Every business sends, receives and pays invoices. When you think about it, every invoice sent is an invoice received by someone else.
It’s the financial heartbeat of the business world and a seamless flow of information between the creditor and the debtor should be a paramount concern for forward-thinking businesses.
As with many business processes, invoicing is going digital at an accelerating rate. Electronic invoicing, or e-invoicing, is the new normal. This shift to e-invoicing has been driven by both sides of the invoicing process. Accounts receivable; generating and sending invoices, and accounts payable; receiving and processing them. Both have much to gain from electronic invoicing so the sooner businesses move towards implementing electronic solutions the sooner the benefits can be felt on both sides.
If we track the lifecycle of an invoice, from generation all the way through to receipt and payment, it’s clear to see that electronic processes and invoicing formats provide greater efficiency, visibility and control across the process.
Wherever your responsibility lies in the management of your business cash flow, you now have the opportunity to enhance and refine existing processes and experience the benefits discussed below.
Preparing and sending electronic invoices
Manually preparing, printing and posting invoices takes time. The efficiency of an automated invoicing solution over a manual process is undeniable. Done well, organisations can save days of manual work each month through e-invoicing and the automation this can offer. This time can then be used to focus on higher-value work.
Removing the repetitive manual task of generating and sending invoices frees up your AR team to focus on more profitable activities – such as chasing payments. No one likes repetitive tasks, so you’ll be thanked for bringing processes into the 21st century.
Whether you look at introducing standardised templates across repeated processes, or full end-to-end automation, there are considerable gains to be achieved from electronic invoicing.
It’s not just about reducing manual labour, sending electronic invoices has immense efficiency and cost benefits. Think: no printing costs, no more printer maintenance, no postage costs or delays. It’s a total win/win situation!
Reliability, accuracy and speed of electronic invoices
Some tasks are best left to humans, but many are better automated. Invoice generation and delivery is an ideal area to hand over to the machines. Invoice generation follows a set of rules, there’s no need for creative flair or nuanced human interaction. You’re simply seeking to delivery a clear and accurate invoice, quickly, to the right recipient.
In contrast to the accuracy of automation, a recent report by Billentis indicates that almost 22% of payment delays are due to incorrect information either in the invoice or in the contact details. Automating for improved accuracy makes good solid business sense, and you’ll be thanked for bringing this into use.
Many businesses start their e-invoicing journey by sending PDF invoices by email, but the biggest gains can be found through structured format invoicing, such as EDI, XML or even connecting via a PEPPOL network where your accounting systems send data, via an e-invoicing solution, directly to accounts payable invoicing systems. This direct connection removes the risk of human error and operates at a speed far beyond even the most skilled employee.
Report, manage and control in the way you want
Running a business, you need to know where the money is at all times. Good cash flow is central to business success. With electronic invoicing the status of each invoice can be made immediately visible. Reports can be generated at the touch of a button to show delivery, receipt and payment status. Furthermore, automatic reminders and various other notifications can be sent when recipients show signs of delay.
The best electronic invoicing solutions allow you to drill down and roll up your management view and reporting across groups such as regional offices or other structures you may have in your businesses. Handling your processes electronically gives ultimate control and flexibility in how you manage and monitor your invoicing and associated cash collection processes.
Whilst it may be the goal of your business to shift all customers to accept electronic invoices, realistically many businesses need to send paper invoices alongside PDF invoices, EDI or XML invoices. Choosing the right solution, or solution partner, to do this is crucial for success.
Processing e-invoices in accounts payable
The electronic invoicing lifecycle doesn’t only bring advantages to accounts receivable. There are plenty of reasons why more and more accounts payable departments are embracing e-invoicing.
Bring cost savings and efficiency gains to accounts payable
A recent study by EY estimates about 6,000 paper invoices can be processed each year by a full-time equivalent. The same person could check 90,000 electronic invoices. That’s a 15x efficiency gain! In many cases, invoices can be received via EDI (Electronic Data Interchange), XML or other structured format and processed without any data entry, scanned paper invoices or human involvement of any kind.
With some businesses looking to encourage swifter payments via early payment discounts, automated invoice processing may result in immediate savings. If you’re considering a switch to e-invoicing for your AP team, it’s worth investigating the options for early payment discounts amongst your suppliers.
An invoice isn’t simply processed and forgotten, records of payments need to be kept for an appropriate length of time. In some cases, the volume of paper storage required to do this non-digitally if quite astonishing. Have you ever needed to retrieve specific invoices for audit purposes? If so, you’ll appreciate the value of electronic search and instant access.
Embrace the machines to support your team
Electronic invoice processing allows automation like never before. Invoices can be checked against purchase orders, delivery receipts, stock levels and accurately verified and paid – all in the blink of an eye.
Machines don’t misread digital documents, they don’t have ‘bad days’ and they don’t get distracted. Let an e-invoicing system take the strain, so you can guide your accounts payable team to focus on more varied, valuable and rewarding work.
No more lost invoices, no more delays in invoice processing, e-invoices come in and the invoice data reaches your accounting or ERP systems almost immediately.
Clarity and control
As with the status of invoices sent, the status of payments is hugely important to keep sight of. Whilst purchase orders and delivery receipts give some clue to cash flow outgoings, invoicing records are the most accurate indicator. Electronic invoicing ensures this information is kept up to date, in real time.
Knowing what invoices have come in, when they are due, and when payments are being made, gives the clarity and control to balance cash flow more finely than ever before. Financial controllers and CFOs welcome the insight this brings into cash flow, allowing them to be make better informed financial decisions.
Electronic invoicing functionality enables accounts payable teams, especially executives, to approve, route, reject, pend and cc invoices while on the go. Electronic invoices also facilitate the enforcement of policies, speeding up audit procedures and compliance by maintaining an audit trail on every invoice.
E-Invoicing and Public Procurement in the European Union
Public procurement across Europe has widely adopted electronic invoicing, specifically structured format invoices. This streamlines invoice delivery and processing, as well as giving tax authorities in the member states better visibility of VAT payments on each invoice.
Any business wanting to sell into public procurement in the European Union will need to embrace EDI or XML format invoicing, such as connecting to a PEPPOL gateway to deliver invoices in the required electronic format.
So, why isn’t everyone e-Invoicing?
When faced with the facts, few would contest the estimated average savings of €6.60 per invoice sent, €11.20 per invoice received and processed. Alongside these savings, there are also the improvements in quality, speed or visibility and control to consider too.
So, why hasn’t everyone switched to e-invoicing yet then?
As I’m sure you realise, the final benefits may be clear, but obstacles can appear to block this path. The following are often the biggest reasons for delay. Selecting the right e-invoicing solution partner to tackle these is crucial to successful e-invoicing adoption.
- Initial outlay – some e-invoicing solutions require a large investment upfront, or attempting to build your own, in house, can consume huge amounts of IT resources for a long, long time
- Compatibility and acceptance – switching to an e-invoicing process is a change which needs to gain acceptance with your audience. Maybe specific buyers, or suppliers, need you to send or receive invoices in particular formats?
- Risk – the very fact that invoices are a critical part of the cash flow process makes businesses reluctant to change how they work with them.
All of the above concerns can be addressed by working with a well-established, trusted, format-agnostic service provider such as Corcentric. Our specialists can assist you with all the steps along the way to a seamless and successful implementation.
Corcentric seamlessly integrates with your ERP system or accounting software to automate and simplify the process of sending or receiving and processing invoices. The invoicing software provides a streamlined platform for validation, archiving and reporting, accessible via a web based interface from wherever you are.
Take a look at our checklist for selecting an e-invoicing provider for accounts receivable e-invoicing transformation, or read about the 5 habits of successful AP departments to maximise success when brining e-invoicing to accounts payable.
Electronic invoicing across the business
Taking the above points into account, it’s clear that both sides of the invoicing process benefit hugely from electronic invoicing and automation of the invoicing process. Whether you choose to tackle accounts receivable, or accounts payable first depends on your own particular set of opportunities and challenges.
At Corcentric, we can advise on the best approach for both sides of the story.
Get in touch if you’d like to understand more about the benefits of e-invoicing and how you can get started without a large initial outlay, or months of development and integration work.