistakes.
Once you also take into account other factors such as fees for late or lost payments, wasteful overpayments, and the opportunity cost of your staff not performing more productive work, it’s easy to see that a manual invoice process is incredibly inefficient. Inefficiencies cost dental organizations money in two main ways: the first being increased time to execute a given process; and the second being the opportunity cost when the best process is not executed properly due to human error. All of this adds up into an expensive total cost for manual invoice processing at dental practices, including:
- The total invoice processing time
- The total time spent reviewing invoices
- Storage, shipping, and postage costs
- The total time spent identifying and correcting data entry errors, duplicate payments, etc
- Expenses incurred due to late payments, errors, etc
- The opportunity cost of staff performing invoicing duties rather than their assigned functions
Wherever there are excessive costs, there is tremendous opportunity for cost savings. And cost savings go a long way toward raising your dental practice EBITDA, so it’s worth looking into the different ways that procurement software drastically improves the invoice process with time-saving features.
Solving the invoice process for dental practices
As dental organizations buy more supplies, invoices aren’t going anywhere. But the manual processing of invoices is quickly falling out of convention. Rather than continuing ahead with inefficient processes to administer A/P duties, forward-thinking dental practices and DSOs are turning to invoice solutions such as invoice capture software to drive down costs and gain a competitive advantage.
Now with invoice processing software designed specifically for dental practices, back office departments can share one platform for every supply order, creating a more efficient dental procurement lifecycle that drives down operational costs across the payment process. And the savings gained from organizational efficiency don’t stop there. From receiving invoices to processing and paying for them, dental organizations are able to dramatically reduce A/P costs through automation – bringing their accounts payable department into the 21st century with digital tools and optimized workflows, including:
- Centralization of all invoices for easy reconciliation
- A one and done approach to assigning GL codes for accurate classification and reporting
- A unified inbox to capture all vendor invoices
- Automatically transcribe line items for each invoice – including price, vendor, SKU, quantity, etc
- Sync with your financial system for quick and easy payment of invoices and month end closes
The A/P process is an integral function for all dental organizations, not only influencing procurement and finance teams but also generating the cash flow and vendor relationships that clinicians depend on to remain in business. This means that smaller dental practices who might not be customers for a comprehensive procurement platform can still realize significant savings by starting with invoice processing automation. And for larger practices and DSOs that are processing thousands of invoices a month, there is the potential to save upwards of tens of thousands of dollars – money that goes straight to your bottom line.
Automated 3-way invoice matching for dental organizations
In any procure-to-pay system, it is the duty of the A/P department to track down, organize, and prepare supplier invoices for payment. In order to prevent fraudulent or unnecessary payments, the A/P team will need to validate that each invoice corresponds to an approved purchase order and that the items were received from the vendor. The best invoice matching process utilizes three-way matching, an accounting control to ensure that the purchase order, inventory packing receipt, and invoice are an exact match. A 3-way invoice match greatly reduces the risk of mispayment for duplicate, unauthorized, or inaccurate invoices – preventing costly overspending while also bringing much-needed price transparency to the payment process.
Because invoice matching involves data search, critical thinking, and organization of resources, it is often one of the more time-intensive parts of invoice processing. A manual invoice process requires someone to spend time searching and reviewing one purchase order and one invoice out of thousands – time that would be better spent elsewhere on more productive activities. For dental organizations that wish to speed up the invoice match process while ensuring data accuracy and safeguards remain in place, automated 3-way invoice matching brings a host of benefits.
With invoice processing software, supplier invoices are automatically scanned and pertinent information such as numbers and text are instantly entered into a database. The same process is performed for POs – which allows software to automatically match an invoice with a PO and determine a match in seconds. Anything less than a 100% match will result in an alert that brings the error to the attention of the accounts payable team. And with a cloud-based platform connecting office receivers with procurement and A/P departments that may be miles apart, each party can verify their individual step in the 3-way match process, resulting in only the right invoices getting paid.
Improve your dental organization’s invoice process with CureMint
CureMint makes it easy to speed up your dental practice’s invoice process through the power of automation. From receiving invoices to transcribing, matching, and storing them, CureMint’s Pay module digitizes the entire invoice process for seamless processing that reduces the total cost to reconcile each invoice for your dental organization. The end result is improved efficiency, and a delightfully simple payment experience that will make your A/P team smile.