Monday, July 27, 2009

The Benefits of e-Invoicing

The benefits of e-Invoicing or electronic invoicing are well documented, but worth repeating as e-Invoicing can help companies solve a number of problems and reduce costs quickly and substantially.

  • The average time it takes a company to process an invoice to approval is 23 days, however, best-in-class companies that have automated invoice receipt (inbound) and work flow have been able to reduce this time frame to as little as five days.
  • The average DSO (days sales outstanding), according to Aberdeen in 2007, was 59 days, laggards was 63 days, leaders were 45 (leaders have automated e-Invoicing among other efficiencies). This shows that the average DSO is significantly reduced when your customers can accept integrated electronic invoicing.

Here are some additional points:

Many companies now seek to implement compliant e-invoicing on the back of existing B2B strategies. Significant benefits are immediately available if done right.

Gartner Group estimates the cost of producing a paper invoice is $5.00, while an electronic invoice is only $2.00, a 60% reduction. They also see a decrease in customer disputes and inbound calls. They estimated that 60% of customer service related calls are related to Invoice dispute. The reduced customer service calls are often not considered in the ROI, but are very real.

Additional benefits of outbound e-Invoicing services are:

• Immediate cost savings as processing time, postage fees, material, printing, enveloping and delivery are eliminated.
• Speed up the invoicing process - customers receive their e-Invoices often in seconds, rather than days through the postal service.
• Predictable ongoing costs thanks to transaction-based fees.
• Increased process transparency and data security due to online archiving.

What does e-Invoicing look like? Electronic invoicing can be in the form of an EDI message, custom B2B electronic file, or as simple as a link in an email that points back to an archived PDF or includes an attached PDF of the invoice. Much of the savings can be accomplished for the sending company using any of these means. However, if the invoice recipient can fully integrate the e-Invoices, then processing is even faster and will have less errors due to re-typing. This will help the invoice sender lower their DSOs (days sales outstanding).

ERP vendors like SAP, have e-Invoicing strategies that utilize applications like Netweaver PI connected to a preferred global e-Invoicing service provider that helps manage all the international tax and legal compliance issues, so the process remains simple for the sender.

Email me if you would like to discuss any of these points in more detail.

OK, so the savings are quick, documented and real. How does a company implement e-Invoicing? Here are a few articles I would encourage you to read.


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