The Hidden Benefits of Electronic Invoicing
For virtually any business, invoicing is a fact of life. The advantages of quick, cost-effective invoicing practices can spell the difference between turning a profit and merely breaking even. The advantages of electronic invoicing (e-invoicing) are well-known, including lower average processing cost per invoice, shorter invoice processing cycle time, and improved processing accuracy. However, there are several less obvious reasons why switching to an invoice management system can produce significant rewards.
It’s clear that e-invoicing leads to improved margins, since it eliminates the need stationery and shipping costs, reduces manual labor, and helps fewer workers process more invoices in a day. These savings from process efficiency are dwarfed by the amount most businesses capture in the form of soft savings. For every $1,000 that a business saves from processing efficiency, they can look forward to saving an additional $2,000 in early payment discounts, $3,000 in working capital, and prevent a whopping $4,000 in contract leakage. In other words, the overall monetary benefit of using invoice management solutions is ten times what you might expect.
Of course, not all benefits are measured directly in dollars. Businesses that adopt e-invoicing also reduce the risk of noncompliance, whether that takes the form of late payments, incorrectly calculating taxes, line item mismatches, or using the wrong accounting codes. Invoice automation solutions bring these mistakes down from 30 percent to under 2 percent.
Finally, another underreported advantage of using an invoice processing system arises from operating entirely in the digital realm. When an organization’s invoicing is performed digitally, it becomes extremely easy to compile detailed analytics on each line item in each invoice. This simplifies cash flow forecasting and improves visibility of your expenditures. You can also improve accountability and information security, since digital systems are much easier for organizations to monitor and audit.
So if you’re thinking about moving your business over to a vendor invoice management system, you can rest assured that these subtle advantages, combined with more obvious cost savings, offer tremendous return on investment. To learn more about our invoice management solution, please contact Visionet Systems.