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The 16 (and counting) problems with manual invoicing

Not yet sold on e-invoicing? Maybe understanding why paper-based invoicing is bad for business might change your mind.

Businesses using traditional invoicing processes are confronted with a wide assortment of problems and issues. Those issues are only becoming more profound as their competitors implement electronic invoicing solutions, putting laggards at a glaring disadvantage.

Here’s a comprehensive—yet not exhaustive—list of issues that come from manual invoicing approaches, and the impacts they have on the organization:

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While issues abound with paper-based invoicing—as the above table gets at—there are yet more challenges with this invoicing method, ranging from slow payment processing to high costs. So, if your company has yet to embrace e-invoicing, it’s time to rethink how you bill. Much of the problems you’re likely experiencing can be prevented by modernizing your processes and leveraging electronic invoicing.

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How does electronic invoicing work?

There’s no one-size-fits-all approach to e-invoicing. Instead, you can think of electronic invoicing as having tiers or levels. For instance, manually emailing PDF-versions of an invoice could be considered the most basic level of e-invoicing. You then might advance to posting digitally created invoices in a customer-facing, cloud-based online payment portal or to your customer’s AP system.

Generally, however, here’s how electronic invoicing works (in three steps):

1. Generate e-invoices and send them

2. Receive e-invoices and pay them

3. Reconcile and record payments, and store e-invoices

Step 1. You generate e-invoices in your ERP and send them to your customers

Most businesses will create electronic invoices in their ERP and post them automatically to their accounts receivable automation platform. AR teams can then send those e-invoices instantly—via email, for instance—or post them directly to an accounts receivable payment portal, where customers can access them in real-time, whenever they please. With some automation platforms, electronic invoices can even be posted directly to a customer’s account payable portal.

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Step 2. Your customers receive their e-invoices and pay them

Your customer receives the e-invoice through their personalized invoice delivery channel where they can easily review its details to compare it with the purchase order or other records. They can also download or print the electronic invoice if needed.

When invoicing electronically, it’s also easier to attach supporting documentation, making it easy for both customers and your AR teams to reference the information they need in one place. And with e-invoices, customers are often encouraged to initiate electronic payments directly on an electronic invoice received in the mail, via their preferred payment method, be it credit or debit card, ACH or EFT, virtual credit cards, or bank transfer.

Payment details are included directly in the electronic invoice to simplify the process. Customers can more easily make short payments against electronic invoices, too, and some payment portals—that host electronic invoices—allow customers to comment directly on line items to address discrepancies or surface disputes.

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Step 3. You reconcile and record payments, and store e-invoices

After you receive notification that payment has been made, you’ll be able to easily reconcile it with the electronic invoice. Payments made directly on e-invoices, through cloud-based payment portals—like some accounts receivable automation platforms offer—are automatically matched to the invoice, eliminating the need for manual reconciliation.

Integrations between e-invoicing and accounting systems ensure payments are then automatically posted back to your ERP system, enabling real-time insight into cash flow. All e-invoices and payments are stored in digital databases or cloud storage for easy access and retrieval, simplifying auditing and financial reporting.

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5 ways you can use automated invoicing to accelerate cash flow

Unlike traditional paper-based invoicing, e-invoicing is economical, efficient, accelerates payments, and delivers exceptional customer experiences. But how can businesses—and more specifically, their accounts receivable teams—actually use automated invoicing? In what ways can online invoicing make an immediate and tangible impact on your accounts receivable collections processes?

Great questions! There are many things you can do—and deliver—with a well-honed, automated invoicing process, that you can’t do using a manual, disorganized, underdeveloped one. Specifically—yet not exhaustively—you can use automated invoicing to:

1. Say goodbye to paper-driven processes

2. Streamline routine invoicing tasks

3. Deliver personalized, branded invoices

4. Customize your invoice delivery strategy

5. Accept online payments

1. Use automated invoicing to say goodbye to paper-driven processes

You can reduce resource use—including labor, paper, printing ink, and shipping costs—through e-invoicing. This invoicing approach also allows you to streamline the invoicing process by empowering you to easily fix errors digitally instead of having to reprint and re-mail invoices.

Going paperless has some serious financial benefits, too. Since implementing Versapay,Boston Properties accounts receivable department has become 100% paperless, slashing their paper mailing costs to $0.00 across their entire portfolio of tenants.

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2. Use automated invoicing to streamline routine invoicing tasks

E-invoicing solutions allow you to automate routine invoicing tasks, which will save staff time by reducing the need to print and mail invoices, and by enabling automated scanning, matching, and validating of invoice data. 

Much of your pertinent invoicing data exists in your ERP already, so it's easily retrievable. With automation software, you can leverage invoices made in your ERP and push them through to customers automatically. Other typical, rote, routine invoicing tasks—like following up on delinquent accounts—are also good starting points for modernization, which automation can make substantially more efficient.

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3. Use automated invoicing to deliver personalized, branded invoices

E-invoices can be easily personalized, which improves your customers’ experience by creating seamless, branded accounts receivable communications. Modern AR automation tools allow you to customize design and layout, business unit and geography, or any other aspects of your e-invoices.

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In this instance, using automated invoicing functionality allows you to present your business as professional, sets you apart from the competition, and enables you to give each customer exactly the information they need most.

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4. Use automated invoicing to customize your invoice delivery strategy

Invoice delivery is a less-thought-of component of the invoice to cash process. Yet it’s a major roadblock for companies using manual invoicing processes; not to mention customers have preferences for how to receive invoices, with many desiring digital delivery these days.

So, make your customers happy by personalizing invoice delivery and sending e-invoices via the channels they prefer.

Automated invoicing reduces accounts receivable staff’s workload both by reducing manual work in sending invoices and by encouraging customers to pay digitally. It also gives you the ability to customize invoice delivery to suit larger clients. For example, using an e-invoice delivery system that can automatically push invoices to a client’s AP portal can help you retain the business of major clients you don’t want to lose.

Broadly speaking, when it comes to invoice delivery methods, you can use automated invoicing to turn your AR department into a customer experience giant. That’s because e-invoices:

• Remove errors borne from manual processes

• Remove roadblocks to growth

• Boost cash flow

• Offer clients real-time visibility

• Delight customers.

5. Use automated invoicing to accept online payments

Automated invoicing empowers you to incorporate digital payment acceptance as part of your B2B customer invoicing process. This will help you improve customer experience, as many customers now find it most convenient to pay digitally, and using methods they’re increasingly accustomed to as consumers.

You can also accelerate cash collection on outstanding e-invoices by streamlining payment acceptance and accepting a wider variety of B2B payment methods.

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The benefits of electronic invoicing

At the risk of sounding like a broken record, manual billing and invoicing processes are tedious, time-consuming, error prone, and expensive. So while embracing electronic invoicing solutions may seem daunting, the productivity and the strategic benefits far outweigh any perceived difficulties.

Just look at these pros and cons lists:

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E-invoicing tools offer innumerable benefits over traditional paper-based invoicing practices. In fact, by automating your invoicing process—from invoice generation to payment acceptance—here are six benefits you could achieve:

E-invoicing benefit #1: Greater accuracy

Electronic invoicing systems eliminate human error by integrating billing with your ERP system or accounting software.

E-invoicing benefit #2: Greater visibility

Automatic e-invoice tracking enables more efficient follow-up and improves cash flow forecasting. Gain real-time visibility into payment details and trends, past-due and delinquent accounts, and individual e-invoice and customer data so you can make more informed decisions.

E-invoicing benefit #3: Faster payments

Electronic invoices make it easier for customers to pay you with a single click. With that aforementioned ERP integration, your accounts receivable team can capture and apply payments automatically, and instantly post them back to your ERP.

E-invoicing benefit #4: Better customer experiences

The convenience and professionalism of e-invoicing solutions give your customers a choice of invoice delivery and payment options, including the ability to make auto-payments using stored payment methods. Receiving personalized invoices and documentation (and having that payment flexibility) through a collaborative accounts receivable solution, for instance, gives your customers more confidence in the collections process.

E-invoicing benefit #5: Lower costs

Automated invoicing reduces costs while freeing up your AR team to work on more productive activities, such as analyzing customer payment trends and developing strategies to improve collections. E-invoicing software also eliminates costs associated with printing, mailing, waiting for checks, and getting them to the bank. Electronic invoicing systems can scale as your needs change and some e-invoicing tools can even automate the creation and delivery of paper invoices (if you still have a need for them or aren’t ready to fully automate your processes).

E-invoicing benefit #6: Less environmental impact

As mentioned earlier, e-invoicing uses less energy than manual billing processes, making it an earth-friendly choice.

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How e-invoicing saves you time and gets you paid faster:

Here’s an even more exhaustive list of the benefits of electronic invoicing:

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The benefits of e-invoicing for sellers

Electronic invoicing solutions benefit both sellers—you and your accounts receivable team—and buyers—your customers. For sellers, the primary appeal to e-invoices is that they eliminate paper and improve productivity. For instance, one of Versapay’s e-invoicing software customers gained 50 hours monthly that are now reallocated to high-impact work.

Sellers typically send invoices through the mail. The process of entering data, printing invoices, stuffing envelopes, and waiting for payment is simply inefficient.

E-invoicing smoothes the process of getting invoices to your customers—and the process of them paying you faster through expedited approvals and one-click payments. And with a collaborative accounts receivable solution—one that hosts e-invoices and supporting documentation in the cloud where it’s accessible 24/7—customers gain easy access to all the documents they need, significantly reducing late payments and disputes over incorrect invoice amounts. Sellers love this.

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The benefits of e-invoicing for customers

As for customers, they like electronic invoicing systems for their convenience, accuracy, and professionalism. Electronic invoicing means customers can receive invoices in the manner that best suits their needs, such as through a portal, in an email, or via electronic data interchange.

E-invoicing solutions providers that offer payment portals are particularly appealing (for customers, despite them not technically having much say in your software purchasing decisions) because they give buyers easy access to e-invoices and supporting documents. When e-invoices enter their accounts payable system more quickly—and all pertinent information is up to date and readily available—customers enjoy a simplified payment experience and are more likely to pay faster, leaving you with fewer outstanding invoices and more predictable cash flow.

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The best online invoicing tip: Use an accounts receivable payment portal to deliver e-invoices

Poor invoicing effectively impedes cash flow, as inefficient processes, invoice errors, poor communication, and invoice disputes stall—or outright halt—your collections efforts.

Invoicing electronically is a surefire strategy for accelerating cash flow, reducing manual labor, and delighting customers. And while e-invoicing may look different for different businesses, the best tactic is to e-invoice using an accounts receivable payment portal—an increasingly popular and necessary tool.

These portals streamline the invoicing process and make it easier for you to get paid. (And, considering businesses process an average of nearly 2,500 invoices monthly, invoicing efficiencies alone could be costing you a frightening amount of money, making payment portals all the more worthwhile.) 

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When it comes to e-invoicing through an accounts receivable payment portal, there are three primary reasons why this solution is unmatched:

1. All invoicing-associated wait-times are eliminated

2. Errors that plague conventional invoicing processes are removed

3. Team time-savings are delivered en masse

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1. All invoicing-associated wait-times are eliminated

When invoicing electronically through an accounts receivable payment portal—versus traditional billing and payment processes—you can get paid exponentially faster.

Not only can your customers make payments inside the portal using their preferred payment methods, but payment disputes can be handled and resolved in-app, directly on the electronic invoice.

And, seeing as over a quarter of accounts receivable teams spend more than half their day resolving invoice disputes, having that burden removed is highly valuable as it frees them to prioritize more strategic collections activities.

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2. Errors that plague conventional invoicing processes are removed

Here’s a list of the most common manual errors plaguing conventional invoicing processes:

• Keystroking or calculation errors

• Misaddressing or misrouting invoices

• Misfiling or losing invoices and supporting documentation

• Failing to include due dates

• Incomplete itemization

• Incorrect current use or conversion

• Improper—or non-existent—follow up

These invoicing complications slow things down as you work to identify and correct any errors—which ironically is also a manual task.

Online invoicing—done through an accounts receivable payment portal—reduces the risk of errors occurring or, even worse, recurring. Keystroking or routing errors, for instance, can be eliminated, payment due dates are automatically inserted into e-invoices, and reminders can be automated.

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3. Team time-savings are delivered en masse

Manually processing invoices takes up a lot of time. Not only does your accounts receivable team get bored with its repetitive tasks, but this process also drives up your labor costs.

Same goes for your customers. They don’t want to be spending their accounts payable team’s time manually entering the same data for each invoice or sitting on the phone disputing a charge. 

Using an accounts receivable payment portal saves everyone valuable time, which translates into saving money. How much money, you ask? By our calculations, accounts receivable teams with collaborative payment portals are absolved from having to manually resolve over $1.6 million worth of invoices monthly. By boosting the efficiency and effectiveness of e-invoicing and collection activities, payment portals can deliver substantial time- and cost-savings.

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How to start e-invoicing: Convert your paper invoices to e-invoices

If you’re ready to transition from paper-based invoicing to electronic invoicing, here are five steps you can consider taking to smooth that change:

Step 1. Make a plan

Clearly articulate and outline your objectives for switching to an electronic invoicing process (as well as your desired timeline). Research omni-channel invoicing software options and have your staff demo various products to identify the best choice. Assign team members responsibilities for implementation and identify the metrics you’ll use to measure how your efficiencies, costs, and customer satisfaction have benefited from e-invoicing.

Step 2. Organize your customer records

Get your customers’ email addresses to start delivering e-invoices, as to ensure that your business has those records or a plan for collecting them. Load your customer data into the new accounts receivable system (or ensure the e-invoicing software you choose can seamlessly integrate with your ERP, where your customer records might already exist). Digitize and upload any paper documents that you need in the system for outstanding invoices. You’ll also want to work with customers to make sure that communications coming from your new system will be whitelisted so your invoices don’t get lost in customers’ spam filters.

Step 3. Train your team

Ensure that your AR team gets proper training on how to use the new system. As you’re evaluating electronic invoicing solutions, a great question to ask is what kind of training the solution vendor can provide your team with. Make sure everyone involved in your company’s AR operations knows about the new e-invoicing solution and its full capabilities.

Step 4. Communicate with customers

Communicate with your customers in advance of making the switch to online invoicing. They should be aware of the changes coming, the benefits the new process will bring them, and any adjustments they may need to make on their end. Make some of your staff available to answer customer questions before and immediately after the implementation of the new system. Versapay’s customer, TireHub, engaged their customers from the outset, and presented their e-invoicing solution not as an imposition, but as an initiative that customers could care about and come alongside for the ride.

Step 5. Choose your roll-out method and monitor things closely post-launch

Invite customers to receive their e-invoices through the system in phases or all at once (the choice is yours). Provide your staff with a detailed timeline of this plan so they know what they’ll need to do and when. Meet with staff frequently during the first weeks of the e-invoicing solution roll-out to help answer any questions or troubleshoot problems.

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How to evaluate electronic invoicing solutions

Below is a checklist covering many of the points you should consider when assessing a new e-invoicing software platform. But before setting up a single demo, it’s vital to clearly define how that platform will fit into your business by following a focused evaluation plan.

One key step is to connect with team members whose work would be directly affected by implementing a new e-invoicing tool. By understanding how they do their jobs and the challenges they deal with, you’ll know how e-invoicing fits into your operations, and what features and benefits you should look for.

Assemble a task force of stakeholders and internal experts to participate throughout the process. Begin researching e-invoicing software by working with your task force. Have them help define current challenges and future goals, including the KPIs you’ll use to judge success. Also discuss change management matters; for example: How will implementation affect operations and staff?

Use the evaluation checklist and other criteria to short-list the best types of automated online invoicing products. Define post-implementation success and use that to assess the contending providers, not just the e-invoicing software. Who will give you help with driving adoption? What kind of long-term support can you expect? What’s the product roadmap?

Get demos. Once you’re down to a shortlist, see the software in action. Don’t shy away from asking tough questions about how the product can satisfy your specific demands. If an e-invoicing solution provider can’t give you good answers, or insists on a generic demo, there’s a good chance they’re not the right one for you.

Get stakeholder buy-in and make a final decision. Collate your vendor analyses and checklist results and discuss them with stakeholders. Once you’ve all aligned on finalist(s), ask for proposals, review them, and arrive at a final decision.

These are the core features most AR teams will look for from an e-invoicing software. Consider prioritizing these in your evaluation:

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Most electronic invoicing solutions are in fact pieces of larger accounts receivable automation software. And, to fully unlock your AR potential for accelerating cash flow, you’ll want more than just e-invoicing; you’ll want to: modernize your infrastructure, optimize a greater number of existing business processes, focus on delivering exceptional customer experiences, and free your AR staff to prioritize more impactful and strategic work.

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Looking to transform your invoicing processes with an electronic invoicing solution? Book a free demo with one of our experts to see how Versapay can help.