Cash flow is literally the lifeblood of any business; anything that slows down that flow will have a deleterious effect on the organization.
This is true in the best of times but becomes an even greater problem when disruption occurs…and there are few situations more disruptive than the current COVID-19 crisis.
With so many companies furloughing employees or working remotely, or even looking at the potential for failure, now is the time for suppliers to take a hard look at all of their processes, identify the ones that can be automated and streamlined, and then take steps necessary to implement solutions. You can’t wait for your customers to make the first move…that is up to you.
One Easy Fix – e-Invoicing
Let me say this straight out…if you are still using legacy invoicing systems that rely on paper and manual handling, you are doing a disservice to both your customers and your own organization. Relying on paper invoices is costly, time-consuming, and fraught with the potential for errors. Our Corcentric-sponsored IOFM whitepaper, “How to Ease a Cash Crunch with e-Invoicing,” spells out in detail how and why you should transition to e-invoicing, if you have not already done so.
Imagine if you could speed up not only the time in which your customer receives an invoice, but also the time when you receive a payment. Think of how much more efficient your company would be if your accounts receivable staff could focus on late payments and disputes rather than chasing paper. Electronic invoicing (e-invoicing) enables you to achieve these goals by eliminating the following problems:
- Invoice Float — If you are like most businesses, you don’t send invoices out daily, but rather once or twice a week. Add in the time it takes for the postal service to deliver the mail and that results in an unacceptable delay in the time you would ultimately receive a payment.
- Employee Inefficiency — One of your most valuable resources is your staff. Take away the time they spend on low value-added tasks, so they can instead focus on revenue-producing functions. Keying, printing, stuffing, and mailing is not the best use of employee time.
- Delayed Approvals — Once it gets to the customer, any delays or errors in the invoice will lead to delays in approvals. In addition, the time necessary for routing and approval can lead to additional delays, even when an early-payment discount is possible.
- Errors, errors, errors — Human error is, well…human. When preparing invoices, staff may key in incorrect information or, if you deal with customers on a global scale, the normal invoice presentation may not comply with regulations. Plus, how do you guarantee that the invoice will get to the right person for approval. You can’t. If, however, you electronically transmit the invoice through a supplier-customer portal, you will be able to see that the invoice was indeed received and can plan your own expenditures accordingly.
- Lack of Visibility — How can you rely on cash flow and forecast revenue if you don’t know exactly when payments will be received and if those payments will be in full or partial? Certainty in your available cash is absolutely essential for stability and growth. When you transition to e-invoicing, the status of every single invoice will be visible to you and your staff, 24/7. Plus, if you maintain historical data, that will give you insight into the creditworthiness or other economic issues different customers may be experiencing. That provides the kind of confidence every business needs.
Optimizing e-Invoicing and Cash Flow Results
Just taking the step of implementing an e-invoicing solution will not, in and of itself, eliminate all of your cash flow problems, but there are ways to make it as effective as possible:
- Get Executive Buy-in — When the C-Suite has to okay a new program there is often push-back that can relate to cost, resistance to change, or concern for customers’ reactions. Explaining how e-invoicing can strengthen your cash flow position is a powerful incentive to get a thumbs up.
- Make Invoices Easy to Approve — When customers can quickly decipher what they are to pay for products and services, they may approve faster. E-invoices can be designed for easy flow of information, but make sure to use a solution that enables you to add fields, change colors, and more.
- Convince Customers to Opt-in — An e-invoicing solution is meaningless if you can’t get your customers onboard. That’s why many suppliers turn to a third-party solution provider, with demonstrable success in converting customers to e-invoicing, who will work to convince customers of the many benefits they will realize through signing on, and then onboard them.
- Use Existing Solutions — It makes no sense to create your own e-invoicing solution when so many providers are out there with solutions that have proved successful and often offer additional capabilities. The creation can be extremely complex and involve a great deal of risk, so go with a known entity.
- Insist on Robust Configuration Flexibility — Change is inevitable and often necessary, so make sure any solution you choose can be reconfigured easily as changes within (and without) the company dictate everything from invoice formats and standards to integration and security.
- Look for Global Capability — Business is global today, so make sure whatever solution you end up with provides a portal that can be available in any language. This will eliminate what could be substantial delays and under or over-payments due to a misunderstanding from language issues.
- Check Under the Bonnet — By that I mean look for the underlying capability and functionality that will allow the solution to keep functioning even during major disruptions. Look for a solution with hardened security, formalized back-up processes, resilient disaster recovery, and robust business continuity measures