I had just gotten off the phone with a frustrated office equipment dealer who had spent the last few days scrambling to send out their monthly invoices – working frantically to print, stuff envelopes, and mail them out. As the company’s lease administrator, these tasks are not typically included in her job description. Nevertheless, it was necessary to allocate her time to assist with these administrative duties, which caused her to put her own projects on hold, ultimately preventing her from reaching her monthly goal.
Time is Money is Resources…
Invoicing is a crucial process for any business, and just as with any operational function, there are expenditures involved. There’s the cost of paper, stamps, envelopes, software, etc., but there’s also a large investment of time. Payments must be posted back to the invoice, invoices must be reviewed, and inconsistencies must be identified, matched up and resolved. Often times, phone calls must be made to the customer in order to reconcile the amount. In some cases, a trip to the bank is necessary to deposit the payment.
And what about the time it sometimes takes to collect the amount due? Calling your customers to ask why they have not made their payment demands a high level of finesse; you must successfully collect a payment and maintain trust with your customer. Yes, it may only take the correction of a small human error on the invoice or a simple adjustment to their billing cycle in order to resolve the issue, but even these actions can raise future questions regarding billing accuracy that will eventually need to be addressed.
It all takes time. For businesses running lean and mean in an effort to maximize returns, this means employees end up working across different job responsibilities. But what many fail to consider is that this approach to administrative work also creates hidden/soft costs. Though not always as obvious, these soft costs can directly impact the success of a company in more ways than one.
So what are these soft costs we speak of?
Loss of Production by Employees
As we hinted earlier, the lean and mean approach to administrative work requires people to work across different job responsibilities. In the example above, the lease administrator needed to help send out invoices, taking time away from her primary function. This delayed her ability to send through funding for deals, ultimately slowing the cash flow into the business.
Misuse of Time and Talent
An employee who specializes in a specific area got that way because they’ve gained a lot of experience doing what they do best. When employees are given duties that are suited to their talents, they not only enjoy the work, but they can get it done in less time. When an employee can apply their talents, it will have a very positive impact on profitability. But in the above example, the lease administrator had to use her time and resources for a function which was not only beyond her responsibility, but which was also beyond her area of expertise. If you’re not suited for a task, you will not complete it efficiently.
Perception of Employee’s Value
All of these items also impact how an employee values their contributions to the team and their long term goals. People within an organization should be excited about their culture and the growth potential within their company. If they feel as though they are not as valued as others in an organization, for instance, those who were not tasked with administrative work, this could fuel turnover or burnout. Most importantly, this perception can hinder their ability to complete their basic job duties to a high level of quality and satisfaction.
Creating, collecting, and processing an invoice can be very costly to a company, and the associated soft costs can certainly add up. Increased employee frustration and a lack of job satisfaction can even cause harm outside of your backend team as the effects could trickle all the way from your sales team to the external customer. Poor attitudes, errors and aggressive collections can cause current customers to explore other companies. In this era of increased competition, the cost of acquiring a new customer will continue to rise. Don’t let the result of a soft cost cause an error or miscommunication that will lose you a deal or damage your reputation!
Soft costs are not isolated to invoicing. They can result from any manuel or administrative task. We've put together a suite of solutions to improve the accuracy and effeciency of your opperations.
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