Electronic invoicing is one of the best ways an organization can improve the functionality of their accounts payable department. However, many organizations are still using paper systems because they don’t understand how the process of automation can fully benefit their organization. The benefits of automation in payables greatly outweigh the few negatives. According to an article by Paystream Advisors, E-invoicing leads to “increased savings, increased efficiency and a greater competitive advantage.” An automated system can greatly reduce the many issues that come from using a paper system.
Problems with Manual Invoice Entry
According to the research, 54% of organizations manually process invoices. The process of entering an invoice into the system involves verification, validation, and approval before the invoice can be paid. This takes time and uses staff resources when they could be better utilized elsewhere. Using a vendor portal can use an organization’s criteria to automatically approve invoices so there are no delays with payment.
Workflow Process Challenges
Nearly half of the organizations surveyed, encounter inefficiency with manual data entry. Another common problem among organizations of all sizes is lost or missing invoices. Both problems can lead to the need to pay late fees or even a ruined relationship with vendors. Paper invoices are physical items that either must be filed away for future payment, approved and paid immediately, or entered into an accounts payable software system. Each of these options leads to overall inefficiency when it comes to paying invoices. The solution to each of these previously mentioned problems is an AP automation solution.
Not Taking Advantage of Discounts
Many vendors offer discounts related to early payment schedules. But organizations who don’t have automated systems often miss out on these discounts. The top reason for missed discounts for early payment is a lengthy approval cycle. Missing information on invoices and lost invoices are common problems that prevent an organization from getting discounts from their vendors. Accounts payable automation means invoices are approved quicker, paid on time, and always accessible so discounts can be used when available.
Implementing Electronic Invoicing
The Payables Report by Paystream shows that electronic payments are the most commonly adopted tool when working towards full automation. By using electronic invoicing an organization eliminates the need for paper invoices. This means invoices can’t be lost or misplaced so that payments can always be completed on time. E-invoicing makes it easy to verify account information during the verification process. It turn this makes it easier to access the account in the future should there be any issues to resolve.
Accounts payable automation decrease errors significantly, but it also leads to better allocation of resources and significant savings in operation costs of the AP department. Thus, taking advantage of perks associated with using technology in Accounts Payable. Whether an organization chooses to use E-invoicing or work with vendors who offer dynamic discounting, they can immediately see improvements once Electronic invoicing is implemented.