“I hate shuffling paper and with today’s technology dealing with paper is so inefficient.”
This was a quote from a VP of Finance responding to the question; why do you believe that E-invoicing is such a good product for your AP Department? A few other AP Managers and Controllers responded and contributed to this topic.
From a Controller of a Service Company came this response, “Because you don’t have to rely on it to come in the mail, it comes faster and you can reference it into your accounting program. It also allows you to keep it into your computer so you can easily reference it and file it in a jungle drive.” Sic
It’s extremely important for invoices to be dealt with in a timely fashion. Relying on the mail when processing invoices could be a disastrous proposition especially when referring to time and money. I just saw on the USPS website information regarding mail delays due to a snow storm on the east coast.
The north east is bringing heavy snow and mixed precipitation throughout the Mid-Atlantic and Northeast. The Postal Service is currently experiencing impacts to delivery and retail services in Georgia, South Carolina, Virginia and the Washington, DC area. Further delays are expected in Pennsylvania, New York, South Carolina, Virginia and Washington, DC. We will make every attempt to provide service where it is safe to do so. Please check back for updates.
With E-invoicing there are no mail delays, therefore it comes faster and more efficiently. Efficiency is also manifested in how easily it can be incorporated into your accounting system. You can import invoice data to your ERP system, reducing mistakes made manually. Electronic Invoicing brings you instant access to your invoices instead of having to search through file cabinets and chasing down paper copies.
A Controller answered the question and said, ‘“It simply costs too much; too much to buy, too much to print, too much to sort through, too much to attach, too much to scan, too much to store. Electronic invoicing allows both a vendor and their client/customer to be more efficient and save costs. One of the largest is labor costs. It is surprising how small and efficient an Accounts Payable Department or Invoicing Department can become through E-invoicing.”
My last response came from an AP Manager of a Healthcare company. He said, “Freeing employees from the daily grind of mindless processing permits them to engage in tasks which are more appropriate and satisfying to today’s Accounts Payable workers, and (I believe) benefits an organization with a more productive allocation/ratio of equipment and human resources to the discipline of Accounts Payable.”
These responses came from those who work day to day in Accounts Payable and are making Electronic Invoicing happen within their organizations. They see how E-invoicing is faster, quicker, more efficient, and saves money with instant access. They also are experiencing reduced labor costs that are freeing up time for better productivity in their organizations. They understand why businesses believe in E-invoicing and are making Electronic Invoicing their choice to process invoices. As a result, they are turning their AP Departments into profit centers.
If we take a minute and look back to all the business technologies that have come and gone over the years, it’s easy to agree that in recent times the internet has had the most impact on these “transitions”. In order to stay competitive, a business needs to be on the forefront of innovation and efficiency. Take the music industry for example; the brick and mortar companies that didn’t change their business model to compete with iTunes and online radio are now nonexistent. The same thing is happening right now with bookstores and magazines competing with products like the Kindle.
The point being that obvious trends should not be ignored because there are always consequences for lack of action, especially when it comes to this internet thing. These consequences aren’t always the collapse of an organization, but perhaps the missing out on millions of dollars’ worth of savings that might come in handy someday. Now, how would you define or identify an obvious trend? I think a good example would be how multiple governments around the globe are making a certain business technologie like electronic invoicing mandatory. These policies along with the natural progression of technological advancement, hint at what’s beyond the horizon. I’ll quit being ambiguous and simply state that Electronic Invoicing or AP Automation is sweeping its way around the world like a technological tsunami and the only way to not fall behind is to hop on the wave!
A technology journalist named Elaine Graham nailed it with the following quote in a recent publication: “Whatever the remaining technology and legislation challenges, at whatever stage various regions are in the adoption cycle, and however many pros and cons there are in the business case of implementing or outsourcing e-invoicing, one thing has become increasingly clear to both the global corporate community and governments over the last decade…” e-invoicing “is one of the most important strategies going forward for improving productivity and preserving the environment, given the billions of tons of paper invoices generated globally each year”. She obviously agrees with my technological tsunami analogy.
A robust AP Automation solution like iPayables InvoiceWorks contain powerful tools like Dynamic Discounts and Early Pay which can help to sustain and better manage a supplier’s cash flow long-term. It has been well documented that most business fail not due to it’s non profit margin, lack of sales or heavy competition; rather it stems from inability to manage cash flow. Whether it’s the environment, efficiency, savings, increased accounting accuracy, or even turning your AP department into a revenue generator… you can’t argue that it’s a good idea to implement this new and rapidly advancing technology. Are you ready to ride the e-invoicing wave? Contact us today! http://www.ipayables.com
ADAM LEVIN is a member of IPAYABLES SALES TEAM and contributed to this months post. Before iPayables Adam was the Regional Sales Manager for Channel Vision Technology, covering an 11 state market in the South Central and Southeastern United States. Channel Vision is a manufacture of over 700 products in the Custom Electronics industry.
Recently, we were happy to learn that Transformation Management Consulting LLC, an independent research and consulting firm specializing in the payables industry; conducted a study comparing all the major Accounts Payable automation solutions available. It specifically evaluated the affordability, functionality, number and quality of offerings; as well as the overall automation potential of each specific solution.
Out of the eight providers evaluated, iPayables scored top marks in several categories including affordability, functionality and was one of only two solutions that offer dynamic discounting; a key discount-capture component for businesses who process high invoice volumes. The purpose of the study and subsequent white paper was “to provide insight relative to the spectrum of Accounts Payable automation solutions available and to draw some correlations between the level of automation achievable and the affordability of that solution relative to other platforms providing a comparable level of automation potential,” said the author.
Transformation Management Consulting broke down the solution providers into two different categories, those who only support the “front-end” capture, matching, exception management and routing of the invoices; and those who support a full electronic invoice presentment and payment (EIPP) suite. Of those that did, iPayables one of two rated as “very affordable.”
Another noteworthy aspect was in the area of workflow where the author highlighted our approach mentioning that “iPayables allows for simultaneous workflow streams as necessary to support multiple business hierarchies. For example, an individual could have certain permissions and authorization capabilities within workflow for normal invoice review and differing permissions and authorization levels within another workflow for a particular project or capital expenditure event.”
Although some of our direct competitors such as Ariba, and Basware might be larger companies, neither of them according to this study, have both the combined affordability, functionality, workflow and dynamic discount offerings that are standard with an iPayables implementation. The study further validates why iPayables has been able to consistently win major accounts against those lager EIPP providers.
“Decision making concerning what EIPP provider to choose, can often be a confusing one,” said our CEO Ken Virgin.” The study gives clarity as to who the upper-echelon providers are and what functionalities are available to prospective clients.” A copy of the study, “Exploring the Spectrum of Accounts Payable Solutions” can be viewed by going to http://pages.ipayables.com/WhitePapers1.html
It’s no secret that an organization’s ability to survive and prosper often depends upon their willingness to find and utilize new revenue streams. One such innovative and often unrealized revenue stream is the dynamic discounting (or early pay discount) feature offered by iPayables and a very few other AP Automation providers.
Dynamic discounting provides ample time for a supplier to be notified that the invoice has been approved and can be paid early with a discount. That discount is controlled by the customer, who typically require rates far less than what is being offered by factoring agencies. Suppliers can either opt for the discount, or select a date to be paid and the application will let them know what the exact discount will be. This makes cash flow forecasting far more accurate and efficient.
Dynamic discounting is the definition of the preverbal “win-win.” Both the customer and the supplier benefit by offering an early pay option. The customer benefits by consistently taking advantage of the additional discounts captured (which would bring a smile to any CFO’s face) and the supplier gets the financial flexibility/ stability of having that payment clear faster.
Over the last 10 years, the industry has seen the processing of paper invoices steadily decline as more companies have automated their payables processing using an E-invoicing (AP automation) system such as InvoiceWorks. With a click of a mouse, invoices and payments can be viewed and approved which affords the AP department using the application, additional time they would not otherwise have if processing with paper.
The time savings results in flexibility that enables the customer to offer early pay discounts to their suppliers who might need a payment to process faster and are willing to pay a little extra for it. Discounts previously unavailable due to a slow paper processing, are now being captured with the average approval of invoices down from 22 days to just under four.
Benefits of Dynamic Discounting:
- Buyers can pay their suppliers early in exchange for a discount.
- Buyers can benefit from double-digit, risk-free returns.
- Organizations can earn more early payment discounts.
- Workflow is strengthened and buyer/ supplier relationships improve by providing suppliers with quick, easy access to cash.
- Average increase for working capital is from 10 – 30%.
A few years ago, one of our clients (the world’s largest restaurant chain) picked iPayables as their EIPP provider and started utilizing the Dynamic Discounting feature. Early Payment Discounting increased their cash flow enabling them to have a quicker approval time with better visibility and reliability.
This restaurant chain has effectively transformed their accounts payable department into a revenue generator. In fact, in the last year they generated nearly $200,000 from discounts alone! By taking advantage of dynamic discounting, this organization is actually generating more money then what they are paying iPayables to use their top-of-the-line AP Automation solution. Along with the other financial benefits of using an electronic invoicing application like InvoiceWorks, dynamic discounting is a proven revenue stream that nearly any mid-market to enterprise organization should be taking advantage of.
To learn more about how your organization can take advantage of Dynamic Discounting and generate profit in AP, give us a call to set up a demonstration (949) 916-7411 or visit our website at www.ipayables.com.
Today’s EIPP (Electronic Invoice Presentment and Payment) solutions take the invoice from submission to the appropriate payment, from ACH with dynamic discounting for discount maximization, to card processing for increased days payables outstanding, to check printing. All of these functions make EIPP the ultimate payment process! They allow B2B transactions to take place with better efficiency than ever before.
It is interesting, that with the expansion of payables automation and EIPP, there are so many solutions that just can’t offer the payment portion. iPayables, an industry leader in EIPP, has expanded their payment options with a wide range of choices including: Customer System Delivery, ACH Transaction, American Express P-Card, MasterCard P-Card and Check Printing. iPayables also provides remittance detail to the supplier for purposes of cash application and reconciliation. It is interesting that so many of the payables automation solution providers stop prior to the payment step.
Here is a review of some of the payment processes you would expect to see in electronic invoice presentment and payment:
- Customer System Delivery – This is where the electronic invoice is simply delivered to the customer to pay within their system. It is commonly available with most any automation solution.
- ACH with Dynamic Discounting – Most companies are familiar with ACH, but there are challenges in collecting banking information from suppliers. This may be why many payables automation providers stop short of payment. iPayables and most EIPP solutions that perform ACH transactions are collecting ACH related information online and most often following up with phone calls to retrieve or validate information. Aside from the convenience of the EIPP provider collecting this information, the greatest benefit of all could come from enhanced control over payment timing. According to the procurement trade publication Spend Matters, businesses can earn a 20 percent or greater annual return on their invested capital by making early payments to suppliers. With Dynamic Discounting, the customer is using their working capital to pay suppliers early, but they are collecting a great return on that investment in the form of high value discounts.
- Payment Cards (Purchasing Cards) – For customers who don’t have the working capital to do early payments themselves, iPayables recommends using purchasing cards as a strategic form of payment for accounts payable. Purchasing cards processed through iPayables net the customer a handsome rebate, but actually extends the payment terms. Suppliers are often willing to take purchasing cards as payment for early payment when an early payment from the customer is not available.
- Automated Check Payment – Though a customer may want all payments paid electronically, there will often be some portion left as check. These can be managed with Customer System Delivery, or companies like iPayables will print the needed checks. This all-in-one approach allows the customer to focus on the supplier relations, audit and other value add efforts and not on paper printing.
A recent 2013 study by AFP the Association of Financial Professionals found that, “78 percent of organizations have integrated their ACH systems with accounting while 56 percent have done so for card payments,” said Jim Kaitz, AFP’s president and CEO. “AFP strongly supports electronic payments and we’re pleased to see the payment innovations now available to corporate treasurers.”
Improved technology and automation provide businesses with more choices when it comes to improving and expediting payment methods. The trend towards more flexibility and higher consumer demand has made traditional payment methods obsolete. Not only has there been a payment/ automation change in B2B, there has also been a methods change. EIPP with ACH and Dynamic Discounting is the latest evolution in payment processing, and it has become a popular and readily available option in accounts payable processing.
Why is AP Workflow so valuable to an Accounts Payable Department?
I believe it’s like the rudder for a boat or wings for a plane. Without it, an AP Department can be lacking in direction and could easily get into murky water and lose its way. AP workflow keeps an AP Department on the right course.
For many Organizations without the proper direction to follow could lead to disastrous results. On the other hand with the right insights and directions can lead to a higher ROI and a thriving Accounts Payable Department.
Now you’re probably wondering is there some kind of magical formula that can bring an AP Department to a “business panacea”. I’m not suggesting that all of your problem’s and troubles are going to disappear, but what I am suggesting is that with some hard work and proper training success is eminent .
Before an AP Department can be proficient in AP Workflow it first needs to answer five questions. These questions are especially important when you are talking about Non PO Invoices.
- What invoices require approval workflow?
- How do you start the workflow?
- When do you route to the next approver?
- When do invoices stop workflow or are finally approved?
- How do you deal with exception/special case workflow?
When these questions have been answered AP Workflow can begin to help an organization to improve its course of direction with a smoother and quicker flow of information.
Here are some other features that can be of help:
- Use a Simple Key – The vast majority of invoices should enter the organization using a simple key. Either Requestor, Buyer, Location or some other value that the supplier may know. Relate this key to the starting point in the organization.
- Hierarchy Approval Reporting – Utilize some kind of hierarchy to advance invoices along the route as needed for additional approvals. This may be reporting structure based or business rule based. 80% of invoices should follow this structure without fail.
- Utilize Matrix Approval Limits - to determine when an invoice is finally approved for payment. Approvers help expedite workflow.
- Limit Reviews of invoices to actual trouble suppliers, business units or spend.
All of this is dramatically improved if you are using technology to automate this process. By automating, all of your business rules that you have put in place are electronically codified into an application that must be adhered to. This process will speed up your approvals to under four days in most cases.
Now with all of these issues being addressed makes it paramount that AP Workflow is set up properly in order to solidify a successful Accounts Payable Department.