Better Working Capital Management with e-Invoicing
Wednesday, 17 Jun 2015
If you’ve been reading my recent blog series on e-invoicing, you’ll know I’ve been mirroring an eBook by Basware which outlines the 6 Steps to e-invoicing Success . This is the final blog post in the series and while I’ve enjoyed writing each post, I’ll forgive you for going straight to the eBook and getting the full scoop.
Senior Product Marketing Manager
Step 6 is all about leveraging payment and financing options available via B2B networks (plug: like the Basware Network). The trick here is that while new options for payment and financing are becoming easier to access, they require, as a pre-requisite, an efficient AP/AR process.
E-invoicing makes working capital optimization possible
You might think offering a dynamic discounting program or virtual card payment option to your suppliers is a great idea – and it is. However, if you can’t get their invoices into your system and approved efficiently, you won’t get much for your efforts. Here’s why: if you can’t approve an invoice quickly, you can’t pay it early so you won’t be able to capture the maximum discount.
In my experience, the single biggest success factor for an efficient AP process is e-invoicing. I’m not making this up. Reports by Billentis and Ardent Partners back me up. All data points to the same fact: that an e-invoice is high quality data – and it moves fast.
Networks impact cash flows
Taking advantage of the opportunities within the financial supply chain really should be on every CFO’s agenda. It’s operational sure, but it’s real money: 1-2% of spend is nothing to sneeze at when it bumps up your bottom line. Savvy finance departments are positioning themselves to offer early payment in exchange for discounts. They are considering payment by virtual cards as a sophisticated way to pay suppliers early while extending their own Days Payable Outstanding (DPO).
Accounts Receivable departments are also looking to the financial supply chain and networks to better manage cash flows. Within networks such as the Basware Network, suppliers will soon discover that their receivables are assets which can be financed. The debt doesn't transfer, and due to the speed of e-invoicing and the data held within the network (relationships between customers and suppliers), 3rd party financing can be made readily available to suppliers.
Thanks to the network and the efficiency of e-invoicing, both customers and their suppliers will be able to make or take payment as cash flow requires. This is the new paradigm for unlocking value, and I think everyone should be interested. E-invoicing is a means to an end.
The eBook discusses many of the benefits enabled by e-invoicing. Network financing services has got to be the single biggest opportunity today for any organization considering e-invoicing.
As you can probably tell, I’m pretty excited by the whole thing. If you want to talk, get in touch.
Until next time,
Download Step 6: Financial supply chain solutions in e-invoicing networks