Edited By Nick Roquefort-Villeneuve, Global Marketing Director – Amalto Technologies
Leading practice organizations repeatedly look for more efficient and effective ways to maximize opportunities. Whether identifying and connecting with more prospects, delivering products and services that perform above client expectations, or implementing financial controls designed to increase cash flow, leading practice organizations regularly identify and leverage their opportunities. In the end, it’s their examples that are highlighted in case studies and are a roadmap for others to follow.
One of the leading practices organizations use to maximize their opportunities is the implementation of invoice automation. The transition from paper-based invoicing practices to solutions that are technologically innovative and automate what were previously manual practices introduces a host of opportunities for any organization. At first blush, invoicing may appear as a rudimentary practice – a tedious chore a supplier organization simply must do to get paid but certainly not a practice that requires much thought or foresight. But, for many organizations, invoicing improperly often initiates a ripple effect that negatively impacts customer relationships, cash flow and invites late payment.
As indicated in the 2012 APQC report Accounts Receivable Performance – Doing OK is No Longer Good Enough, top performing organizations (those incorporating some form of invoice automation) realized a cost per total invoice submitted of $1.17 compared bottom performing organizations who experienced a total cost per invoice submitted of $39.61. Not only are additional costs a byproduct of inefficient invoicing practices, but customers process manually submitted invoices at a far slower rate than those invoices submitted via automation. Referencing the same APQC report, bottom performing organizations require 6 days to generate complete and correct billing data while top performing organizations require only 1 day. Although invoicing improperly and experiencing the ripple effect of unpredictable or late payments is regularly recognized as a serious pain point, many organizations, surprisingly, ignore this portion of their Order-to-Cash process. Half measures may make organizations feel better in the short term but addressing this serious pain point in a way that provides long-term solutions is the only way to remove the source of frustration permanently.
Reasons For Pain Points
There are pain points but let’s look at some of the causes for the pain. First, organizations run into the dilemma of finding the right solution to automate invoice automation for their organization. There is information overload, contradicting messages in the marketplace – for example, what constitutes electronic invoice processing and what does not – and empty promises about what solution providers can realistically deliver. Gathering conflicting messages and discerning between what’s true and what’s not can be frustrating and time consuming.
Second, with more customers and buying organizations developing their own supplier portals, supplier organizations are suffering from portal overload. It’s not uncommon for organizations to interact with a dozen or more different portals just to upload invoices. With 12 different customers using 12 different portals, that’s 12 different ways of submitting invoices. Not only is this extremely frustrating and inefficient for the supplier, it creates an automatic resistance to technology and automation.
Third, once an organization is interested in transitioning to an automated/technology-based solution, getting internal stakeholders on board is a challenge in and of itself. Because different departments may have different agendas, getting everyone on the same page requires leadership and patience.
Addressing The Pain Points
Pain points do exist, but there are steps organizations can take to resolve them. Step 1 is getting all stakeholders on board. By allowing others to identify those things important to their area of the organization, stakeholders are more likely to feel they have a vested interest in the move toward automation. It’s important to not only get stakeholders on board early, it’s critical to keep them engaged throughout the process.
Once the stakeholder team is in place, step 2 is to identify those areas of need, ensuring each stakeholder provides insight relative to their area of responsibility. Making sure each area of need is properly weighted and scored to make sure the most important issues around invoicing receive the most attention is key to making sure a prospective solution can be tailored to your organization’s needs.
Step 3 is selecting the solution that best fits your organization. Some providers may want to speed to the process in order to bring you to a quick solution. It’s important to take your time and ask the right questions. Leveraging the strength of your team, identifying your list of important criteria and aligning those criteria with providers that deliver the best solution will help to streamline the selection process and bring your organization closer to automation.
Benefits of selecting the right solution
Once your organization has taken the right steps toward automating your invoicing process, you can expect to see several benefits. Creating and submitting invoices to your customers can be completed in a matter of hours rather than days – including confirmation of invoice delivery. Automation and e-Invoicing will also allow your organization to submit more accurate invoice data, thereby significantly reducing DSO and positively impacting your organization’s bottom line.
Once your invoice has been submitted and there is confirmation of delivery, the approval process occurs much more quickly. Many organizations understand that the clock starts when the invoice is received in relation to payment terms. With that in mind, when the invoice is received within hours, the clock starts then.
If your customers can receive your invoice, process it with zero exceptions and pay on time (or even early), they will want to do business with you more often. Invoice automation is just as important to your customer. They would rather process invoices and payments automatically because it reduces exception handling and significantly reduces costs on their end.
Finally, when the opportunities arise to take advantage of invoice financing, the automation your organization implemented opens a host of early payment options for your organization to consider. Whether it’s used or not, it’s good to know the opportunity is available.
Transitioning from paper invoice submission to automation and electronic does not have to be a fearful endeavor. The above steps can help you make sense of the transition, demystify the technology available in the market and help your organization move from being a bottom performer to being a top performer.
Learn why Amalto + FIS is your order to cash solution: https://info.amalto.com/white-paper-amalto-fis