How to manage purchase invoices and optimise your cash flow

Purchase invoices vs sales invoices: understanding the difference

Sales invoices represent the money coming into your business. These are the documents you issue to your clients for your services or products. Purchase invoices, on the other hand, represent the money going out: supplies, software subscriptions, external services, rent.

This distinction is fundamental for your cash flow. Your cash flow depends directly on the gap between these two flows.

Concrete example: Marie, a freelance graphic designer, invoices a client 5,000 CHF in January (sales invoice). The same month, she receives supplier invoices for 1,200 CHF (software, subcontracting). If her client pays within 30 days but her suppliers require payment within 10 days, she must have liquidity available to cover this gap.

Why good tracking of purchase invoices is crucial for your cash flow

Neglected tracking of purchase invoices can quickly damage your financial situation. Late payment penalties accumulate, your relationships with suppliers deteriorate, and you lose a clear view of your financial commitments.

Cash flow surprises are frequent: a forgotten payment that falls at the wrong time can create a costly bank overdraft. Without a consolidated view of your upcoming expenses, it's impossible to anticipate your liquidity needs.

This management directly impacts your overall cash flow strategy. An average Swiss SME handles between 20 and 100 supplier invoices per month. Without a rigorous system, the risk of error becomes significant.

Essential information to check on each supplier invoice

Before recording a purchase invoice, systematically check these elements:

• Complete contact details of the supplier (name, address, VAT number)
• Unique invoice number and issue date
• Detailed description of services or products
• Amounts excluding VAT, VAT and including VAT clearly indicated
• Payment terms and due date

Common errors include: VAT applied at the wrong rate, inconsistent amounts between excluding and including VAT, vague payment terms. An invoice with VAT at 7.7% (old rate) must be challenged.

Practical tip: Annotate each invoice received with the receipt date and payment deadline before archiving.

Implementing an effective tracking system

An effective expense tracking system must enable you to answer three questions instantly: how much do I need to pay this month? To whom? By when?

Three main approaches exist, each suited to different needs. The choice depends on your invoice volume, your budget and your comfort level with digital tools.

The essential thing is to choose a method and stick to it rigorously. A simple system applied systematically is better than a sophisticated tool used sporadically. Let's look at these three methods in detail.

Method 1: The Excel spreadsheet for tracking supplier invoices

An Excel spreadsheet remains the most accessible solution to get started. Create these essential columns: receipt date, supplier name, invoice number, amount excluding VAT, VAT, amount including VAT, due date, status (to pay/paid), payment date.

Add formulas to automatically calculate monthly totals and conditional formatting to flag approaching deadlines (for example, cells in orange at D-7, in red at D-3).

Advantages: free, flexible, customisable. Limitations: time-consuming manual entry, risk of errors, no automatic alerts, difficult to share with an accountant.

This method suits micro-businesses with fewer than 20 supplier invoices per month.

Method 2: Dedicated supplier management tools

Software specialised in supplier management offers advanced features: automatic invoice scanning (OCR), data extraction, validation workflow, deadline alerts by email, complete history per supplier.

These tools centralise all documents and enable quick searches. Some even offer expense analysis by category or supplier.

For whom? This solution is aimed at SMEs handling more than 50 invoices monthly, with several people involved in the validation process. The cost (generally 50-200 CHF/month) is justified by the time saved and error reduction.

Method 3: Integration with your invoicing tool

Some invoicing platforms also allow you to record your purchase invoices. The major advantage: a consolidated view of your cash flow in one place.

You visualise simultaneously the money coming in (your client invoices) and the money going out (your supplier invoices). This overview considerably facilitates financial management and cash flow forecasting.

BePaid, for example, offers tracking features that help you maintain control over all your financial flows. This approach avoids tool proliferation and simplifies your daily management.

Ideal for: freelancers and small SMEs seeking simplicity and consistency.

Optimising your supplier payment terms

In Switzerland, standard payment terms are generally 30 days net. Some suppliers offer 10 days with discount (2-3% reduction) or cash payment.

Negotiate longer terms with your regular suppliers, especially if you represent significant volume. Moving from 30 to 45 days improves your working capital at no cost.

Balance is crucial: if your clients pay within 60 days but your suppliers require 15 days, you must finance a 45-day gap. Discover how to improve your cash flow by optimising these terms.

Discount calculation: 2% at 10 days on a 5,000 CHF invoice = 100 CHF saving. Worthwhile if you have the liquidity available.

Planning your payments to avoid cash flow tensions

Create a monthly payment calendar listing all deadlines. Visualise the weeks when outflows accumulate and anticipate liquidity needs.

Prioritise your payments according to three criteria: urgency (approaching deadline), importance (strategic supplier), and impact (potential penalties). Pay small suppliers first and those offering attractive discounts.

Build a safety cushion equivalent to 1-2 months of fixed costs to absorb quiet periods. This reserve helps you avoid costly overdrafts.

Use a cash flow statement to project your needs over 3 months.

Example: An agency plans its rent payments (1st of the month), salaries (25th), main suppliers (15th) to smooth out outflows.

Managing VAT on your purchase invoices

Current Swiss VAT rates are: 8.1% (standard rate), 3.8% (accommodation), and 2.6% (essential goods).

VAT on your purchase invoices is generally deductible if you are VAT registered and the purchases are related to your business. You recover this VAT via your quarterly return to the FTA.

Keep all original supporting documents for a minimum of 10 years. The tax authorities can audit your deductions at any time.

Common errors: deducting VAT on private purchases, applying the wrong rate, forgetting to record certain invoices. Regularly export your data to your fiduciary for validation.

Modern tools facilitate this management by automatically categorising VAT by rate.

Automating reminders and deadline alerts

Configure automatic alerts to never miss a deadline. Set up notifications at D-7 (to plan payment) and D-3 (urgent).

These reminders help you avoid late payment penalties (often 5% + interest) and preserve your supplier relationships. Consistently punctual payment strengthens your credibility and facilitates future negotiations.

Several automation options exist: reminders in Google Calendar, email notifications from your Excel spreadsheet (via scripts), or alerts integrated into your management software.

The main benefit isn't just the time saved, but above all the reduction in mental load. You no longer have to remember each deadline, the system does it for you.

Archiving and filing your supplier invoices

Swiss law requires you to keep your purchase invoices for 10 years. This obligation concerns all professional expense receipts.

Adopt a consistent filing system: by supplier (alphabetical), by date (monthly), or by category (supplies, services, subscriptions). The essential thing is to quickly find a document.

Digital archiving is legally recognised in Switzerland if it guarantees authenticity and readability. Scan your paper invoices to PDF and name them in a standardised way: "2024-03-15_Supplier_Amount.pdf".

OCR (optical character recognition) tools allow you to search your invoices by keyword. Prepare a monthly summary folder for your accountant: time saved and reduced fees.

Bank reconciliation: checking that everything is paid

Bank reconciliation consists of comparing your bank statements with your recorded invoices. Objective: verify that each invoice marked "paid" corresponds to a bank debit, and vice versa.

This verification detects oversights (unpaid invoice), duplicates (double payment), and discrepancies (incorrect amount). It also reveals unexpected direct debits.

Recommended frequency: weekly for small structures, monthly minimum for others. The longer you wait, the more difficult discrepancies are to identify and correct.

Modern tools largely automate this process by importing your bank transactions and automatically matching them with your invoices.

Simple process: 1) Download your statement, 2) Tick each identified transaction, 3) Investigate discrepancies, 4) Adjust your records.

Rigorous management of your purchase invoices isn't just about organisation: it's a direct lever for protecting your cash flow. By systematically checking each supplier invoice, planning your payments according to your deadlines and correctly recovering your VAT, you maintain control over your cash outflows.

Whether you opt for an Excel spreadsheet, a dedicated tool or integration with your invoicing software, the essential thing remains the same: having a clear view of your commitments and anticipating your liquidity needs. Automatic reminders and regular bank reconciliation help you avoid unpleasant surprises and duplicate payments.

If you're looking for a simple solution to manage both your sales invoices and track your cash flow, BePaid centralises your invoicing and helps you manage your business with tracking and bank reconciliation tools. Test free of charge up to 10 invoices to see if the platform suits your needs.