I have recently come across a couple of articles highlighting how several Latin American countries who are much smaller than the United States are doing more than we are to stay ahead of the electronic curve by mandating electronic invoicing. In 2014, e-invoicing has / or will become mandatory in: Mexico for all businesses and individuals; in Chile for companies with profits exceeding $100,000 a year; and in Ecuador for all transactions that support the Value Added Tax. Though the driving force behind these mandatory statutes is to diminish the large amounts of tax evasion occurring in these countries, I can’t overlook how legitimate businesses will profit from the changes, and think of how American companies should consider following suit.
Electronic Data Interchange (EDI), and electronic invoicing go a long way to improving business efficiency, and reducing unnecessary costs – and in these uncertain economic times there’s no reason not to make the change.
In the most recent Aberdeen Study on Invoicing and Workflow, it was determined that companies in the U.S. fall into three different classes of efficiency, with those who are best-in-class coming in far ahead of the others.
Best in Class Performers
• Take 3.8 days to process a single invoice.
• Spend an average of $3.09 per invoice in processing costs.
• Increase year-over-year early discount payment capture by 4.1%
• Take 9.7 days to process a single invoice. (More than double that of best-in-class!)
• Spend an average of $15.61 per invoice in processing costs. (5x more than best-in-class!)
• Increase year-over-year early discount payment capture by 1.3%. (3x less!)
• Take 20.8 days to process a single invoice. (Almost 5 1/2 times longer!)
• Spend an average of $38.77 per invoice in processing costs. (12.5 times more!)
• Increase year-over-year early discount payment capture by 0.5%. (More than 8x less!)
I wonder if you did a study within your own company, looking at these three factors – what you would find? If you are still using a paper-based process, how much money are you spending (and losing) on manual Accounts Payable and Accounts Receivable processing?
In the Aberdeen Study, the two main differences between best-in-class companies and the rest was that they:
1. Had devoted resources to the automation of AP processes and,
2. Had several automated systems in place including:
• Electronic Invoicing
• Comprehensive AP automation.
• Electronic approval workflow.
• Supplier networks with e-invoicing support.
• Supplier portals.
• and Document Imaging technology.
I realize implementing change can be a little scary, but when it comes to automation – you are doing your company a big favor. A great first place to start is in electronic invoicing, the benefits of which (whether you choose to use EDI, email, or fax) are astounding. Even better, many of our clients report that they see a Return on Investment within 12 months.
Let’s take a quick look at the direct benefits of electronic invoicing that will impact a company that chooses to implement an automated process:
• A quick set up configured directly within your Microsoft NAV ERP accounting system.
• Reduced unnecessary expenses relating to: paper, printers, ink, document storage, lost documents, and postage.
• Lower operating costs – thus making you a more attractive business partner.
• Increased cash flow visibility and optimized working capital.
• Electronically archived documents – making them much easier to find at a later date.
• Drastically reduced (if not eliminated) duplicate, fraudulent, and overpaid invoices.
• A streamlined process in which your staff can create, send, and receive Sales Tax compliant invoices, purchase orders and credit memos electronically.
• Easy business partner set up through a process accommodating multiple formats, languages and currencies.
• Real-time access to all AP / AR invoices which drastically speeds processing (through viewing, query, approval, and payment.)
• Faster payment dispute settlement through easy access to all necessary documentation.
• Reduced lead times and faster payments.
If this sounds like something that would be beneficial for your company and you would like to discuss how electronic invoicing and/or EDI can specifically benefit your company, contact us today. We are here to lend our expertise and support, whether you prefer to implement EDI, email, or fax for your billing systems.