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How Much Money Can Your Business Save with eInvoicing?

eInvoicing helps businesses pay faster, take full advantage of invoice data for spend management, and reduce expensive invoicing errors by automating eProcurement data entry.

2020_5-13Blog_website.pngB2B businesses can receive thousands of invoices per year that must be processed, paid, and filed. A percentage of invoices will have to be queried because of errors or miscommunication, requiring calls and emails to the supplier. Often, the data contained in invoices has to be laboriously entered into an eProcurement or spend management platform.  Dealing with these preventable errors and bad or incomplete data degrades the invoicing process and increases the Days Payable Outstanding (DPO) metric, which measures the average number of days a company takes to pay its suppliers.

It may not take long to process each invoice if an experienced bookkeeper or accounts payable clerk handles it, but over thousands of invoices, the time and expense add up to a considerable amount of money.

Electronic invoicing, or eInvoicing, automates the process of receiving and validating invoices, ensuring that invoice data is automatically logged in the purchasing organization’s eProcurement platform. Instead of sending an invoice through the mail or attaching it as a document to an email, the supplier’s eCommerce or enterprise resource management platform sends the invoice data directly into the buyer’s eProcurement platform.

EProcurement platforms, such as Coupa, provide rich eInvoicing functionality. They can receive and process invoices automatically. Users can set up validation rules for preferred suppliers so that invoices are paid instantly. Manually validating invoices is far easier when all the relevant data is at hand and automatic business rules augment final manual review. In short, eInvoicing substantially reduces the cost of processing an invoice. The Aberdeen Group found that companies spend an average of $20.30 on each paper invoice in labor and processing alone. That cost drops by an average of 49% for electronic invoices to around $10.35. If a company manually processes 5,000 invoices annually, moving to eInvoicing would save an average of $51,765 per year.

In addition to the cost savings we’ve already discussed, businesses that integrate their eProcurement platform with their suppliers’ backend order management systems for eInvoicing benefit in several less obvious ways.

Faster Payment

Many B2B suppliers offer early pay discounts to buyers that pay promptly. These are often expressed in a format such as “1/10, net 30,” the buyer earns a discount of 1% if they pay within 10 days, or they can pay the full amount within 30 days.

Suppliers offer early pay discounts because it’s better for their cash flow when invoices are paid quickly. However, buyers only benefit if their accounts payable processes are nimble enough to promptly settle invoices. Electronic invoicing streamlines the process and helps buyers pay invoices within the early pay discount term. The Aberdeen Group also estimates that companies can process eInvoices four times faster than manual invoices.

Improved Transaction Data

Businesses adopt eProcurement and spend management platforms to take control of supply chain spending, but unless data is quickly and efficiently entered into the platform, it’s impossible to gain a comprehensive overview of spending when and how you need to manage it. The information needed to discover savings and cost efficiencies may be locked away in PDFs in email inboxes.

EInvoicing ensures that spending data is immediately available for collation, analysis, and oversight.

Fewer Errors

Every time a person manually enters data, there is potential for the introduction of incorrect information to the invoicing and payment process. Suppliers introduce errors when creating invoices, and buyers introduce more when invoices are processed manually.

Thomas C. Redman writes at Harvard Business Review about a project at AT&T targeted to reduce overpayment on invoices. The company was concerned that it was overpaying by tens of millions of dollars. An analysis showed that, on average, fewer than 40% of relevant data records were without error. 

Few businesses are as big as AT&T, but errors introduced by the manual handling of invoices are common and could be costing your business serious money. Even if a company catches an invoice error before overpayment, each and every error costs an average of $53.50 to rectify. Computers excel at moving data across networks and platforms without error, and eInvoicing is the best way to get error-free invoices from supplier business applications to your eProcurement platform.

To find out how straightforward it is to integrate suppliers with your eProcurement platform for eInvoicing, contact us via live chat or fill out the form at the bottom of this page.

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