Let’s face it, the workday is filled with meetings, emails, and countless tasks. It’s nearly impossible to find time to reflect, reevaluate, and refine proven processes. For the accounts payable (AP) department, there’s the added stress of managing payment processes that ultimately impact the bottom line. From invoice entry to cash flow to month-end closing, every part of the AP process impacts spend and budget. But one part of the accounts payable cycle is surprisingly costly for businesses.
Blame Invoice Processing for Wasting the Workday
Of all the steps in the AP process, managing printed invoices is one of the most draining part of the AP cycle. Handling paper-based invoices includes manual coding, data extraction, approval, and storage. Let’s not forget any internal invoicing procedures your business needs to prepare for payment.
After a supplier’s invoice is received, the rest of the accounts payable process can be streamlined with electronic invoicing (eInvoicing), but many businesses are still reluctant to jump on the electronic bandwagon.
The idea of eInvoicing raises common concerns. Some businesses doubt the ROI of eInvoicing is great enough considering the number of invoices and payments they process. Other organizations worry about ramp up time after implementation, and still others aren’t ready to include AP solutions in their budget because their tried and true processes are working just fine.
But these AP departments are wasting valuable time on repetitive processes that lead to more errors rather than efficiency and ease. It’s also true that businesses that handle paper invoices lack visibility and control over cash flow from the beginning of the payment process.
Manual Invoice Entry is a Big Problem
Regardless of the size of the business, manual invoice entry continues to be a pain point for accounts payable processing. Entering all the data from piles of paper invoices can result in errors that, in turn, can lead to routing and approval issues. Time spent solving these problems further delays approval time and often means late payments that weaken supplier relationships.
A PayStream Advisors report points out that the most efficient invoice receipt types are electronic invoicing (eInvoicing) or EDI/XML. Unfortunately, most companies are still receiving invoices through paper and email.
Manual invoice processes leave AP staff buried in paper. Depending on the number of invoices, sorting, categorizing, and manually entering them can take hours before the invoice is in the accounting system.
Instead, with eInvoicing, businesses have flexibility and visibility into invoices 24/7. Visibility into all invoices improves cash flow. Oftentimes, accounts payable departments struggle with cash flow due to limited insight into budget and spend. With e-invoicing software, finance leaders have expanded capabilities to plan payment dates and keep control.
With manual invoice processing, there’s plenty of room for mistakes. Sending invoices to the wrong department, approval concerns, and entry errors can hinder the entire payment process—leading to late payments and the risk of duplicate invoice entries. These concerns beg the question:
How can your business not afford to save time and money in the payment process?
It’s Time to Cut Approval Time in Half
Chasing down managers is no fun. According to PayStream Advisors, 25% of businesses note that manual approval routing of invoices is a major challenge that drains the accounts payable process. Paper invoices require AP staff to track down approvers to sign-off on invoices. Running around the office and keeping up with approvers’ schedules can slow down the process significantly.
But there are ways to facilitate approval without losing control and visibility. For example, there will always be exceptions to the rules. More often than not, invoices that exceed a certain threshold or business purpose may need to be manually approved by a manager.
Invoice exceptions and approvals can be expedited a number of ways. According to an Accounting Tools article, businesses can implement these steps:
- Send negative approval requests. Asking the approver to respond only if there is an issue. If not, AP staff should continue business as usual.
- Cut approvals for the small things. Setting thresholds for certain amounts or rules for specific vendors makes it easy to cut down on the number of authorizations.
- Let the purchase order be the approver. If a vendor sends a purchase order of goods or services, it could be another way to verify the purchase for payment.
Organizations that struggle with approval lag time should consider investing in an invoicing solution that automates approvals. This solution gives approvers flexibility to review and approve invoices through a cloud-based portal. Once the invoice is approved, users are notified, and the invoice is automatically routed for payment without the need to constantly check the approval status or sift through piles of paper.
Learn How to Keep Control with Centralization
Suppliers send invoices various ways—paper, fax, email, or electronically. The AP staff often spends hours manually entering each invoice, but there are bigger risks than the costs involved. Losing one invoice during the manual entry process—which is easy to do with them coming in from so many directions—can increase the risk of inaccurate spend reporting and general ledger errors.
According to a recent PayStream report, invoicing issues start with invoice receipt. Regardless of how suppliers send invoices, the problem that businesses face is the lack of invoice centralization. Almost half of surveyed businesses lack the centralized, organized hub where all invoices can be managed and streamlined for payment. Instead, finance departments must manually manage each invoice, relying on various departments and their requisitions, which makes it easy to skip a step in the entry process.
E-Invoicing software is the centralized solution to cut down time spent manually entering invoice information. Electronic invoicing (eInvoicing) stores all invoices in one cloud-based hub no matter how suppliers send them.
According to a recent Aberdeen study, top-performing organizations are 67% more likely to have a centralized invoice solution.
E-Invoicing software has its benefits, but one of the top benefit is keeping your suppliers happy. Paying suppliers on time is a win-win for both buyers and suppliers. Typically, late payments stem from invoice errors that take time to correct. With a cloud-based solution, once invoice details are extracted electronically, the payment process is streamlined with AP automation. And there’s less chance of duplicate entries that could lead to duplicate supplier payments.
Suppliers have flexibility with e-invoicing software solutions that save them time as well. If buyers use AP automation solutions, suppliers can simply log in to the solution portal to check the status of invoices or payments instead of constantly calling or emailing buyers. And with eInvoicing, vendors still have the flexibility to send invoices the way that is most convenient for them. Once the invoice is entered into the system, the only difference is the rest of the process is paperless.
Stop Driving Up Time and Money
Businesses that rely on manual invoice management often think that paper is the least expensive way to manage the accounts payable cycle because they avoid the high cost of technology.
Think about the time spent coding, reviewing, processing, and storing invoices. Then add in the hours spent correcting manual mistakes from coding entries. Before you know it, you’ve lost valuable productivity time and racked up more costs than savings.
Many businesses can spend several hours per week handling manual invoice management issues. Initially, implementing e-invoicing software may seem costly and require too much ramp up time, but top-performing businesses recognize the upside. Organizations should calculate the cost of an invoice to determine ROI and efficiency. Businesses that depend on paper often incur more late fees and short cash flow cycles instead of the rewards of early payment discounts.
The Success and Savings of eInvoicing
The bottom line is eInvoicing saves the day with numerous benefits:
- A centralized, cloud-based invoice hub that securely stores invoices
- The start of a streamlined, paperless payment process that can be accessed anytime, anywhere
- Automated invoice approvals that automatically route invoices to payment
- Real-time status updates for suppliers to check the status of their invoice.
If your decision-makers aren’t confident in the benefits or ROI of eInvoicing, there’s one way you might win them over—the valuable human asset—their employees. Investing in full-time employees is important to scale for growth and future financial opportunities. It’s not an efficient use of time or spend for employees to drain the day away with repetitive procedures that automation could handle. Employees should be maximizing their time in the office to focus on company growth and strategy. With eInvoicing, your AP staff can save time and money while analyzing strategies and data that maximize growth.