Electronic Invoicing and Why You Need It
The term “electronic invoicing” (or “e-invoicing”) gets thrown around quite a bit in accounts payable. You may have heard it before and wondered: “What exactly is electronic invoicing? And why should I care?” Electronic invoicing, put simply, is an invoicing process utilized by a company that minimizes (and in most cases, eliminates) the usage of paper or PDF invoices. This form of accounts payable automation allows you to more easily process, track, and store invoices. Your next question may then be: “What’s so bad about paper or PDFs?” Let’s explore some of the various issues with traditional paper and email invoicing in modern AP departments.
Invoices and purchase orders are essential parts of most AP departments, but their paper forms are often a major setback. Lost, duplicate, and incomplete invoices plague many AP departments. Late payments strain vendor relationships, causing executives to become frustrated. Routing an invoice involves passing through multiple hands just to receive a final approval for payment. Plus, there’s the tedious process of checking invoices against PO’s and putting that information into your bookkeeping software. To top it all off, there’s the additional effort and frustrations associated with audits. While PDFs may be a step up, they still leave too many manual efforts for your department to deal with.
This is where electronic invoicing steps in to improve the process. With e-invoicing, most aspects of the AP department become automated, from invoice submission to payment. Your suppliers submit invoice forms over a web portal, which saves time in the receiving process. It also allows you to handle any issues or exceptions more directly. Additionally, because your supplier also has access to the portal, any necessary edits are made in real time. All changes and conversation history are then recorded on the invoice for audit preparation. This same portal allows you to review, code, approve or deny any invoice you receive, and automatically informs the supplier of any update they may need to address.
In high-level automation solutions, electronic invoicing software will track and match PO information. Non-PO invoices will automatically be routed for approval based on your unique controls that you set in place. Customers and suppliers can easily track and view any invoice with just the click of a button. This makes electronic invoicing a perfect solution for auditing and archiving problems. Additionally, all invoices are securely stored on a server for easy access through the web application. Approved/matched invoices are either fed back into your payables system for payment, or paid automatically depending on how you organize your workflow. A process that once took weeks or even months can now take a few days with electronic invoicing.
But what about time spent? Implementing an electronic invoicing system may sound like a huge change; the good news is, it’s easier than it sounds. With modern technology, you don’t have to be a tech wizard to eliminate the nightmare of the paper process. Once you decide to go live with electronic invoicing, the solution provider can walk you through everything—from implementation, to supplier adoption, to support.
Electronic invoicing is an exciting technology that can greatly reduce the costs and hassles of the AP department. Paper in the business world is obsolete, and PDFs are headed in the same direction. Information can be exchanged in seconds online. Electronic invoicing employs this kind of technology to improve business processes within accounts payable. Paper and PDF invoices are yesterday’s technology- electronic invoicing is the future of accounts payable.