The Key Advantages of E-invoicing (Digital Invoicing)
An invoice is a business document issued by a selling organisation to a buying organisation. The process of manually logging and approving invoices can be painstakingly long.
E-invoicing revolutionises the order to cash process by utilising a solution to replace paper invoices with electronic equivalents and automatically validate invoice data sent by suppliers. Importantly, to avoid errors, e-invoicing solutions can be configured with validation rules to ensure only correct invoices are processed. AP departments then approve the invoice before the payment is released. Automation can reduce typical invoice cycles by up to 60%.
The key benefits of e-invoicing are:
- Increased efficiency: Processing paper invoices can cause strain on internal teams. Manually re-entering information into your business system and sifting through paper documents can lead to increasingly large periods of time spent on low-value administrative tasks. E-invoicing and integration with your business system removes the need for this rekeying.
- Reduced costs: Time is money and e-invoicing enables businesses to reinvest their finance team’s time into more strategic tasks and remove paper costs from the business.
- Fewer errors: Automatically validating supplier invoices based on specific and configurable business rules reduces the incorrect invoices entering your systems.
- Streamlined payment cycles: By leveraging electronic tools you remove slow and erroneous processes from your supply chain, shortening payment cycles which benefit the supplier from a cash flow perspective but can also benefit you, the buyer, in that you may qualify for early payment discounts.
- Improved supplier performance and supplier relations: Analytics tools enable you to monitor supplier performance, allowing you to identify suppliers that are underperforming. Alerting suppliers of invoicing issues at the point of submission reduces unnecessary payment delays which improves supplier relations.
Accounts Payable teams are suffering from inefficient paper processes whilst also fighting the threat of duplicated efforts, late payments and errors. In a recent study the CIMA stated that ‘the average UK business receives 323 invoices a month’ and a massive ‘34% of those surveyed admit their organisation does not process all of their supplier invoices in a timely manner.’
Key e-invoicing benefits for buying organisations
- Faster and more accurate invoice processing : E-invoicing solutions eliminate the need to scan and re-key supplier invoices into your business system, reducing costly errors and the time taken to process invoices.
- Fewer invoice queries: Rule based invoice validation enables you to save time and money by automatically rejecting invoices that don’t meet your requirements before they are sent to you.
- Removal of manual processes: With e-invoicing you can benefit from automated processes such as e-invoice matching. You’ll no longer need to manually review and match invoices against purchase orders, shipments and receipts, saving your team time and reducing errors which inevitably happen with manual processes.
Whilst the benefits of e-invoicing are considerable for buying organisations, there are also important benefits for suppliers.
Key e-invoicing benefits for suppliers
- Compliance: Electronic trading programs are usually mandatory for sellers who are looking to win lucrative contracts with large organizations, such as retailers. The ability to participate in an e-invoicing initiative can lead to key relationships with some of the largest organizations in the market, and as a result are vitally important to many companies.
- Reduced errors and the need for rework: E-invoicing helps to improve efficiency by removing the risk of human error from the invoicing process. Suppliers that send erroneous invoices have to rectify and then resend them, increasing their workload. E-invoicing provides a more streamlined and efficient process.
- Shorter payment cycle: Invoicing errors and queries caused by manual errors delay the payment cycle as the invoice is not processed and paid until the errors or queries are dealt with, which often involves back and forth communication and delays in between. With e-invoicing, errors are resolved before the invoice is submitted leading to faster payments and improved cash flow for suppliers.
- Improved customer service: One of the key benefits of e-invoicing to a supplier is the improved service it provides to customers. Customers are no longer receiving incorrect or incomplete invoices, which makes the supplier more attractive to do business with.