Remote work has accelerated the shift from paper invoices and cheques in the mail to electronic invoicing and e-payments. In fact, according to PYMNTS research, 63.5% of US businesses have already made the transition away from paper invoices.
“Your accounts receivable department can experience much-needed efficiency gains by switching to electronic invoicing,” says Angelica Tan, Senior Director of Accounts Receivable at Cyberbacker. “Electronic invoicing is one of the simplest ways to standardize billing practices, but that doesn’t mean your company’s transition will go off without a hitch. The transition to electronic invoicing is a major undertaking for any business.”
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Traditional paper vs. electronic invoicing
Paper invoices are created with software such as Word or Excel before each one is then separately printed, sorted, processed, and mailed by employees to customers. However, this process is time-consuming and frequently causes payment delays that can have far-reaching consequences for a business, including hiccups in cash flow.
“Your staff works hundreds of hours to generate this paper trail,” Tan observes. “On top of that, your clients must manually open, process, and pay each invoice.”
Electronic invoices, on the other hand, are invoices that companies generate, transmit, receive, process, and store entirely digitally through software integrated into their Enterprise Resource Planning (ERP) systems. Unlike the procedure described for paper invoices, electronic invoices can be dealt with in a matter of moments because electronic invoicing automates many steps throughout the payment process. When an ERP is linked to a company’s invoicing system, that company can schedule payments to be applied automatically.
Make a clear plan before switching to electronic invoicing
When transitioning to electronic invoicing, being well-prepared is the key to success. Companies need to identify certain critical factors before developing a workable strategy.
“Before you implement electronic invoicing, list all the people who will be affected by the change,” Tan advises. “This includes your employees, clients, and vendors. Look closely at how prepared each of these stakeholders is to transition with you, and don’t take the leap until you know electronic invoicing will create opportunities not stand in their way.”
Selecting the right service provider
When transitioning to electronic invoicing, choosing the best service provider is crucial. This is why, according to Tan, companies must research to find a service provider that functions well with their existing procedures, is simple for their stakeholders to implement, and — above all else — can keep their sensitive information secure.
“As you evaluate a service provider’s consistency with your company’s existing procedures, remember that your ERP system isn’t the only one the solution needs to work with,” Tan says. “Your provider’s platform will need to interface with a wide variety of systems like your warehouse management system and your third-party logistics system. And if you want to be able to continue exchanging invoices with your business partners no matter what, you’ll need to ensure that all document formats and standards are supported.”
Next, companies need to make sure their service provider is accessible to current and potential customers. All potential business partners — regardless of size — should be able to easily integrate with their new electronic invoicing system and process.
“To ensure no clients are left behind, your service provider should offer electronic invoicing in a variety of formats,” recommends Tan. “Having an online portal for manual entry and an option to convert PDF invoices should allow everyone to make the transition along with you.”
Finally, companies need to choose a secure service provider. “Make sure the solution provider you go with is both ISO 27001-certified and GDPR-compliant,” Tan notes.
Give partners time to adjust
For companies to achieve the benefits of electronic invoicing, they must first convince the majority of their customers and suppliers to send and receive bills electronically along with them. When partners are less tech-savvy or hesitant to change, it can take more than a single phone conversation to persuade them to join the bandwagon.
“Give your business partners plenty of advanced warning that you plan to begin using electronic invoicing,” Tan mentions. “Allow them sufficient time to do their own research, and as you talk with them, focus on the positive outcomes for everyone involved and be ready to answer any questions. Above all, make the transition as simple as possible and give them invoice processing choices.”
Highlight the benefits of electronic invoicing to employees
Preparing internal teams for the switch to electronic invoicing and winning their support is just as critical as preparing customers and suppliers. While electronic invoicing automates many of the menial tasks employees dread, it requires learning a new process.
“To smooth the way for electronic invoicing, clearly communicate the plan and offer support,” says Tan. “The most significant factor to winning your employees’ buy-in is demonstrating how the new process benefits them. The question is no longer if you will use electronic invoicing, but when. Follow these tips to meet the challenges and make the switch to a more reliable, efficient, and cost-effective payment method.”
