For some people, it’s hard to imagine anyone using paper checks as their main payment method or stuffing envelopes and mailing out invoices to customers. For others, it’s still standard practice.
With alternatives available today that encourage faster and more efficient invoicing experiences, many businesses still rely on dated processes for their accounts receivable (AR). Why?
In this blog, we’ll outline Electronic Invoice Presentment and Payment (EIPP) and discuss whether it’s the answer to upgrading your manual invoice-to-cash process. We’ll delve into what EIPP is, help you understand why businesses use it, and ultimately, help you decide if implementing this kind of solution is right for your business.
What is EIPP?
Put simply, EIPP enables suppliers to give customers an improved payment experience by providing a simple, automated, and secure alternative to the traditional paper-based invoicing process.
From beginning to end, EIPP software automates and streamlines business transactions, and allows for the electronic sending of invoices to clients via e-mail or self-service customer portals, enabling your customers to pay you as soon as they receive an invoice.
EIPP enhances the AR process by offering invoices in multiple formats according to their needs and preferences. These could be via electronic data interchange (EDI), commerce extensible markup language (CXML), PDF, and email. Plus, EIPP integrates with existing web-portals, accounting systems, and cloud software so you can better optimize your invoicing process.
Why do businesses need EIPP?
If you’re reading this thinking “Well this all sounds great, but why do I need EIPP? My business’ invoicing process works well enough,” allow me to elaborate.
Paper-based invoicing—with its postage, envelopes, paper, and printing—is incredibly costly to businesses’ bottom line. The margin for human error in manual invoicing is quite high, with each error from paper invoicing potentially costing over $50 to rectify. In our current climate of economic uncertainty, where maintaining cash flow is critical, you don’t want to be paying these kinds of avoidable costs.
Paper-based invoicing and the disjointed accounting systems that accompany it make billing and payment incredibly complex and only lead to headaches for finance teams.
But perhaps most importantly, paper-based invoicing doesn’t fit with the experience customers have come to expect from their suppliers. Expectations from the B2C world have migrated to the B2B world and customers today demand an online, self-service, and electronic payment experience which resembles their experiences as consumers.
An EIPP workflow eliminates the drawbacks of manual invoicing, simplifies the payment process, and improves customer, supplier, and partner relationships as a result. Businesses also see metrics in their aging reports improve after implementing an EIPP solution.
Reducing overhead costs, eliminating potential for human error, speeding up cashflow, and giving customers the experience they demand are all benefits of EIPP, and may give your business a competitive advantage.
Is EIPP right for your business?
If you’re looking for a way to get your customers paying you faster, EIPP may be a good fit for your business. By delivering a more convenient and personalized invoice presentment and payment method to your customers, you’ll most likely see an improvement in their payment behavior. Your customers will love being able to instantly view and pay invoices in the ways that work for them.
That’s all well and good for your customers who were going to pay you anyway, but what about the customers who can’t or won’t pay? That’s where EIPP leaves much to be desired.
Those customers who are “payment averse” need continuous reminders and follow ups, which is impossible to manage at scale without the right platform in place.
If your collections efforts are a significant pain source for your finance team, it may be worth considering a solution that can provide collaboration and deeper automation features than a basic EIPP solution can offer.
EIPP vs. AR automation
An EIPP solution can’t fully solve the challenges faced by a modern AR team.
Rather, for an EIPP workflow to be best utilized, it should be paired with an AR automation solution that manages collections and payments, allows for real-time collaboration between suppliers and customers, and can intelligently apply cash so your money ends up in the right place every time. Bonus points if a solution can offer these back-office automation features in addition to multi-channel invoice presentment and online payments.
However you choose to invoice customers, implementing an electronic method will be leaps and bounds ahead of manual and paper-based invoicing. And as the world moves further and further towards a remote working environment and we digitize our finance processes, the better positioned we are to ride out uncertainties.