What the…?
Invoices in landscape orientation form only a small percentage of all invoices received.
While this orientation does permit you to fit a lot of information horizontally on the page, it limits the number of transaction lines that can fit in a single page, but more importantly, makes handling of your invoices a little more awkward for your customers.
After all, if 90% of the invoices they receive are in portrait orientation, your invoice will have to be turned to be processed. It will then have to be filed with all of the other invoices in portrait orientation. When retrieved, the file will have to be turned to read your invoices and then turned back again for the next invoice in the file.
Why would you introduce this handling nightmare for your customers?
Imagine if the customer scans all of their invoices for electronic storage? Your invoices will be more difficult to read because they are in landscape orientation.
Let’s take a more detailed look at an invoice issued in landscape orientation.
It is for hygiene supplies and at first glance, it seems to have all of the required information on it and appears to be clean and easy to follow.
However, a more detailed look reveals a very major flaw in the design of this invoice that could lead to payment delays and an unnecessary amount of time spent by the credit control team chasing payment.
The issue is particularly acute if the staff in the accounts payable department of the customer organization change, as it is likely that there will need to be a re-education process, undertaken by the vendors credit control team, to explain one of the critical pieces of information on the invoice.
It is likely that this company could improve its cashflow and reduce time wasted by its credit control and customer service teams through one simple change to the invoice.
Before getting to that, I had to ask myself why the invoice is issued in landscape format and the only explanation that I could come up with is that it is a legacy from when invoices were printed on dot matrix printers and the stationery was ‘sprocket fed’ in duplicate or triplicate (‘carbon copies’).
Either the format was retained when the vendor changed computer systems, or more horrifyingly, perhaps the old legacy computer system is still in use to this day and the vendor has not upgraded it to a more modern system?
There are other clues on the invoice that point to it being an old system which I will cover in the more detailed analysis of the invoice.
Key Issues with This Invoice
The most critical failing on this invoice is the fact that there the only date with a label is the ‘Due Date’ which could easily be mistaken for the date of the invoice. If this is the case, the invoice may not even be considered for payment until 30 days after the due date.
Why run this risk, when the simple fix would be to provide a label to left of the invoice date?
This is not the only issue with the invoice as can be seen from the following:
The Key Issues Are:
- Everyone in North America knows that ‘#’ means number, but it is not widely used in the UK where this invoice was issued. Why not simply put a label ‘Invoice Number’ to the left of the number?
- I assume that this is the invoice date, but why not clearly explain this by including the label ‘Invoice Date’ to the left of the date?
- Why would I as a customer want the invoice number in barcode format on the invoice I receive? This is an example of internal information being included on customer invoices. I believe that the reason it is here is because invoices have to be scanned by the vendor and stored on a separate system to the one that issued the invoice. Again, it points to an older system that might need to be replaced.
- A single ‘Invoice To’ address is displayed, but what if there is a delivery address required on the invoice as well? Will this print, or is there a lot of unused ‘white space’ on the invoice?
- ‘Due Date’ could easily be mistaken for invoice date in an environment where there are thousands of vendor invoices being processed every month, especially if there is a high turnover of staff in the accounts payable function.
- Why is the sales order number ‘SO#’ on the invoice? Why does the customer care about it? Including internal information on customer invoices is a bug-bear for me. It points to poor back office systems – why else would it be there?
- This is a really long description for a product, and is all of the information really necessary? The customer has already purchased the item, so you don’t need to include all of its benefits in the product description. Keep product descriptions short and meaningful.
- It would also be common practice (and very useful) to separate the product code from the description.
- What am I missing off the invoice? Are other customers getting discounts that are not available to me? Is that why there is so much white space on the invoice line?
- This invoice is subject to Value Added Tax so what VAT rate is this product being charged at? Can I assume that items will always be charged at the standard VAT rate? What is the standard VAT rate? It should be shown on the invoice.
On a positive note, the invoice has a clear ‘Reservation of Title’ statement, i.e. ‘All goods remain the property of Hygiene Vendor Inc until payment is received in full’.
This is really important to include on any invoice where goods are supplied because if the customer goes into receivership or liquidation, you should be able to reclaim any goods that have not been sold or used.
Suggestions for Improvements
Firstly, switch to portrait orientation. As outlined above, it introduces additional handling for your customers if invoices are in landscape orientation.
Secondly, place all information critical to identifying and reconciling the invoice in the upper right of the invoice. Include invoice number, invoice date, purchase order number, and page number.
Include the delivery note number too, as this is sometimes used by customers to reconcile the invoice against a delivery received. It is missing from this invoice which adds to the work for the customer.
Perhaps the invoice was generated before the delivery note was prepared in which case processes and systems should be changed to generate invoices after delivery notes are generated so that the delivery reference can be included on the invoice.
Maybe the items were delivered by a courier in which case the courier consignment note will be signed by the customer and not a delivery note. In that case, why not include the courier company and consignment note number on the invoice?
Lastly reduce the length of the product description and move the unit of purchase/sale to its own column on the invoice and out of the product description.
How to Manually Process This Invoice
Imagine that you work in Accounts Payable and have to process this invoice. How would you go about it?
The invoice number is obvious even if presented in an unusual way. The date requires a second look and it would be quite easy to mistake the ‘Due Date’ for the invoice date because the invoice date is in small print underneath the invoice number.
Next up is the purchase order number which is not too hard to find.
There is enough information on the product code and description to code the invoice, i.e. determine the correct general ledger code to apply to the line item on the invoice.
Although the VAT amount is displayed, the rate is not displayed anywhere on the invoice. This could be important, because it is unclear which branch issued the invoice. If it was the Ireland branch, the VAT rate should be 0%, whereas if it was issued by one of the UK branches, the VAT rate in this case should be 20%. The rate should be displayed on the invoice.
Overall Score
5/10
This is an invoice with some significant issues, most of which could be addressed very easily. Changing from landscape orientation to portrait could be a significant challenge but the simple addition of some labels could make this invoice for easier to process.
Data Extraction
The OnePosting Digitization Engine successfully extracted all of the relevant data from this invoice as it can handle invoices in landscape orientation just as easily as it can extract them from invoices in portrait orientation.
If you’d like to learn how the OnePosting Digitization Engine can help you with your invoices, book a meeting today.
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