“The latest invoicing regulations are set to be the final nail in the coffin for out of date paper invoices,” says BancPay’s Mike Peplow.
Despite how easy it is to process your invoices electronically, there are still some companies wasting their time with paper. These companies who continue to rely on this out of date system will fall by the wayside, with new regulations set to knock the nail into the ‘paper invoices coffin’ even further.
New VAT laws and EU regulations are set to encourage the further use of e-invoicing, removing obstacles and ensuring maximum productivity for businesses, fundamentally highlighting these systems as the future of business payments.
New UK VAT rules are encouraging companies to become fully electronic, by motivating them to provide electronic versions of invoices to auditors. This is beneficial both to the tax man and businesses, from SME to large corporation. Increasing financial automation will only speed up business processes such as tax payment at both ends, allowing for easy and efficient tracking ensuring auditing is effective, easy and fast.
Speed is one of the key benefits of electronic over paper invoicing. The issue with paper invoices is that they create more legwork and lower productivity. Not only are they often easy to lose but paper invoices require paying for postage and are reliant on mail delivery. An employee must create the invoice, put it in an envelope, pay for a stamp and post it, which can often require a trip to the post office for the smaller business. E-invoicing on the other hand reduces costs and administration as invoices can be delivered automatically by the press of a button and received by the customer immediately.
Significantly the European Commission is mandating e-invoicing across the EU. In many countries including Spain, Greece and Denmark this has already been carried out. The mandating of e-invoicing in the UK is expected to happen soon as well, providing countless benefits to businesses. A large scale roll-out of e-invoicing will dramatically increase business productivity and reduce costs.
The pessimistic business might respond to the claim that e-invoicing reduces costs with the argument that they would have to spend money to set up the system. This may be true, in some cases but e-invoicing still has a direct impact on finances, dramatically increasing cash flow. The bottom line is that the sooner a business can send out invoices, the quicker they will be paid. Furthermore, e-invoicing can be 10 times cheaper than paper, with businesses able to recoup any set up costs within a year.
Across the UK public sector, up to £2bn could be saved by adopting e-invoicing, with some more liberal estimates suggesting that £4bn-£6bn could be saved. A PwC study has suggested that if e-invoicing was adopted worldwide, across public and private sectors, €3.7 trillion of excess working capital could be released. The potential for saving money and increasing cash flow is the strongest business argument for adopting e-invoicing as to almost all businesses, the bottom line is everything.
The economic power houses of India, Brazil and Russia have all recently passed legislation recognising e-invoicing. With increased e-invoicing being seen in these BRIC countries, e-invoicing as standard is critical in order to maintain trade links with the economic powerhouses of the world. By 2016 all of the European Unions public procurement will be performed electronically, setting the necessary precedent for the rest of Europe.
Many companies do not fully understand e-invoicing, therefore government regulations and laws which encourage its wider use will only bring benefits to business productivity across the board. E-invoicing will be embraced by businesses, and is set to be the final nail in the paper invoices coffin, pushing it into the business history books.
Mike Peplow is Senior Vice President and President of Europe, Middle East and Africa at BancTec. BancTec is a global leader in payment, document and content processing solutions and outsourcing services. BancTec have helped thousands of clients in over 50 countries to simplify the management of their information, business processes and operational infrastructure.