It’s hard to believe that a large percent of B2B transactions in the US and the UK are still being done with paper checks and invoices. What’s even harder to imagine is that according to the leading management consulting firm worldwide, paper invoicing and payment processing is costing UK taxpayers four to six billion £ per year, and the cost keeps going up. Another review performed by the US Treasury Department estimated the current cost of manual Accounts Payable processing as $900 million per year for the Federal Government. That’s $3.6 billion for four years, which is, of course, the length of one Presidential term. They also calculated the savings from automating would reduce the cost by more than 50 percent.
How can CFO’s Control Wasteful Spending?
Many CFOs have been wondering what the key is for putting a stop to all this wasteful spending? Although Electronic Invoicing and Accounts Payable Automation have initially been slow at catching on in some sectors, the fact remains that they are offering immense transparency, speed, and savings for B2B transactions. Not only is this technology very promising, but it’s becoming more and more powerful every day. In fact, many major players in the financial sectors in both the UK and the US have started forming partnerships with developers of payment software for hosting their systems.
AP Automation an Achievable Solution
Some additional data regarding AP Automation implemented by US Federal organizations reveals an annual cost reduction of 46 percent when dealing with undisputed invoices and 54 percent when invoices are disputed. This indicates some very achievable and realistic savings. Still, however, in spite of the obvious savings, many companies are just now starting to understand all of the AP Automation and E-invoicing benefits. With EIPP, which stands for electronic invoice presentment and payment, vendors have the ability to bill their buyers electronically. Then, once the buyers have reconciled their invoices against their purchase orders, they can authorize electronic payment via a vendor portal.
Research has shown that EIPP can enable businesses to cut their accounts payable overhead in half while speeding up invoice processing. This further allows buyers the option of negotiating dynamic discounting deals in exchange for prompt payments. It’s a win-win for everybody involved.
AP Automation offers Five Benefits:
- Improves Cash Flow
- Improves Internal Quality
- Provides Resiliency
- Increases Customer Satisfaction
In fact, research shows that customers who received their invoices electronically paid them an average of 20 days earlier than those who received a paper invoice. In some industries, that could equate to a 75 percent administrative decrease, an 85 percent adoption rate, and $12 to $15 million in savings.