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Gaining business advantage through e-invoice compliance
By Simon Shorthose, Managing Director, ReadSoft
The cost of doing business Companies worldwide spend up to staggering €23 billion interpreting and entering business information. Finance departments bear much of the brunt of this in the form of invoice transactions, where the volume of accounts payable transactions that remain paper based still hold many companies back.
When it comes to enhancing IT processes, automation, especially within Accounts Payable (AP), represents a crucial element in the progression towards a faster, more efficient, compliant and cost effective paperless environment.
Invoice automation When assessing workflow, the finance department remains one of the best places to start, and most modern accounts departments will have considered either a hybrid system able to deal seamlessly with paper and electronic transactional formats, or moved wholly towards an electronic format for managing invoices.
Despite rising numbers of invoices received and processed, staff no longer need to be dragged from other tasks to complete labour intensive inputting and checking. By automating manual processes invoices received can be scanned and be available on the system the same day. There will be far fewer manual entry errors, and therefore fewer query escalations, meaning fewer staff are required to deal with exceptions. With ledgers up to date, payment on-time will increase, duplicate payments are reduced, all of which helps improve supplier relations.
With more than 90 per cent of documents automatically scanned, and the data processed, verified, catalogued and archived, automation can cut the cost of per invoice processing by more than 60 per cent. Adopting a blended approach for automating paper and electronic invoice processing could help cut cost per procurement by as much as 92 per cent.
e-invoicing and the dream of the paperless office
With automation actively reducing the need for paper copies, the technology is helping to encourage businesses to think about taking the next step toward a ‘paperless’ office. We all recognise that scraps of paper and old file folders are business inefficient, and that going paperless should deliver greater return on hardware, software, and technology investment. Many companies will say they operate a paperless environment and point to the use of scanners instead of copying machines, but the truth is invoices arriving by email whether as text or attached Word, Excel, Fax, PDF or Jpeg image will still need to be printed off for scanning.
The next big step forward is to remove manual scanning entirely by integrating e-invoices directly into the automated AP system. The results would be greener, more business efficient and cost effective.
So why have we not yet seen an explosion in e-invoicing?
In the past year, five million European businesses and 75 million consumers were sent or received e-invoices, but this remains a drop in the ocean when compared to the billions of invoices businesses send and receive each year. Smaller suppliers, whilst fleet of foot, may not have the capital to invest in new finance systems, though Cloud based software as a service (SaaS) solutions are remedying this situation by removing the need for capital expenditure. Large enterprise on the other hand can be slower to react due to the complexity of adopting technology across departments and international borders where clarity of regulations for electronic invoices versus ‘hard’ paper copy has in the past proven to be complicated and unclear. Given that European businesses could save an estimated €64.5 billion per year by adopting e-invoicing, the European Union decision to step in and clarify the nature of e-invoicing throughout the member states is extremely timely.
On 1st January 2013, the EU introduces a new directive on the electronic transfer of invoicing information (billing and payment) for all European organisations. Under this directive paper and e-invoices will be guaranteed equal treatment, ensuring compliance and better business practice. For businesses moving to e-invoicing, this directive will require them to have business controls in place to guarantee the authenticity, integrity and legibility of an e-invoice. In doing so, these controls will create a reliable audit trail between an invoice and a supply of goods or services, which is exactly where automation has a key role to play.
Integrating e-invoicing and process automation Businesses which have invested in automated data capture from invoices can reduce costs further and bring the finance function in line with the new directive on e-invoicing by integrating a monitored, dedicated email account set up to receive e-invoices.
At ReadSoft, this is provisioned through the simple addition of a bolt-on to our existing invoice and workflow automation software. For a business suddenly coming to grips with the new EU directive it is no more than a day’s work to install the COLLECTOR product which will then permanently monitor an e-invoice email inbox. When an invoice arrives, no matter the format (text, Word, Excel, PDF, TIF, PNG, or JPEG), the software automatically extracts the relevant information and posts it directly into the finance system.
Conclusion Combining e-invoicing with process automation not only reduces paper waste; it really helps companies improve their bottom line. By speeding up invoice processing and removing the need for print and post, moving to e-invoicing with process automation could save a business 80% of their current invoice costs.
Moving to e-invoicing can be a simple, fast, painless and cost effective. When combined with AP automation it ushers in truly paperless invoice handling, finances are less error prone as manual touch points reduce, and the quality of data extracted is greatly improved. This provides that all important audit trail ensuring that both the finance department and the organisation remain compliant, for this EU directive and for better business control.