It’s true – electronic invoicing (e-invoicing) is rapidly becoming not only the norm but also the law in many places worldwide. And as many companies are digitalizing their processes to keep up with the global mandates concerning e-invoicing, they might forget that with it comes significant benefits. In this blog, we’ll cover some of the perks that come with going electronic with your invoices.
Countries worldwide are mandating electronic invoicing (e-invoicing). France, for example, on 1st July 2024 will require all companies subject to VAT (Value Added Tax) to accept e-invoices. (Get all the information you need about the France 2024 mandate here.)
And others are on the same path with the same vision. Though it’s technically an obligatory process, there’s a lot that businesses will gain by making the switch. Let’s look at 6 top benefits organizations will gain
1. Processing Efficiencies
Let’s kick off our list with how e-invoicing provides massive processing efficiencies. Manual processing in general (when it doesn’t need to be) is not the most efficient. Without a digital process, invoices average 19.4 days from invoice receipt to approval workflow to payment. But best-in-class businesses can realize payment time averages of 3.7 days – a nearly 17-day reduction. (Learn how ABB decreased their processing time by 50%.) And though AP automation has been around for quite a while, many of those best-in-class companies still need to manually touch 10-30% of their incoming invoices. So, by reducing that percentage by using innovative tools (like our SmartPDF and other technologies) they can gain serious savings while boosting overall efficiency.
Not to mention, automating and going digital provides your AP team with 57% lower exception rates and 3.4 times more touchless, straight-through processing. With averages like this, the benefit of e-invoicing is clear.
2. Stronger Compliance
If you’ve been keeping up with buzzwords and hashtags recently, you may have noticed that there is quite a lot going on in the tax compliance world. Tax administrations around the world are changing the game of indirect taxes such as VAT, GST, and customs and excise duties. And if you’re a global company doing business in multiple countries, the varying regulations pile up quickly. It’s important to understand relevant tax obligations and ensure your accounting system is prepared to handle them in the most compliant way.
Adopting an e-invoicing solution that is equipped to handle complex, global compliance needs will prepare your organization with a streamlined and centralized accounting process. Plus, every invoice processed electronically is automatically stored, ready to be retrieved during audit season.
3. Error Reduction
How many times have you witnessed (or contributed to) data entry errors? These time-consuming mistakes are commonplace when it comes to manual invoice processing. But, with e-invoicing, these potentially detrimental mistakes are nearly erased thanks to automation.
And when it comes to exception handling, manual intervention is decreased through machine learning technologies that help perform the exception handling for you. By digitizing invoice data and automatically matching it, e-invoicing minimizes the risk of data errors and exceptions. When e-invoices are transmitted digitally, they can be validated automatically before payment.
4. Greener Workplace Practices
When your organization adopts e-invoicing, you’ll contribute to a decreased carbon footprint and make our planet a better place.
Surely, you’ve seen other electronic initiatives around your office, considering that it’s estimated an average office worker can consume between 10,000 and 20,000 sheets of paper a year. And for those working in Finance or Accounting, these numbers can creep even higher. All this paper usage means one thing—less trees. And long story short, with less trees and higher amounts of paper waste, companies are leaving behind detrimental amounts of waste, emitting excess carbon in our atmosphere.
Through e-invoicing, the paper that would normally be handled manually is transferred through the system electronically, cutting back drastically (and in some cases totally eliminating) paper from the invoice process.
5. Digital Archiving
If you were to have an audit request pop up tomorrow, would you quickly be able to locate and pull all relevant documents? With an electronic archive, you definitely could. When all your invoices are processed electronically through an automated solution, the data automatically gets stored in your electronic archive for the appropriate time required by various regions.
With a cloud-based e-archive in place, your company can:
- Save money and storage space
- Be less vulnerable to fraud or a surprise audit
- Consolidate all your invoice information into one location
- Remain safe and secure, as each document is digitally signed and timestamped
- Quickly search and retrieve archived documents, making you ever-ready for audits.
6. Cost Savings
Lastly, e-invoicing provides immense cost-savings. Paper invoicing takes up time – and as we know time equals money. Additionally, printing and mailing each absorb their own costs that make the process even more expensive. In a new Ardent Partner’s report, it was revealed that the average cost to process a single invoice in 2023 is $10.18. This all-inclusive cost (which includes labor, overhead, technology, etc.) increased by 10% in the past year.
But by going digital, you get rid of these costs and free up AP resources that can be invested somewhere else in your organization. And automated invoicing processes can cost between 40% and 90% less, with best-in-class organizations spending only $3.12 per invoice. (Read how Carlsberg gained 48% in postal cost savings.)
For more information on how you can ensure compliance with global e-invoice and tax mandates, download our factsheet now.