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How to Become Paperless and Why Some Never Will (Part 1)

by | April 20, 2018

E-Invoicing isn’t the most exciting area of procurement – but it can deliver savings, improve relationships and open-up new possibilities. This Blog series explores the genuine benefits (and costs) associated with setting up e-invoicing, how to measure them, common pitfalls (and how to avoid them) and the bit that’s most often missed – what to do next?

Oh, its e-invoicing Again!

E-Invoicing has been around for years – decades actually. There is no doubt that there is more e-invoicing now than there ever has been. However, there is still clearly a way to go until organisations can all say they are genuinely e-invoice enabled (both sending and receiving).

Which e-invoicing do you mean?

Before covering the main sections of this Blog, it is worth clarifying what I mean by an e-invoice.

Many organisations are happy to include emails, pdf attachments and OCR (Optical Character Recognition) invoices into their electronic definition. This is not what I mean by an e-invoice – and the reason is that at some point they are likely to be printed to be keyed into an Accounts Payable system.

My definition is an invoice that is transmitted electronically and that is intended to be processed automatically by the receiving system without manual intervention or printing. I repeat – it is not OCR!

Remind me of the benefits of e-invoicing… I forgot….

E-Invoicing has a number of benefits both tangible, hard cost savings as well as soft, intangible benefits. I have broken them down in to the following key categories:

Increased efficiency, reducing operating costs

Entering data from a paper invoice into a payment system is time consuming and is open to the risk of incorrect data entry. And this assumes that the invoice is sent to the right location in the first place.

Additionally, supplier self-service significantly decreases the number of supplier queries that accounts payable need to deal with, cutting costs further and also improving the experience for suppliers.

Improved supplier relationships

Suppliers’ most consistent gripe is that they do not know the progress of payment for an invoice, and that they don’t get paid on time.

There may be conscious decisions to manage supplier payments, but by receiving e-invoices, it is likely that the invoice processing time will be vastly reduced giving the buying organisation more control over payment. Payment on-time can lead to better supplier relationships – especially for more strategic suppliers where Supplier Relationship Management plans may be in place, paying your supplier is a hygiene factor that shouldn’t be ignored.

Better working capital management

Early payment discounts can be obtained from the accelerated payment cycle provided by e-invoicing.

With more control over the payment time and freer resources (due to new-found efficiency), proactive decisions can be made over early payment discounts. With some of the best organisations in the world taking advantage of these where it suits the working capital strategy of the business, savings here can be significantly more than any other e-invoicing measure.

Reduced environmental impact

Less paper means a lower carbon footprint which not only improves company image but also provides a cost saving through reduced storage requirements.

Most countries require that paperwork is stored for a number of years and this can have significant storage costs due to either the required size of your premises or rental of off-site storage.

Show me the Money

Taking an organisation with 100,000 invoices a year and spend of around £800m:

So that’s the Why concluded. Why this is still an important area which so many people are still failing to pin down. In the next part of this series we will explore the cost of going paperless along with all the necessary steps needed and, most importantly, what to do next.

Stay tuned for part 2!

Useful Links

Creating a world class procurement organisation – A transformational journey
Implementing and leveraging digital procurement