by John Webster
Paperless invoicing is no longer the preserve of big business – the cloud is making it accessible and attractive to SMBs too.
No matter how efficiently you try to run the finance team, you still dread that call. “Why have I not been paid? I sent you an invoice three months ago!”
The angry supplier prompts a frenzy of activity, in which staff stop what they’re doing and frantically search for the missing invoice. Was it mis-filed? Did it arrive at all?
As well as wasting paper and time, printed invoices present a risk to your business. Misplacing them can damage relationships with important suppliers and prevent a clear view of your cash position.
Paper Invoice Penalties
A report from Aberdeen Group says: “Paper invoices and manual processes continue to hamper accounts payable operations, keeping suppliers in the dark and failing to give finance the visibility it needs to actively manage an organisation’s cash position.”
Meanwhile, businesses swimming in paper invoices miss an opportunity to learn from their past. “The necessity of ready access to invoices and supporting documentation does not end [with payment]. Access to and analysis of historical information can be critical to improvement efforts, future negotiations by counter-parts in procurement and in support of potential internally and externally conducted audits,” the Aberdeen research says.
Paper also exposes your business to the all too human frailty of losing things. Or as Aberdeen put it: “Information is key and when it is bound to paper documents, the potential for actual or constructive loss is a notable pressure in itself.”
While big businesses might deal with millions of invoices from tens of thousands of suppliers, they also have the most resources to cope. They can use their purchasing power to mandate suppliers to move to electronic invoices. They can design and build computer systems to process, store and analyse invoice transactions. They can even invest in expensive hardware if they wish to scan paper documents themselves. More recently, they have looked to invest their funds with service providers who are able to take ownership for their entire accounts payable processes and supporting technology platforms. It’s called ”Business Process Outsourcing” or BPO.
The problem with BPO has been the hefty volume of work needed to justify the considerable cost of these deals. But things are changing, and changing fast.
The good news for smaller firms is that they too are beginning to benefit from discrete yet proven models made popular in larger scale outsourcing contracts. By offering simple, managed services via the cloud, providers are now able to meet the needs of smaller firms through a single service, standardized to ensure that costs are lowered dramatically.
The Cloud Opportunity
A 2012 study by KPMG found small to medium-sized enterprises were driving growth in cloud computing, as they like the option of the pay-as-you-go model for applications hosted in the cloud. Fears over security were abating, while smaller firms valued the immediate efficiency offered without the significant and sometimes prohibitive upfront investment of on-premise solutions, the research showed.
Legislation is also helping to push e-invoicing adoption into the mainstream. As part of its drive to cut costs in supply chains, the European Payments Council created the Corporate Action on Standards project. It says that e-invoicing allows companies to cut the average 30 euro cost of processing a paper invoice by 80 per cent.
The European Commission’s accompanying Directive 2010/45/EU is set to be introduced across the economic bloc this year and is designed to harmonise rules which will enhance electronic invoicing and archiving.
So… time to act?
With the barriers of cost and bureaucracy to electronic invoicing falling by the way side, it’s time for SMBs to consider ditching paper once and for all. In smaller businesses the people doing the rummaging through paper invoices will have other, more important, jobs to do. Could your business be more competitive if their time was spent being strategic or creative, and if you had complete control over cash in-comings and out-goings?
The Aberdeen research found that 35% of accounts payable’s time is spent on enquiries – both internal and from suppliers. Given the current economic pressures, is this time you can really waste?