E-invoicing: The Accounts Payable (AP) best practice behind productivity
Financial organisations are often on the lookout for the next step in efficiency. For the last few years, businesses have consistently prioritised any effort that can increase productivity, improve reporting and accounts payable analytics, or reduce invoice processing costs.
Paper is the arch enemy of Accounts Payable and adoption of AP automation best practices
What has kept AP heavy-footed, is paper. For too long has accounts payable been struggling with the problem of paper. In the worst cases, there can be thousands of invoices that are not entered into the accounts payable system by the end of the year while paper-based invoices are circulating throughout the organisation and the AP team lacks the means of tracking purchase invoices.
It is alarming that according to research from Basware and MasterCard, only 20 percent of businesses have highly automated account payable processes with fully optimized systems to effectively manage invoice payment. Equally so, it has been estimated that only a fifth of the average company’s suppliers electronically submit invoices. This leads to many issues, including delays in payments, and obstruction in cash management and supplier relations. Getting the relationship with the suppliers away from paper as quickly as possible is a proven method for further automation. E-invoicing with AP automation is a foundation on top of which businesses can build more efficient, stronger and mutually beneficial relationships.
E-invoice is the best practice in accounts payable (AP)
Many organisations have already discovered e-invoicing to be the fundamental building block in efficiency and more equitable relationships. In 2015, around 9 percent of businesses were using electronic invoicing. By the year 2017, this number will rise to as high as 38 percent of businesses. According to Forrester, more than 40 percent of all U.S. business-to-business (B2B) activity and 20 percent of global B2B activity is conducted through electronic channels.
This movement is closely connected to cloud-based collaboration. In 2015, 33% of businesses planned to process their invoices in the cloud within the next two years. This technology transformation lowers unit costs, increases visibility into financial information, more closely connects businesses with their partners, and improves corporate profits. Companies should break the bad habit, get off paper, and embrace electronic invoices with accounts payable automation.
Break the bad habit, get off paper, and embrace electronic invoices in accounts payable
E-invoicing, coupled with AP automation, delivers an accurate depiction of cash in the business and enables cost savings. By simply moving from manual to electronic invoice processing, companies can save between 70% and 90% of AP costs which, according to Ardent Partners, translates into a savings of $12.80 per invoice. In fact, invoice processing costs for best-in-class performers have been shown to be 86% below the average for their industries.
Best-in-class performers also handle over half of their invoices with no human intervention. As a result, invoices are processed faster and can be paid on time. The benefits are not only reaped by the buyers: the improved payment efficiency is a warmly welcomed change for suppliers who are hampered by the late payment culture. E-invoicing has been reported as the single biggest success factor – a true accounts payable best practice – for an efficient AP process. According to Billentis, a reputable e-invoicing analyst firm, the payback period of an e-invoicing / AP automation project varies between 6 to 18 months.
Build sustainable growth on e-invoicing and AP automation
Accounts payable automation and e-invoicing brings the necessary boost to the AP department. Invoice processing times of the best-in-class companies are almost 80% faster than normal businesses and each AP person can process over three times as many invoices in the same amount of time than their counterparts. Together with AP automation, adopting e-invoice is the right first response in bringing accounts payable best practices, you guessed it, into practice.
The Basware Network is where buyers and sellers meet, trade and grow. In this network, you save time and money on every invoice you send and receive. To apply the best practices for both accounts payable and e-invoicing, join the Basware Network where both suppliers and buyers create more sustainable growth.
Read the full blog here.