Electronic Invoicing Gets the Job Done Efficiently
Technologies offering electronic payment and invoicing have been around for a few years now, but surprisingly, the adoption of electronic invoicing and payments has been slow. Companies have yet to recognize the benefits and many, if not most, are still entrenched in the old ways of doing business.
Yet companies that have shifted from paper-based methods of invoicing and bill payment are experiencing improved relationships with their customers and have eliminated paper and related inefficiencies throughout the accounting side of the business.
Electronic Invoice Presentment and Payment (EIPP) provides companies with a comprehensive approach to electronically manage invoice data, disputes, approvals, payment disbursement, and payment reconciliation. The system employs electronic processes to handle invoicing, including intricate line-item details, accounts payable, and accounts receivable. It improves efficiency by taking costs out of a company's very necessary financial operations.
The most immediate benefit of moving to EIPP for companies is the elimination by nearly half of the $21.86 average per invoice handling cost-from initial handling, including postage, to reconciliation-which can save even small companies thousands of dollars per year. But an often unseen benefit is the improved customer relationships it grants by providing a business partnership with customers that adds value in several different areas:
Elimination of paper handling costs: Just as the company saves from elimination of paper handling costs, the customer saves as well, providing savings from reduction in handling, postage and filing.
Better growth possibilities: With EIPP, the supplier provides the customer with a way to grow his own business without the resulting growth in administrative costs that are common with paper-based systems. This enhances a "business partnership" relationship, which is much stronger in terms of customer retention and loyalty than a typical customer-supplier relationship.
In a paper-based environment, the more a customer's business grows, the more overhead grows to handle invoicing, payments, bookkeeping and similar business necessities. With EIPP, no additional manpower is needed, even if the business grows exponentially.
By giving suppliers the ability to use EIPP, companies also enable their customers to integrate invoicing with enterprise resource planning, CRM, sales and other systems throughout the organization. This eliminates the time, manpower and inherent human errors involved in rekeying information from one system into another, as with paper-based invoicing systems.
Improved dispute resolution: Fewer disputes arise and those that do can be settled much more quickly because all information on invoices, payments, et al., is immediately available to all authorized parties without the delays caused by phone tag and the exchange of faxes and emails. For the customer and the supplier alike, there's no digging through paper files to find records or attempting to interpret handwritten or carbon copies. Customers and suppliers can both see what was ordered, the agreed upon price, and shipment, delivery, and payment details. There are fewer disputes, quicker resolutions, and a better customer relationship overall.
Improved reporting: To track spending, many customers with paper-based invoicing systems will ask the supplier for an accounting of the most recent quarter or year because the supplier doesn't have the manpower to produce the reports himself. Even if the supplier has other business applications, they require technical expertise to run such reports. With electronic invoicing, the customer can easily, without any technical expertise, run these reports without the supplier's involvement in minutes, rather than hours or days.
Complete spend management capabilities: By providing EIPP, suppliers build rapport with customers by providing insight where customers can save money. With electronic invoicing, customers can see at-a-glance what they are purchasing and in what quantities. This enables them to quickly determine if they can accelerate payments or increase order sizes with suppliers in order to take advantage of early pay or volume discounts. In this challenging economy, customers will stay loyal to those suppliers that can alert them to cost savings.
Better timing of payments: In the same vein, by providing EIPP, a company enables its business customers to better time their payments so they can maximize their use of cash on hand-investing it or using it to offset interest charges-while also ensuring fewer late payments and associated fees.
Conclusion
Business customers may not be immediately aware of all of the potential benefits of electronic invoicing. Yet they are constantly searching for ways to grow their businesses without adding to administrative overhead, a given with older invoicing systems. As businesses grow, so too does the invoicing function. Additional personnel are required to handle the paper-based booking process. With EIPP, no additional staff are required, even if the company grows exponentially. Supply companies can and should work with their business customers to initiate an EIPP solution. It's a technology that brings real, measurable benefits to both parties.
About the author
Dave Lindeen is vice president of sales for Corcentric, a company that provides firms with solutions to electronically manage all of their invoice data, disputes, approvals, payment disbursement, and payment reconciliation processes. Lindeen is responsible for strategic business planning, including sales, technology investments, and systems improvements.
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