As with all software solutions, the idea that implementing a solution will streamline the process, automate where possible and deliver value through insight, reducing overhead and driving efficiencies. In the accounts receivable arena, e-invoicing has been discussed, but it really comes in a variety of flavors.
For some people it means just sending electronic invoices, which on their own cut down on mailing costs and delivery time, reducing DSOs. To others it includes online payment acceptance and processing – which also reduces both mailing costs and DSOs.
However, the real question is whether these are fully automating the process. The reality is that looking at the entire chain of events, the creation of an invoice is only part of the process, and while it may be the most important, it’s also not the most time consuming. What we’ve found is that two major factors determine how efficient an accounts receivables process is. The first is speed of communication between the customer and the vendor and the second is the speed of bookkeeping on both the vendor and client side.
From a speed of communication position, not only is sending the invoice a huge factor, but so is dispute resolution and payment processing. Dispute resolution tends to slow down the collection process significantly and drastically increase the DSOs, while payment processing also tends to increase mailing costs and time to collection.
From a speed of bookkeeping perspective, matching the payments to invoices and performing the overall reconciliation can be manually inefficient, … Read more