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When busy business owners think about invoice processing, they often take a very simplified utopian view: They issue a purchase order, get invoiced, and make a payment.
If only things were still going great, but the point is, entrepreneurs and executives often underestimate the time they actually spend on exceptions, that is, whenever things don’t go right. “As expected”, such as when goods were not t shipped or delivered on time or were damaged en route.
“This is really where all the friction takes place and where all the costs add up when you don’t have digital and automated processes in place.” Matt clark, President and Chief Operating Officer of Corcentric, said PYMNTS.
Information, visibility and time
Simply put, the time spent resolving perfect transactions, as well as those with exceptions, is not just wasted time (and money) that could be deployed more efficiently elsewhere, but it is one of the top reasons invoice automation is gaining conversions.
Another is visibility, which is basically showing what the flow of invoices looks like at a given point in time. Knowing where these invoices fall in the lifecycle and whether they contain the right amount of information provides visibility and gives businesses the time they need to make the right decisions.
On the accounts payable (AP) side, when to pay and how to pay are also drivers of cash flow, Clark said. On the accounts receivable (AR) side, electronic invoicing allows the invoice to be fed into the customer’s system so that they can pay this invoice on time and transfer the dollars to the supplier’s bank account in a more predictable manner.
Quick fix
When businesses embrace electronic invoicing, Clark said, “The impact is almost immediate. “
Much of that comes from visibility, he added, noting that it’s something he’s seen time and time again, with customers often not even knowing what issues they are having until ‘they are highlighted by this new visibility.
“We had a client that we just signed that really had no idea how quickly he was paying his bills,†Clark said. “They were paying them pretty much as they came in. They had no strategy to say, ‘OK, if we have 45 day payment terms, let’s pay on day 45.’ ‘
Speeding up payments unnecessarily like this has a direct impact on cash flow, so once they had visibility and control over the process, they reconciled that very quickly, during the first payment cycle.
“They said, ‘OK, now we can put a strategy around this. We have full visibility into every available invoice, we know what our payment terms are and we know when we should be paying them now, â€ending this practice of paying bills before the terms adds an immediate cash benefit,†he said. Clark said.
Barriers to adoption
Despite these advantages, there are still barriers to adoption that keep many businesses on the sidelines. One of the reasons, he said, is that people are only looking at their customers’ billing process and not the big picture, which includes the impact on cash flow and other benefits. ‘they will receive.
“I think understanding the full lifecycle of a B2B transaction, then understanding how e-invoicing fits into that picture, what the upstream and downstream impacts are, and then connecting all of those dots really helps,†said Clark.
Another hurdle is looking at existing systems and processes and being overwhelmed by the idea of ​​replacing them with a better solution.
“This is one of the reasons we’ve taken an end-to-end lifecycle approach on the AP and AR side of the equation, because we understand that solving this problem is not just a solution.” ad hoc that addresses an element of the problem. cycle of life; the whole life cycle needs to be looked at holistically, â€said Clark.
The stage of digital transformation
Digital and automated processes also eliminate fraud and security concerns caused, for example, by a paper check or invoice being sent to the wrong place and putting sensitive information in the wrong hands.
“When you do everything in a very digital way, everything is as clear as daylight,†Clark said. “And the bar has been set so high for providers like us from a data security and privacy perspective that you can be assured very quickly that this is a better way to do business than the old way. “
The pandemic has accelerated the adoption of digital invoicing and digital payments. In Europe, the transition was also driven by regulations forcing companies to eliminate checks and paper invoices.
In the United States, Clark noted, “We’ve left this in the hands of our individual companies, and I think you’ll start to see more and more standards being developed – whoever pushes those standards – who will probably get that last 30%. or 40% of the volume is available to make this leap and enter this stage of digital transformation. “
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