In their everyday operations, companies face a multitude of challenges. Chief among those is the management of invoicing, which only gets more complex and more vital as the business grows and develops. The tasks of managing billing submissions, payment deadlines, and recall and collection procedures demand a substantial investment in time and accounting resources alike. Furthermore, if companies employ monthly billing models, they should be prepared for even more intense and diligent invoice processing power. In such a case, the use of accounting software becomes an inevitable necessity.
Challenges and benefits of automated e-invoicing
Higher IT costs
Naturally, the costs that come with developing the IT structure for an automated accounting solution can be an essential factor to keep in mind. For starters, one would have to purchase the necessary software, then look into developing software extensions to customize the system so it can optimally respond to the needs of their business. On the other hand, you can rest assured that the money you save in a year will greatly exceed the initial investment required for implementing this solution.
Adopting the new technology
Consider that a portion of the implementation costs will have to cover the management of internal processes that you will have to establish in order to let your teams fully adopt the digital solution and master its functions. This includes training, support and personalized follow ups for each division of your staff. It is also crucial that every member of your team takes part in the process in order to contribute towards the continuous improvement of the solution, consequently ensuring a greater return on investment as a result of time savings.
Faster processing of accounting data
While there are different opinions on how to increase invoice processing efficiency through automated invoicing, all market leaders agree that this solution improves the overall performance. Of course, their opinion is based on the massive scope of their operations, seeing as the time saved by invoice automation is exponentially greater, considering the number of accounting activities handled by major companies.
Reduced margin of error
It goes without saying that by removing the human factor from the process, we greatly reduce the potential for error in accounting operations. Getting rid of the penalties related to invoicing errors is another way to reduce the costs associated with invoice management. Data does not require multiple accounts of manual entry with automation, and the more the process is handled through digital means, the fewer errors there will be.
Reduced paper consumption
The costs associated with using, storing, managing and filing paper are greatly reduced thanks to automated invoice management solutions that rely exclusively on digital media. This is another factor that increases your return on investment by simply eliminating paper from the equation.
Once you transition the management and automation of the invoicing process into the digital realm, one significant benefit is the increased security, thanks to the processes safeguarding the digital environment that are otherwise impossible with paper handling. For example, the limitations on modifying the data after production restrict the risk of fraud.
More efficient archiving and management of documents
Maintaining an archive of digital documents is a much simpler task than trying to take care of physical files. As mentioned earlier, e-accounting solutions do not require any archiving space or time investment, which is hardly the case with its paper counterpart.
What are the implications of accounting automation ?
More than 80% of corporate accounting data on average is recorded either manually or semi-automatically. It means that nearly 20% are now fully automated. Now, what are some of the benefits of automated invoice management through the use of Enterprise Resource Planning (ERP) or Integrated Management Software (IMS)? Here are 5 significant factors that influence companies to make the shift towards automation:
- Online payments
- Digital PDF invoices
- Automatic reminders
- Management of recurring invoices
- Return on investment (ROI)
All these elements contribute to the reduction of costs related to invoice management, saving both time and money on day-to-day operations, and allowing you to focus on further developing your business.
1. Online payments
There are multiple solutions available for the management of online payments. Among the most common ones is payment by credit card. This option is distinguished by its ease of use, however even to this day, it involves a greater risk of fraud as well as higher costs of operation. The fees are around 2.9% of the total for each transaction, plus $0.30 per transaction. On the other hand, the widespread popularity of this payment method and the ability of managing credit cards within your accounting software makes it a convenient solution.
Meanwhile, the Interac transfer is gradually taking off with more and more clients choosing this option. This transfer method allows you to request payments directly with the customer, providing all the information they may require to complete the transaction, such as the amount, due date and invoice number. This type of payment is also easy to follow up on and to integrate into your accounting management system. Interac e-transfers allow customers up to $10,000 per day and are highly secure.
Pre-authorized direct debit payments offer the best solution for businesses that feature a recurring billing model, such as telecommunications companies. This method completely eliminates billing time and payment management altogether. With such a system in place, it becomes possible for you to easily predict your profits, thanks to fixed income.
2. Digital PDF invoices
Invoices delivered digitally in PDF format offer great benefits in relation to managing documents and reducing the costs associated with using paper. Even without automating the management of your company’s accounting, merely the switch from paper to digital in itself provides massive savings in time, as well as in operating and storage costs. It is estimated that managing a digital invoice in PDF format costs 70% less than an invoice generated and processed on paper. This alone should be enough to convince many businesses to go digital!
3. Automatic reminders
Tasks like managing accounts receivable, producing account statements and transmitting collection notices can weigh heavily on you and your team, requiring time and energy. Which is why, once the accounting processes are digitized, all reminders and account statements can be executed in a fully automated fashion. Additionally, by managing all of these activities digitally, you benefit from substantial savings by cutting down on the use of paper and the time required to complete these tasks.
4. Automatic management and creation of recurring invoices
When everything is done automatically, you no longer need to worry about monitoring your customers’ subscription renewal or payment dates. From generating the invoice to payment related data entry, you don’t have to perform these actions manually anymore. Once again, automation saves time. And because time is money, we see our return on investment increase as we move towards fully automated and digital processes.
5. Return on Investment (ROI)
Your return on investment is an essential value to understand and increase your company’s profits. As such, the use of an ERP is highly recommended in order to accurately forecast these numbers by calculating the operational cost – a statistic that is often unfortunately neglected by professionals.
If you are envisaging the implementation of an accounting solution that offers automated invoice management but you are yet unsure if you want to make the move forward, start by calculating the return on investment that such a transformation in your accounting operations could bring to your business. You will quickly come to realize that despite the substantial investment initially required to implement this type of software, your rewards for making this switch will prove to be much higher than the initial setup costs in the medium and long term.