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Simultaneous implementation of the SOLOCHAIN Warehouse Management System (WMS) in 5 distribution centers View the press release
While sending and receiving invoices in electronic format will become mandatory for all companies by 2024-2026, 80% of supplier invoices issued today are still sent in paper format. However, the standard processing of a paper invoice is a costly process, estimated at €13.8, according to a GS1 France survey.
Indeed, several parameters increase the costs:
Processing costs: reception, transfer, filing, reading, verification.
The time spent analyzing and correcting the invoice if there are errors.
Costs related to the loss of documents in the event of a tax audit or accounting audit.
The cost of space dedicated to paper archiving: most companies process considerable volumes of invoices per year.
The law requires companies to keep their supplier invoices for 10 years. The storage and archiving of these documents takes up space. This translates into additional rental costs for the company: cabinets, filing cabinets, additional m²… Not to mention the costs of maintenance and upkeep of these spaces.
Indirect costs: late payment and penalties, failure to meet payment deadlines (litigation, bailiff’s fees, legal fees, etc.).
The costs of the resources and means mobilized by the company.
By automating invoice management, companies can reduce the cost of processing an invoice by 75-80%, saving nearly €10 per invoice on average. In total, the average benefit to a company adopting an APA offering is €615K per year and the return on investment is most often realized within four months, according to a 2020 IDC survey.
In addition to reducing the cost, automation will speed up the overall invoice processing process. The average invoice supply chain takes 8.6 days. It takes a minimum of one additional week for payment. If you automate 80% of the invoice processing tasks, the cycle time is reduced from approximately 15 days to 3 days. Invoices are also approved more quickly. Any errors are detected and corrected automatically before the invoices are submitted and the data is sent by e-mail to the approvers. According to the PWC-DFCG study on the 2019 priorities of French administrative and financial directors, no less than 30% already claimed to place invoice dematerialization at the heart of their priorities. Moving to paperless invoicing means doing away with printing, enveloping, manual processing, etc. In short, it means freeing yourself from time-consuming processes with little added value. For example, an accountant who usually processes 6,000 paper invoices can process 90,000 digital invoices at the same time. As a reminder, payment terms between professionals are normally set at 30 days following receipt of supplies. However, a supplier may apply a longer payment term, without ever exceeding 60 days or 45 days from the end of the month. Beyond these periods, late payment penalties may be applied. However, 30 days or even 60 days is a relatively short period of time if a company’s accounting department is slow to process paper invoices. In case of unpaid invoices, a company is exposed to late payment penalties. Thus, the non-optimized processing of invoices from suppliers can be costly. To reduce processing time and avoid late payments, the use of an invoice processing software such as AP Automation is essential.
Dynamic Discount or Early Payment Discount is a solution that offers suppliers the possibility to receive early payment in exchange for a discount on their invoice. For example, the supplier offers the buyer a 2% discount if an invoice is paid within ten days. Yet, according to PayStream Advisors’ AP & Working Capital report, 31% of respondents said that manually routing invoices for payment and approval was a barrier to an early payment discount. Payment automation can reduce the processing cycle and allow organizations to take greater advantage of the discounts available to them, optimizing their working capital: according to a 2019 Redbridge survey,1 only 2% of companies surveyed were using dynamic discounting for this purpose, but already nearly 20% were interested in expanding it. In addition, automated payment processing leads to increased supplier satisfaction: suppliers are paid faster and can reduce their DSO (Days Sales Outstanding). This goes a long way toward improving relationships with the supplier base.
1 Redbridge Survey – The Treasurer and WCR Optimization
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