In our personal lives, we are increasingly cutting the manual element of day-to-day processes and moving towards quick, online transactions. Shopping, banking and paying bills can all be done with a click of the mouse and without ever having to leave home. The same can be said in the workplace where manual processes, that can often take huge amounts of time and money, are becoming automated.
Electronic invoicing or e-invoicing is a key business process that many large companies take part in but have often been put in the ‘too hard’ or ‘too costly’ basket for small to medium sized businesses. But that doesn’t need to be the case. E-invoicing is simply turning the entire accounts payable process electronic; from receiving invoices, getting approvals, making payments, and archiving paid invoices and related documents.
Here are five reasons for SMBs to embrace e-invoicing:
1. Work smarter
Accounts payable tasks such as reviewing and approving invoices can too often slip on the list of activities business owners need to attend to on a daily basis. Scanning incoming paper invoices or entering data manually from incoming documents to the company’s financial sytems is dull, repetitive work and yet it is essential to the day-to-day operations and cash flow of a business.
For businesses paying as little as 100 invoices a week, an automated e-invoicing solution is useful to ensure that your time, money and resources are spent efficiently.
An automated e-invoicing solution can also be easily plugged into existing financial systems such as MYOB. Traditionally, only large enterprises were able to afford e-invoicing but now, there are some very affordable software solutions readily available and specifically designed for smaller businesses.
2. Cut down on errors
Each invoice that a business has to pay, whether it’s a purchase invoice, travel plan or expense claim, needs to be handled carefully. But according to a Basware study and perhaps unsurprisingly, the most common kind of mistakes that occur in this invoice approval and payment process are a result of human errors. Fixing payment errors is costly and takes time that could be better spent on managing the business. Studies have shown that you cannot rely on your suppliers to point out your mistakes when for example, you pay the same invoice twice. Plus, inaccurate and unreliable payment of invoices will easily tarnish the reputation of your business with your suppliers.
With an e-invoicing solution, the whole payment process is automated so it cuts down on the number of people handling an invoice and in turn, the potential for data to be lost in transaction. Also, paying recurring invoices such as mobile phone contracts, leases or other office supplies is made easier as invoices are automatically matched with existing business rules, contracts and payment schedules. The built-in business rules assure that only correct invoices are approved and passed through the system for payment.
3. Provide a visible audit trail
An automated e-invoicing solution keeps a searchable archive of all invoices that pass through the system. This is particularly useful for auditing and the inevitable tax time as it saves business owners from spending a huge chunk of time sorting through files of paper and accounting for expenses. A full audit trail also ensures that at any given time, business owners can see whether an invoice has been paid or if it’s awaiting approval. Business owners can also view who approved the payment of each invoice.
The audit trail offers greater transparency over the payment process and is a great tool to help prevent accounting fraud. With an automated e-invoicing solution, all payments need to be approved by authorised people prior to payment.
4. Gain greater control of cash flow
Keeping track of costs and maintaining positive cash flow is vital yet many small businesses have been at the receiving end of slow paying customers and bad debts. With an e-invoicing solution, small business owners can quickly ensure that all payments are made on time and in some cases, take advantage of early payment discounts or avoid any late payment penalties on overdue payments. As all purchase and payments are recorded, small business owners can take a quick snapshot of their financial position at any point in time.
5. Reduce paper
With climate change high on the global agenda, businesses are increasingly developing an environmental conscience. Internationally, European governments such as Denmark and Sweden have mandated e-invoicing with government suppliers as they realise the benefits of reducing their carbon footprints whilst streamlining invoice practices.
In Australia, there is no obligation for government suppliers to use e-invoicing however as local businesses look for more sustainable, eco-friendly ways to operate, e-invoicing presents a viable solution. E-invoicing gets rid of paper and also the physical amount of space that boxes of invoices can take up in the office.
