Many organizations had trouble securing payments on time, and organizations that didn’t have the support of strong and integrated digital software encountered challenges with tracking payments and adjusting their processes in real-time. As organizations continue to recover from these obstacles, they must prepare for the future by implementing procedures that make doing business more accessible and efficient. One way companies can create a more resilient process is through using e-invoicing.
To understand the nuances of digital transactions, it is important to understand the fundamental processes. One part of the transaction process is the use of invoicing. An invoice is a document sent to buyers for the cost of purchasing a product or service. This document helps to track accounts and establishes an obligation of the buyer to pay the balance. While an invoice might seem like a bill, the difference lies in the information they contain.
While bills are usually generic and don’t include much information on the transaction or the customer, invoices are much more specific. Since invoices are legal documents used for tax and accounting purposes, they provide detailed information on both involved parties.
The processing of invoicing begins when a customer states their intent to purchase your goods or services. During the purchasing process, buyers and sellers agree to terms and conditions regarding the cost, deliverance, and payment of the products. Once the decision to purchase has been made, a purchasing order is created. The purchasing order is essential to the process, as it clearly states the expectations of both involved parties. When the terms of purchase are agreed upon, the purchasing order becomes a legally binding contract.
The length of time before payment is due on invoices may vary based on the size of the purchase and the agreed-upon deadline. Usually, invoices are created using Net 30, which means that the buyer is obligated to pay for the order within 30 days of receiving the invoice. There are a variety of timelines for invoice deadlines, with the most commonly used deadlines being 10, 30, 60, or 90 days. While Net 30 is the standard practice, remember that this timeline may not work for all situations or all clients. As you and the buyer negotiate the terms of the agreement, ensure both parties are satisfied with the decided upon deadline.
In the past year, supply chains have faced disruptions like never before. Cash flow slowed, customers struggled to pay invoices, and businesses struggled to adjust to an increase in remote operations. With more disruption expected in the future, it is imperative that businesses analyze the weak points of their processes and find methods to better adapt in the future; one process that deserves to go — traditional paper invoicing. Traditional invoicing involves a lot of paperwork that can easily get lost in the mix or clutter up the office. When organizations rely on traditional paper methods, they open the door to a range of challenges:
Paper invoices are time-intensive. Research has found that the cycle time for the processing of paper invoices can take up to 22 days. Businesses using paper invoices will discover that a large amount of time is spent handling and entering data. Depending on the organization’s size, there can be thousands of invoices being sent around at any given time. This workload can quickly stack up with every invoice needing to be validated and cross-referenced with purchase orders.
Let’s face it; paper is easy to lose. Rather than spending their time monitoring invoices and tracking down payments, your accounts payable team will spend their time and effort searching for misplaced invoices. When customers call to inquire about the status of their invoice, it can be challenging for accounts payable staff to track down the specific invoice. Without digital assistance, your AP department will find it difficult to reassure executives and customers on the status of payments.
As organizations highlight the weak spots in their invoicing process, the need for adopting technology into your supply chain becomes apparent. E-invoicing provides the support and tools necessary to transform the efficiency of your system.
The chance of error is significantly increased when using paper invoices. Since paper invoices need to be shipped or mailed, there is the possibility of invoices being lost or delivered to the wrong location. In addition to the challenges mail poses, there is the possibility for human error when entering and filing previous invoices. Without a consolidated system, confusion can occur through your communication lines. Organizations who use paper invoice systems have seen mistakes such as:
E-invoicing alleviates the stress of traditional invoicing and automates much of the tedious work associated with securing payments from buyers. When organizations consider moving to an e-invoicing system, they need to ensure that their digital tools can support their staff and processes. E-invoicing assists in the process by:
Using technology to record and track invoices saves your AP department a great deal of time. Without having to manually enter data and file invoices by hand, a digital platform and the use of e-invoicing make storing previous payment records easier and allows for historical data that is accessible at any point in time.
Since invoices can be sent instantly and directly to the customer when using e-invoices, the possibility of misplacing or losing invoices is greatly reduced. The built-in digital paper trail makes tracking each invoice’s progress efficient and allows for stronger communication between all involved parties. Additionally, the automated system handles the collection and analysis of the data, leading to a much more reliable process.
A robust e-invoicing system collaborates with the other tools and technology your organization uses to support your AP and supply chain processes. This allows for total automation, meaning that returning customers do not have to go through manually creating invoices repeatedly. Organizations can more easily sort and keep track of their records, and often, organizations will find that they can receive payments much faster. Offering customers the ability to pay invoices instantly and online may encourage customers to pay you faster.
Tradeshift knows that shift happens, and your organization needs the comfort and support of strong technology to navigate disruption. Through the use of our customizable software, we are equipped to provide you with the specific support your team needs. In addition to assisting with e-invoicing, our digital network of business professionals enables you to strengthen your relationship with customers, leading to heightened transparency in communication and payment processes.
As the leading supplier of supply chain B2B payments and marketplaces, Tradeshift’s robust software processes millions of payments every day. Our expansive portfolio of clients showcases our commitment to creating an award-winning and user-friendly program.
When businesses operate in a global market, it can be challenging to ensure compliance across countries. This means that organizations using e-invoicing need to ensure that they are complying with dozens of regulations. Tradeshift helps users make sure all the T’s are crossed, and all the I’s are dotted. In addition to staying updated with the latest compliance regulations, our digital software ensures efficiency with all your transactions. Our streamlined and digital system means that your invoices get processed at a faster speed, getting cash in your hands quicker.
As a leading supplier of B2B marketplace and network solutions, Tradeshift enables suppliers and buyers to connect more quickly and process payments in record time. For more information regarding our e-invoicing options and how they can transform your traditional processes, reach out to one of our experts. If you’re ready to shift your organization to a digital format, sign up now for your free demo.