The Industrial Revolution changed human life forever by mechanizing the processes of creating products. Before the advent of machinery, shoemaking was considered a skilled labor. Craftsmen who dabbled in handcrafting shoes or jewelry ruled pre-industrial society. However, humanity is not always exactly precise, so every shoe, piece of jewelry, and plow forged was slightly different than the one before it and the one after it. Automation changes and improves the process: the same machines that consistently slice the same amount of fabric for every single shoe, also cut the shoes. This in turn creates better, more uniform products; every shoe fits exactly according to the company guidelines. If you fit into one shoe, you don’t have to pray that the other one fits. It’s standardized, so everything works well together.
If industrial mechanization has gone the automated route and has clearly been optimized, then why haven’t payments been able to go the automated route in the same way? Electronic Invoice Presentment and Payment (EIPP) is the choice that some companies have been turning to in order to accelerate business and limit human error when it comes to financial transactions. Sending invoices via regular mail is archaic, and is at odds with the high-powered, instant world that we live in today. Manual processes, while perhaps familiar and comfortable, tends to be slow, unreliable, unpredictable, and in the final analysis, far more costly than automated solutions. Humans are not machines, per se, so therefore, work done by humans will statistically have some sort of flaw. By turning to automation in order to improve the order-to-cash process, results are faster and more predictable.
Operating via automation and digitally rather than with paper, the payments process can be faster, safer, smarter, and more precise. This translates to the potential of having all transactions handled more efficiently. Real-time requests and invoices can be noted and processed using EIPP, making it so the process is more streamlined and centralized versus chasing down countless pieces of paper from multiple sources. As these flows become organized and easily accessible, businesses are able to better handle questions and requests from companies who either need to be paid or who want to make a payment. The entire transaction process is simplified and better managed through EIPP.
The benefits of EIPP don’t stop just at reducing human error in the process and help to streamline supply chain interactions. When you automate your businesses using the advantage of the free-to-access Internet, as opposed to the pay-per-mail ‘snail mail’ in order to make purchases and send orders, cost reduction is an obvious result. That’s why EIPP is so compelling: it is faster, more efficient, and overall less expensive. More than that though, companies also benefit from shortening the time it takes to collect on invoices—a metric measured as Days Sales Outstanding (DSO). According to a 2013 research study by GenPact, as outlined in the graphic below, companies can expect to decrease DSOs significantly over time with the adoption of EIPP.
As business processes becomes more automated through technologies like EIPP, paying invoices and collecting invoice payments becomes much more efficient, bringing significant advantages to a company’s bottom line. The Industrial Revolution reduced labor costs, increased production, and improved the quality of products and services offered. It is time for another revolution in the supply chain, and EIPP is a solid step in the right direction.