Three Ways to Reduce B2B Invoice Errors

No one likes late payments, especially when the need to increase cashflow becomes an even higher priority than it normally is.

While some B2B customers respond to sudden economic downturns by extending payment terms, late payments can also be self-inflicted due to invoicing errors. As I’ve noted, those errors may be caused by mistakes related to sales tax and/or value added tax (VAT) calculations, among other factors. Regardless of their source, invoice inaccuracies cause disputes between buyers and sellers that inevitably delay payment.

Our B2B payments firm recently surveyed 300 accounts receivable (A/R) managers and professionals in B2B companies to find out how often late payments are caused by invoice disputes. Thirty-nine percent of respondents reported that more than one-quarter of all the late payments their departments receive each year stem from invoice disputes. Nine percent, a smaller (yet still surprisingly high) portion of respondents, indicated that between half and three-quarters of all late payments stem from invoice errors.

One of the most effective and cost-efficient ways to generate more money from receivables is by addressing the fundamental causes of invoice errors. To do so, it helps for A/R managers and other key stakeholders, including tax managers, to consider several actions, including:

  • Awareness: When evaluating how to improve working capital, there is often an inclination to start with options for monetizing receivables by working with factoring companies, for example, or taking out an asset-based loan. While those approaches have proven to be effective, identifying and reducing invoicing errors is typically a less expensive first step that can quickly deliver substantial returns.
  • Involvement: Companies of all sizes can suffer from invoicing errors. Within larger companies, it is important to have all the right people in the room when addressing invoicing accuracy. In addition to A/R managers, key stakeholders include other finance professionals as well as information technology (IT) and tax managers.
  • Timing: Credit as a service and automated A/R solutions play a pivotal role in reducing errors and sustaining invoice accuracy. It is helpful for companies to consider these types of solutions before they enter new markets or onboard new customers.

By focusing more attention on invoicing accuracy and applying more rigor to managing invoicing processes, B2B companies can decrease disputes, reduce the volume of late payments and improve working capital. Leading A/R functions tend to build on these benefits by leveraging those gains to improve underwriting and fraud-reduction capabilities.


Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

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