Tag Archives: accounts payable automation

What to look out for with e-billing

As you are aware, I am a big advocate of offering the customer the option of choosing how they receive their bills in paper or electronic format.transpromo

Ask anyone in business what their biggest headache is and the answer usually is getting paid on time.

The second is the cost of processing and sending invoices.

As the cost of technology has reduced more businesses including SMEs have or are considering implementing electronic invoicing/e-billing to save invoice processing costs.

The advantages of e-billing include the speed and control you have over your financial documents; you decide when your customer is sent an e-bill.

You save staff time, postage and stationery costs.

slider02But, trying to establish the true cost of billing is a lot harder than you think because most don’t consider all of the related costs.

Many assume that paper has to be more expensive because it involves staff time, stationery costs, processing and cost of postage.

Making electronic billing the obvious winner.

There have been many comparisons on paper versus electronic ranging from £8.17 to send out a paper invoice VS £3.31 to send it electronically.

Document

Sending invoices as email attachments doesn’t constitute electronic billing.

E-billing may save on postage costs but this represents only a small percentage of the actual cost of processing an invoice.

How do you work out your invoicing costs?

What costs are associated with the invoicing process?

An organisation needs to be able to break down what the true costs are and these can be direct, indirect and those hidden costs that we tend to forget about.

What are the direct costs?

These include preparation of the invoice and are the most obvious costs to find in the process.

  • Printing
  • Envelopes
  • Inserting into envelopes – often a manual exercise this might also include a mailing machine
  • Postage costs

What are the indirect costs?

Although these costs are part of the invoice process they do not involve the preparation and sending of invoices and may or may not have a bearing on your invoice process.

Even so, they are often overlooked when working out the cost of invoicing and should be considered.

  • Queries and resolution – is the invoice accurate, does it have the required information. If it is wrong other functions in the organisation are involved including finance, credit control, operations, distribution and sales/customer service
  • Account reconciliation
  • Time spent on missing or undelivered invoices
  • Storage and archiving – how are invoices stored? As paper or electronically?
  • Credit notes – how long does it take for the company to generate a credit note, does it require hierarchical  approval, time taken to issue, delay in payment until the credit note is issued

multi channel services

What are the hidden costs?

Although not necessarily related to the processing of invoices they should be considered as part of the process

  • Payment processing errors
  • External debt collection agency fees
  • Staff time addressing and reviewing invoice problems
  • Additional finance costs due to the length of time time taken to get paid
  • Invoice financing or factoring costs.

Most of the costs associated with the invoicing process involve the number of staff that are involved in what can be a labour intensive task.

Even if the invoice preparation is streamlined and automated, if the order processing, AP and AR are manually intensive then the invoice processing will cost more in staff time such as:-

  1. Dealing with copy invoice requests
  2. Chasing purchase orders
  3. Chasing the sales team to solve pricing issues
  4. Reconciling accounts

iStock_000002289637SmallSending an invoice as an electronic attachment is not e-billing it is simply sending the customer an email with an invoice attached to it whilst it removes the postage and stationery element it is highly likely that your customer (the recipient) will print and allocate the invoice accordingly.

But it doesn’t take away the other costs associated with invoice processing like requests for copy invoices, misplaced invoices.

We never got your invoice, it never arrived in the post has been replaced with we never got your email.

Careful consideration of your invoice processing and understanding the true costs of the process can in the long term reduce the impact on the business.

Customers ultimately know they have to pay your bill the key is to making sure your bill is on time, consistent with the information they need to process the bill which in turn helps you gain visibility and enable better cash management and cash flow control.

What is a digital mailroom?

A digital mailroom captures or converts into digital format all incoming business documents – paper, emails, faxes, indexes them and stores them securely.

Organisations receive thousands of documents everyday in multiple formats – paper, fax, emails, PDF, XML (Extensible Markup Language) and EDI (Electronic Data Interchange) resulting in disparate systems using manual processes with often high invisible costs.

To first understand how a digital mailroom might benefit an organisation we need to know what it is or does?

“A digital mailroon is the automation of incoming mail processes using document scanning and document capture technology. Companies can digitise incoming mail and automate the classification and distribution of mail within the organisation. Paper and electronic mail can be managed through the same process allowing companies to standardise their internal mail distribution procedures and adhere to company compliance policies”. (Wikipedia)

Why implement a digital mailroom?

Accuracy, faster and cost effective which helps organisations remain competitive and regain focus in the current global economic climate.

With mail volumes growing at an exponential rate and I include ALL types of correspondence not just paper based and with companies having mobile work forces and various regional offices it makes sense to convert all incoming correspondence and communication into a digital format for distribution.

Instant communication accurate information and distribution of this information is vital coupled with the compliance and accountability that companies invest in back up systems, document scanning and storage and compliance solutions all of which are time and money.

A digital mailroom automates the process of distributing incoming documents in to a document management system.

How does it work?

Information is captured or converted in to digital format with each item classified using intelligent capture. It is then indexed and placed in the document management system

A workflow process notifies the user or group of the existence of the document so that they are able to control the processing of this document to its completion.

An additional workflow process is then created to let the sender of the document know that it is being dealt with.

Once allocated the document is then moved into the correct folder within the document management system which contains all other relevant information and documents.

Management information from incoming documents and thier current status within the business is available.

What benefits can be derived from implementing a digital mailroom?

  • Turning all incoming paper mail, faxes, electronic mail into images reduces operational costs, reduces manual processes and provides instant access to documents by employees irrespective of where they are located.
  • Decision making processes are quicker because information is accessible faster.
  • Reduced paper storage and archiving costs by encouraging employees to do without paper for example reducing printing and copying of documents.
  • Minimal distribution of paper based mail.
  • Creating digital images of incoming mail and establishing a workflow process ensures the document can be tracked through its life cycle.
  • A scanned document is accessible by authorised users and can be referenced to other relevant documents in the document management system.
  • The security of the process guarantees the authenticity and integrity of the document which aligns with the records management policy of the company.

Finally

Many companies believe that they are legally obligated to archive documents in paper format for a certain amount of time such as accounting and contract documents.
Legal admissibility of scanned documents is still perceived as an issue for many businesses because they want to avoid risk at all costs.
It is the reason why businesses rely on costly paper based archiving and storage.
But the reality is that only a small minority of documents are required to be paper based and most digitised documents are legally acceptable in a court of law.

What next?

Digital Print Management provide print management solutions designed to reduce costs. For further information call us on: 01234-271156.

You can also follow us on twitter, like us on facebook and connect with on linkedin for all our updates.