The verification of content, dollar accuracy and invoice formalities involves complex processes that must be performed correctly as well as quickly.
Early payment discounts and rebates can be lost if invoice verification takes an excessive length of time. Delaying invoice payments too long can even result in late payment fees or credit issues with the vendor.
Booking invoices is prone to error since typing in billing information may lead to typing errors or incorrect information. In addition, paper invoices must be archived. Copies are also often required for individual clerks and supervisors.
|The cost of manual invoice processing
|A study by American Productivity and Quality Center (APQC) found that the most efficient companies spend about $0.71 to process an invoice. The least efficient spend $11.50.
||A study by the Helsinki-Aalto University School of Business found that using electronic invoices can reduce the circulation time of invoices between receipt and payment by an average of two days.
||A study by Ardent Partners shows that the cost of invoice processing can be slashed by over 80%, and that the time it takes to process an invoice can also fall by some 80%.
Digitizing invoices allow accounting teams to take advantage of a machine learning system to check invoices and use automated workflows to approve invoices. This speeds up the process considerably. As a result, invoices are paid faster, and early payment discounts or other rebates can be gained. Late fees can also be avoided when invoice verification takes place in digital fashion. With digitization, documents are processed faster and with far less cost.
In addition, there are numerous other benefits of digital invoices:
- Rapid and automated invoice processing increases trust with suppliers. This automatically improves your reputation with suppliers since invoices are paid faster and more reliably.
- All process steps are tracked and transparent to supervisors and authorized employees. Automated processes can compensate for employees who are absent due to illness or vacation.
- Doing away with paper copies and paper printouts provides massive cost savings, as well as practical benefits such as reclaiming office space from filing cabinets and unnecessary printers.
- Filing is easier since no paper folders are necessary. Office material is saved, and archiving is easier since it is completely digital. With automation, digital organization happens automatically – you set the rules, and then invoices and other documents are instantly stored in the correct manner.
In general, the problem with paper invoices is that they can be lost or lie on desks for extended periods of time, for example when an employee is out of the office . This does not happen with digital invoice processing since documents are immediately available electronically in the document management system (DMS) and can be used by all authorized employees. This eliminates the effort involved in recovering documents that can no longer be found.
Digital invoice verification increases approval reliability
Invoices are sometimes quickly “waved through” — especially during hectic times when employees are dealing with heavy workloads — due to a lack of time or information that would permit more thorough verification.
In addition, when due dates pass, overworked employees can also potentially approve invoices that should not be authorized for payment.
With digital invoice processing, employees have access to all information as quickly as possible and authorize payments with speed, ease and accuracy. Digital invoice verification improves the reliability of payment approvals since validation is improved. Added to this is the transparency that allows the approver to view a process at any time without first having to request a copy. This drastically reduces the risk of invoices being approved without verification.
Automated digital invoice verification greatly simplifies approvals down to a few mouse clicks. At the same time, the employee's workload is minimized and his or her satisfaction is increased since they can use the right tools to perform their tasks both faster and more effectively.
Information is available at all times
If an accountant, management or staff member has questions about an invoice, the necessary data and information can be retrieved and displayed at any time and, ideally, in any location. This significantly increases the flow of information. The employees responsible can also retrieve information or approve invoices using their smartphone or tablet.
The advantage: you dispense with tiresome searches for information which may not even be available. On the contrary, information is immediately available via the document management system.
Unnecessary costs and risk is removed
A study by International Data Corporation (IDC) describes how employees spend vast amounts of time processing, storing, archiving and searching for paper documents. IDC estimates that a company with 1,000 employees has nearly 213 individuals whose time is spent managing too many paper documents.
The risks and downsides of paper documents are well known and documented. Eliminating paper yields clear benefits:
Imagine no more filing cabinets, fewer printing devices, and shelves of storage reclaimed from paper and toner supplies. Less shipping, less photocopying, less filing and searching. The first advantage is a cleaner, brighter, more spacious office.
Automated workflow makes the right content accessible at the touch of a button whenever and wherever you need it. It takes only seconds to route and share documents across multiple departments and systems.
Reduced business risk
Custom access controls and digital data security make it easier and less expensive to maintain compliance and reduces the likelihood that missing documents will result in fines or lost revenue.
Better customer relationships
Information is only seconds away with a quick search — no more putting people on hold to dig through folders. Deliver the speed and quality of support your customers and vendors deserve.
Using digital workflows instead of paper results in greater transparency, allowing management to monitor business processes in real time for smarter decision making.
Positive environmental impact
If you have a “green” initiative in place, one of the easiest ways to reduce your carbon footprint is to print, ship and store less paper.
Introducing digitization to any part of your business can reduce reliance on tedious, manual tasks and help your organization go paperless.
Audit prep and response is simplified
Audits are much easier with digital invoice processing. Documents in the document management system are available at all times, are archived in a legally secure manner, and can be retrieved at any time in a highly organized manner to support even the deepest audits. This can help avoid fines for missing documents.
See how DocuWare's invoice processing software takes care of your invoice processing automation securely and easily:
Early payment discounts
Many vendors offer discounts for clients that pay invoices early. For example, if you have net 30 terms with a vendor, your contract might allow for a 10% discount if you pay within 10 days from the date of the invoice. Manual invoice processing policies or other inefficient processes can cause you to miss that window and lose those savings.
While it might not seem like much on a single invoice, the extra expense can add up over time. If you spend $20,000 with a vendor that offers such a discount, that’s a potential $2,000 savings.
Increases trust with suppliers
Invoice software lets you process payments faster and more accurately, which helps develop trust in the relationship between you and your suppliers. Better invoice processing allows you to quickly develop a reputation for paying your bills on time (or even early) and being generally a financially responsible client.
Having a preexisting level of trust can give your business some leverage to lean on if there’s ever a problem or you need more credit extended. If your company is growing and you want double the credit you normally get on an order, a vendor is more likely to grant your request if you have a solid payment history. And in the event that an invoice does go missing, the vendor is more likely to overlook and forgive a single late payment if you've always paid early before.
Tracked and transparent
Document management systems that track invoices and support back-up documentation for each payment make spending easier to understand and control. Executives, accounting departments and others can easily see what was purchased, who signed off on it and what the overall costs are.
Massive cost savings
Invoice processing systems offer numerous ways to cut down on costs, including:
- Reduced overhead: You’re not paying to store and maintain so much paper.
- Reduced labor costs: Digital invoice processing is more efficient.
- Reduced spending: You’re able to get early payment discounts more often and save money on late payment fees.
Archiving is easier
Digital invoice processes make it easy to save documents related to every payment. You don’t have to pay for filing cabinets or other physical archiving resources, and the documents are easy to retrieve with a few clicks of a mouse or keyboard if you ever need them.