E-Invoicing for Best-in-class Accounts Payable Process

Traditional manual-based invoice processing results in costly errors – handling paper documents, late approval cycles, compliance and ...

Traditional manual-based invoice processing results in costly errors – handling paper documents, late approval cycles, compliance and security risks, delays in uploading data on approved invoices to finance system are a few of them. The focus on AP automation is crucial to increase profits in an economic environment where revenue growth is hard to achieve. Embracing an advanced technology is essential to take AP process to the top level of performance. E-invoicing plays a major role in creating a world-class AP department. Here, we present six attributes which shows how e-invoicing contributes to each one.

Faster Invoice Cycle Times

Invoice cycle times are among the top AP concerns in many businesses. On-time payments reduce late-payment penalties, create early payment discount chances, reinforce supplier relationships, and provide buyers with greater leverage when it is time to renegotiate contracts with key suppliers. Better cash management and discount capture opportunities are also the other main concerns. Compared to capturing data from paper invoices and physically routing the invoices for approval, electronic invoicing greatly accelerates cycle times for PO-based and non-PO based invoices.

E-invoicing improves the invoice management process by enabling organizations to receive invoices in any format, from any place. Images of Invoices received via paper also can be consolidated into an e-invoicing solution, as well as information extracted from paper invoices via optical character recognition (OCR). E-invoicing systems automatically extract supplier, header and line-item data from invoices that are received digitally. Invoices then are matched with purchase orders (Pos) and/or products/services receipts. Invoices that need approval are automatically routed based on pre-defined business workflows. Also, e-invoicing ensures that invoices requiring review are always sent to the right person.

Low Invoice Processing Costs

Costs is another top AP teams’ priority. They want to reduce costs through the automation of accounts payable processes. E-invoicing reduces the costs associated with invoice processing.

Electronic invoicing eliminates the need for scanning software, hardware, and ongoing maintenance. Data is automatically extracted from digital invoices, eliminating the need for data entry or manual validation. Moreover, e-invoicing systems validate invoice information at the supplier’s end, increasing first-pass match rates and reducing exceptions. Suppliers can instantly convert digital purchase orders (POs) into electronic invoices, making it a snap for them to submit invoices digitally while streamlining invoice processing for buyers. The e-invoicing solution also automatically posts matched invoices without operators having to enter invoices data into a company’s financial systems.

Improved AP Team Productivity

Organizations receive most of their invoices in paper, e-mail, or fax format. Businesses need an automated system to automatically identify & extract data and convert it to an electronic format. Without this, data needs to be manually entered, and paper documents need to be physically collected, stored and maintained. In many organizations, paper invoices are handled multiple times during the approval process and are often misplaced. Digital invoices reduce the data keying, paper handling and routing, and physical document storage required in a manual operation, in turn, considerably improving staff productivity.

E-invoicing systems automatically extract and validate invoice information, match invoices with POs and receipts, and post approved invoices. Any invoices that require review or approval are digitally routed to specific individuals based on pre-configured rules. The application automatically alerts users to bottlenecks and invoices approaching their due date. The system tracks overall processing efficiency, including key metrics for staff productivity and average invoice approval time. This improves overall productivity and frees staff to focus on strategic tasks while allowing the company to reinvest savings in high-value business support and analysis.

Also Read: 3 Top Tips to Create a Balanced Business Budget

Fewer Supplier Inquiries

E-invoicing allows businesses to automatically communicate invoice and payment status – tasks that can otherwise consume valuable time and frustrate employees of suppliers and buyers. With an e-invoicing system, suppliers receive confirmation that their digital invoice was successfully submitted. The platform also enables them to view the status of invoices and payments at any time, as well as view any messages from the buyer.

Resolving disputes in a paper-based accounts payable process can take days, and potentially involve several escalations, straining trading partner relationships, and resulting in missed opportunities for early-payment discounts. E-invoicing eliminates the time-consuming back-and-forth through online collaboration. With an e-invoicing solution, multiple employees can review and approve an invoice at once in a restricted manner. Advanced security tools ensure that access to specific data is restricted only to those who are authorized to view and approve invoices. E-invoicing reduces phone calls and e-mails from suppliers regarding invoice or payment status, while promoting invoice approval and exceptions resolution, and reducing paper handling costs.

Better Invoice Processing Rate

In a manual AP process, the team must collect and manually reconcile PO, invoice and payment data. E-invoicing systems drive straight-through processing by automatically extracting invoice information, checking for duplicate invoices, validating supplier data, and calculating the line-item data on invoices. The information extracted from invoices is automatically matched with POs and proof of delivery documents. Data can be validated against data sources, business rules, and applications.

Additionally, e-invoicing validates invoice data at the supplier’s end, increasing first-pass match rates and reducing exceptions. The system enables suppliers to instantly convert POs into digital invoices, making it an instant for them to submit invoices digitally while streamlining invoice processing for buyers.

High Discount-Capture Rate

The inability to effectively capitalize on early-payment discounts from suppliers is another AP departments’ biggest challenge. In a manual process, invoices are typically approved outside of the discount window. Also, it is hard to facilitate discount offers in a manual processing.

An automated technology helps buyers maximize their working capital with more early-payment discount opportunities. Buyers can create an early-payment discount program through an e-invoicing system and invite their suppliers to sign up. The intuitive solutions enable suppliers to sign up in just a few minutes. Once an invoice is approved by the buyer, the supplier is provided with options on when they want to receive their money. The sooner the payment, the bigger the discount the supplier offers.

Author Bio : Marissa Levin is a marketing consultant, freelance writer at SutiAP, who regularly writes articles on Business, Finance, ERP, and Cloud/SaaS trends



Vyas Infotech: E-Invoicing for Best-in-class Accounts Payable Process
E-Invoicing for Best-in-class Accounts Payable Process
Vyas Infotech
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