When it comes to accounts payables, businesses often find difficulty with reconciling what’s been approved at the initial order, with what appears on the invoice when it comes to processing.
This is really due to outdated practices that rely on a certain workflow:
- A business places an order and raises a purchase order
- This is put onto the system by the admin staff
- The invoice comes in, but the amounts don’t tally
- The invoice is paid anyway
This results in overpayments that are, in practice, difficult to resolve without the help of a professional auditor, which again costs the business more money, not to mention time. Auditors that work in the recovery space often keep a part of the money that they receive back for the business as part of the fee, so in reality there is a savings, but there is also a better way.
While we’ve been promised that the ‘paperless office’ will be the workplace of the future for some years now, in reality most of us in business still generate a lot of paper. The answer to this, of course, is digitalization, which we’re well accustomed to today. Add to this the pace at which technology has evolved and really, everything should be handled electronically to maximize productivity and revenue.
In this instance, e-invoicing is the answer to the amount of time and revenue wasted with regard to accounts payable. It is the enabler that is needed by today’s enterprises in order to make the most of value-added services such as dynamic discounting and supply chain financing.
Dynamic discounting allows a business to create maximum value in its relationships with its suppliers. It’s an automated solution which means that an invoice amount can be created directly from the initial order or contract.
For example, say a company has agreed to a contract with an office supply retailer for 12 months. The supplier offers a discount if an order over a certain amount is generated (bulk discount). The supplier also gives the business access to an online catalogue, which contains product codes, and when the order is made electronically, the discount is applied at a certain price point. Since the invoice is generated when the order is made, the discount is automatically applied—no one is left having to work it out following a phone order, and there are no surprises when it comes time for payment.
Alternatively, suppliers can raise an invoice directly from the order or service sheet without the need for a purchase order. By choosing to work electronically and asking suppliers to apply product, discount, and other cost element codes into the initial order, the process can be fully automated at both ends.
Automation is Key
The ability to automate such processes can, and does, save businesses substantial amounts of revenue when it comes to accounts payables. However, to realize these benefits, automation and e-invoicing itself are vital elements of the mix.
In order to gain the real, considerable benefits that e-invoicing affords an organization in a B2B scenario, it’s necessary to look at where the value lies. Of course, in itself, it is quick, takes fewer personnel, less paper, and has many more benefits. But that’s just a fraction when compared to the value that can be found in dynamic discounting and supply chain financing.
This is especially true when it comes to early payment discounts. Every supplier wants to be paid early, and every organization would prefer to receive discounts wherever possible. Value is seen at both ends of the buying spectrum. On the buyer and seller network, there are ways and means to extract value from the invoice in terms of dynamic discounting and cash flow.