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.
Globally, there is an accelerating shift towards the digitization of invoicing processes. This shift is being 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 invoices electronically
In accounts receivable, the variety of benefits can be experienced by an early switch to electronic invoicing. Just being proactive, as you are in reading this, sets you on the right path to bringing immense positive change to your AR processes through e-invoicing.
Empower your AR team to improve efficiency
At a basic level, manually preparing, printing and posting invoices takes time. The efficiency of an automated invoice generation system over a manual process is undeniable, with most organizations embracing e-invoicing in accounts receivable to cut out whole days of dull manual work and recover the lost opportunity to focus on more important matters.
Whether you look at introducing standardized templates across repeated processes, or full end-to-end automation, you have considerable gains waiting to be discovered.
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 in 2019, so you’ll be thanked for bringing processes into the 21st century.
It’s not just about reducing manual labor, sending electronically 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
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.
The benefits can be seen when considering the alternative. 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.
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 is immediately visible on a device of your convenience, wherever you are and whatever you do. 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 within a larger business, 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.
Processing invoices electronically
The lifecycle of an electronic invoice doesn’t only bring you advantages over a paper equivalent 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 and processed without any human involvement at all.
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 PO numbers, 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.
Clarity and control
As with the status of invoices sent, the status of payments is hugely important to keep sight of. Whilst POs 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.
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 sometimes obstacles can appear to block this path. The following are often raised as the biggest reasons for delay. If you want to tackle these, you’ll be well placed to drive forward the adoption of e-invoicing in your business.
- 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 partner such as Corcentric. Our specialists can assist you with all the steps along the way to a seamless and successful implementation. Take a look at our checklist for selecting an e-invoicing provider to learn how to evaluate the risks and benefits before transforming your invoicing process for the better.
Electronic invoicing across the business
Taking the above points into account, it’s clear that both sides of the invoicing process benefit hugely from digitization. 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. Corcentric as a platform provides the AR side of e-invoicing, but many of the considerations applied here also apply when evaluating AP e-invoicing solutions.
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.