Imagine an environment where buyers and sellers do business electronically, without paper invoices:
- No more printing, stuffing and mailing paper invoices
- No opportunities for invoices to become lost or delayed in the mail
- No more guessing whether buyers received an invoice
- No need for buyers to key invoice data
- No more tracking down invoice approvers
- No physical routing of invoices or forwarding of e-mails
- No back-and-forth e-mails and phone calls to resolve exceptions
- No more general ledger coding
- No need to input data on approved invoices into your ERP application
- No filing of processed invoices in file cabinets and cardboard boxes
This is the promise of electronic invoicing.
Sounds awesome, doesn’t it? But even with all of these benefits, electronic invoicing has made only marginal inroads in the United States. Why? And is it possible for finance departments to achieve full accounts payable (AP) automation regardless of how they receive invoices?
We explore both in this 4-part blog series. Spoiler alert: The answer to the second question is ‘Yes!’
What is electronic invoicing?
It’s not as obvious of a definition as you may think! Electronic invoices move from a supplier’s billing system to a buyer’s accounts payable system without requiring data entry. Paper invoices, faxes and e-mail attachments such as PDF documents and spreadsheets that are manually entered (and possibly scanned) are not electronic invoices and do require manual data entry. And electronic invoicing does support machine-based EDI and XML format invoices.
Paper and e-mails everywhere
Manual processes cause major headaches for accounts payable, including costly keying and paper shuffling, full-time equivalents (FTEs) wasting lots of time on low-value tasks, errors when matching invoices to POs, long approval cycles (late payments and missed discounts), lost invoices, lots of exceptions, fragmented systems, a lack of financial visibility, and many more.
In spite of these pain points, only 17 percent of the invoices received by AP departments currently arrive via an electronic invoicing portal or an electronic invoicing network, IOFM’s 2018 Future of Accounts Payable Survey finds. In fact, thirty percent of accounts payable departments operate in a completely or mostly manual, paper-based environment and only 25 percent of accounts payable departments operate in a fully electronic environment where invoices flow straight-through to an ERP without human operator intervention, per IOFM.
We’ll find out in Part 2 .
*This blog series is based on the Yooz whitepaper Why Finance Leaders Shouldn’t Wait for Electronic Invoicing, available for download.