Electronic Invoicing: What is it?
Electronic invoicing, also known as e-invoicing, is an automation solution that removes the need for paper invoices, supplier phone calls, and manual data entry. E-invoicing provides a way for your suppliers to key in and upload invoices via internet. Depending on how invoices are uploaded, they can also be automatically matched and routed to the appropriate users for approval.
How does it work?
E-invoicing vastly simplifies invoice interactions between suppliers and their customers. First, the supplier submits their invoices in one of three ways: FTP, online entry, or paper invoices sent to iPayables for upload. Once uploaded, the once-paper invoices are routed for approval and in a short time, these invoices will be available on the cloud for review. On the supplier portal, suppliers can make real-time edits and comments if any errors are flagged or questions asked. The suppliers can also see every step that has taken place, since every change is tracked along the way.
The supplier is then given the option to be paid through ACH, credit card, virtual card, or check. Once the invoice is paid, it is then sent to archiving where it is filed away for safekeeping.
How does Electronic invoicing benefit AP departments?
Companies are often reluctant to switch to e-invoicing, fearing it will be too time-consuming without enough pay-off. However, e-invoicing benefits accounts payable departments in three major ways.
First, electronic invoicing saves accounts payable departments money. CFO magazine tried to determine the total costs of processing paper through an AP department, factoring in labor, outsourcing, and overhead, then averaging that cost between the number of invoices the company processes. In looking at 1,485 different companies, the worst 25% were spending more than $10 per invoice, with the average amount spent being $5.83. If a company is processing 1,000 invoices in a month, that brings your average monthly cost to around $5,000 a month. Automating your accounts payable department with iPayables has brought costs down to under $1 an invoice, in part by cutting the costs of paper, postage, labor, and time. This is a dramatic difference especially when processing thousands or tens of thousands of invoices each month.
Second, e-invoicing makes the auditing process less stressful. For most people, this “A” word is enough to make their hair stand on edge. But it shouldn’t be – an independent audit is meant to help your company find problems and improve. Once the auditor is given access to your records, they look for accuracy, duplicate invoices or payments, and compliance within your company’s accounts payable records, which will then be matched up to the end-of-the-year AP balance. While this is all good, getting ready for an audit can be a nightmare when the accounts payable department is all paper – the necessary documents seem to be scattered across the four corners of the business and hidden under piles of paper that are rarely ever touched. By switching to enterprise-level e-invoicing technology, paper trails that once took hours to comb through turn into a simple audit trail that can be inspected in hours, a fraction of the time when compared to the days it once took to follow a complicated paper trail.
Finally, e-invoicing saves accounts payable departments time. Accounts payable automation drastically reduces the time that you spend processing invoices and payments. You can track each invoice through every step of the approval process, so there is no need for your employees to be searching for paper invoices or payment status. Any relevant information that you need is available in a few, quick clicks. Your suppliers will thank you too as they will receive their payments faster through electronic payments rather than paper checks, which can take weeks to be processed, mailed, and then deposited.
E-invoicing is a game changer. It saves your AP department time, money, and stress, all while eliminating paper and making the job easier.