The popularity of invoice automation is growing because of its ability to cut costs, but the technology is just as valuable as a method to save time.
It may have taken awhile, but electronic invoicing has finally reached mainstream status.
So what is driving invoice automation’s rise in popularity? As with most technological innovations, the potential to cut down on operating costs is the No. 1 factor, according to a recent survey by PayStream Advisors. Late fees, lost files, angry clients and and a variety of similar issues lead to increased expenditures that any company would prefer to avoid.
But another major problem is the amount of time manual invoicing processes take.
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Report – Invoice automation reduces payment cycles by about 75 percent
“Somebody in Germany would receive an invoice in the mail or email, print it out, write the general ledger codes on the invoice, have somebody sign it saying it was approved, scan it and send it in an email to the Tampa office where they would print it out again,” said Mark Fox, project manager at World Triathlon Corporation (WTC). He said that this could take up to six weeks to complete, as WTC’s Tampa Bay office could only process between 20 and 30 invoices per day.
The PayStream report found that invoice automation grew to an 84 percent adoption rate in 2012, with more than a quarter of respondents hoping to streamline 75 percent of their processes by year’s end.
Worth the hype?
While cost-cutting benefits were cited as the top motivator for e-invoicing implementation, saving time ranked close to it. More than fifty percent of respondents, for instance, cited a desire to decrease procure-to-pay cycles for their company as the motivator for deploying these solutions.
Often when an emerging technology reaches the market, it always receives a huge bounty of hype. Oftentimes, however, they fail to live up to expectations.
So what is the scoop with electronic invoicing? Is it legit, or is it just another in a long list of overrated inventions?
If a recent study from Corcentric is any indication, invoice automation really does what it says it can do. The report found companies that incorporate best practices for their accounts payables activities achieve a 75 percent difference in invoice processing times.
WTC has experienced similar improvements after implementing paperless invoicing, according to Fox who noted that “a 45- to 60-day payment time is down to less than 15 days.” This translates to a benefit for both the company’s clients and its accounting department.
James Carruthers, vice president of operational finance at WTC, said, “We have moved from being constantly backed up and under pressure to being proactive and looking at adding additional duties to the accounts payable team to help fill their days.”
Other benefits of invoice automation
Reducing the time of payment cycles leads to a number of advantages, both directly and indirectly.
But what about cutting costs, which is the main reason respondents to the PayStream survey said they’re adopting e-invoicing processes? Fox said his company has seen that benefit come to fruition, too.
Manual processes used to cost WTC between $30 and $40 per transaction. That number has since been reduced to between $2 and $3, a 15 to 20 percent decline.
In addition, WTC employees are able to process 12 to 15 times as many invoices per day compared to before, allowing them to allocate more time toward other activities. There are many more benefits of invoice automation, find out more!
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