Have You Considered e-Invoicing Yet?
It is inevitable that all invoices will be issued electronically in the near future. With pressures on organisations to increase efficiency and reduce costs, e-invoicing (electronic invoicing) provides an easy way to generate direct savings, but it also helps to reduce the time it takes to get paid by suppliers.
If you can provide invoices in a timely manner, provide backup documentation such as PODs (Delivery Dockets), and respond to queries quickly, you are likely to get into customer payment runs faster than if they have to process invoices on paper.
Furthermore, with governments looking to generate savings by making e-invoicing mandatory,
anyone dealing with the state sector will be obliged to invoice electronically. For example, the
EU has an objective getting all European governments to receive their invoices electronically by
2020. A key consideration for any finance function must now be, are you ready
Is Your Business Ready for Electronic Invoicing?
You might think that e-invoicing involves large IT projects, big budgets,
and involves a substantial time input from staff. You might also be concerned
that e-invoicing is expensive to operate.
While this may have been true of older technologies such as EDI, modern e-invoicing
solutions are easy to deploy, require minimal up-front costs, a very low input from
staff, and are actually less expensive than issuing invoices on paper.
It may appear to be ‘free’, but it is a very unsatisfactory way to distribute invoices.
(See the article on the issues with sending invoices by email). To ascertain if your business is
ready for e-invoicing, let’s look at the key elements that are involved.
Your Accounting Software
Interfaces are available from many accounting packages which means that implementation
can be as simple as activating an option in your accounting system.
If your accounting software does not have a standard interface, it may still be a simple matter to implement e-invoicing. Most accounting software packages include reports than can be output in CSV (Comma Separated Value) format. This is a format that can normally be used by e-invoicing systems. Even if an existing report is unsuitable, most modern accounting software packages incorporate a report writing facility which can be used to output the data needed for e-invoicing.
There are old legacy accounting systems that may be incapable of providing data without
investment in IT.
If you have concerns about your accounting software, please contact a
specialist e-invoicing service provider and let them engage with your IT provider to
establish what would be involved in extracting invoice data. If you don’t have an
accounting system, don’t worry. You can still issue invoices electronically using
online entry via the Internet.
Will my Customers Accept Electronic Invoices?
The simple answer is ‘yes’. In the short term, not every customer will convert from paper to e-invoicing, but some e-invoicing providers incorporate a print service into their offering, so this subset of customers is catered for at a lower cost than printing in-house.
Experience has shown that 80%+ of customers are ready to make the switch from paper invoices to electronic invoices, provided that invoice delivery is secure, convenient, and that customers can access copies of invoices online at any time. This figure holds true across most business sectors.
A fundamental consideration here must be that even if it is only cost neutral to switch the printing of invoices to an e-invoicing service provider, cost savings will be generated by customers switching from print to e-invoicing so there is no risk in making the switch now and there are many benefits to be gained.
Are the People in my Business Ready?
Every organisation is different, and introducing new processes or new technology brings change that can often be met with resistance. The secret of success is to establish the benefits for each function within the business, and to provide regular open communication with staff, customers and suppliers.
Can You Afford to Delay Implementing e-Invoicing?
With savings to be generated as soon as an e-invoicing solution is implemented, why wait? In reality, the biggest obstacle to implementing e-invoicing is often internal resistance to change. In another article in the Learning Centre, we will look at preparing a winning business case for implementing e-invoicing.
If you are still unsure about e-invoicing for your business, why not consult an expert in the field? The team at OnePosting would be happy to discuss the specifics of your business without obligation to help you decide if e-invoicing is right for you at this time.
What are the Benefits of e-Invoicing?
There are many reasons for switching to e-invoicing from eliminating paper and paper
handling to more effective management of account queries. However, the three most
common reasons for implementing e-invoicing are:
e-Invoicing costs as much as 70% less than issuing
invoices in paper format.
Customers who receive their invoices electronically tend
to pay faster than those who receive their invoices in paper format. As a result the
DSO (Days Sales Outstanding or Average Debtor Days) figure tends to be reduced.
More Effective Allocation of Staff
When paper is removed from the invoicing
process, it frees staff to focus on more productive tasks such as shortening month end
invoicing cycles to provide more timely management reports, as well as improving the
debt collection process.