Most businesses today recognize that complexity needs to be checked. Complexity isn’t always necessarily bad, but much of it is an impediment to speed, agility, productivity and innovation.
Complexity can be caused by a number of factors:
- Regulations
- Multiple legacy systems
- Data and operating silos
- Misaligned processes
- Technology incompatibility
- Geography
Executives have a tendency to focus on institutional issues and overlook how redundancy, duplication, and lack of clarity impact individuals – a blind spot that can result in inefficiency, waste, and unnecessary costs.
With so many moving parts, it’s easy to get overwhelmed. But it all doesn’t have to be addressed at once. Starting with one or two initiatives that are relatively painless and inexpensive to implement, can improve your business quickly. Find a project that seems manageable and take it one step at a time.
Examining the invoice process
Despite the fact that we live and work in a networked world, more than 80 percent of invoices are still paper – often produced as a result of incompatible technology between companies.
Each year, accounts payable (AP) departments waste thousands of man-hours manually keying information into their financial systems. Not only is the process slow, it’s also risky. Human error is all too common; data can be entered incorrectly, and paper documents can get lost or misfiled. Something as simple as a duplicate invoice or lack of a Purchase Order (PO), can lead to serious wasted time and resources. Also: Unsatisfied business partners, bad supplier scores, hence reduced business and negative sales impact.
E-invoicing eliminates time-wasting complexities
- Buyers can reduce costs, increase accuracy, and enjoy faster processing and payment cycles.
- Suppliers can get paid faster, experience fewer rejected invoices, and increase productivity.
- Managers improve visibility and compliance, while optimizing their working capital.
According to Deutsche Bank, there are 16 billion business-to-business (B2B) invoices produced each year in Europe alone. A switch to e-invoicing would represent a savings of 260 billion euros. On average, the cost to process an invoice ranges from 17.60 euros to 6.70 euros for a buyer, and from 11.10 euros to 4.70 euros for a supplier.
E-Invoicing can be used to automate processes like validations and matching. In fact, invoices that validate and match within the established tolerance can often be processed with no human intervention – especially if orders are digitized and automated so that the invoice is automatically generated from the PO, resulting in touchless processing and significantly reduced days sales outstanding (DSO). This will allow for even greater benefits such as early payment and discount negotiations.
Most programs go beyond simply moving invoices from paper by including a supplier portal that gives vendors self-serve information regarding payment status. This dramatically reduces call center staffing, and ultimately, cost. Factor in enhanced cash management and account reconciliation, and the benefits of e-invoicing are more than compelling. And it is only the start. The Electronic Invoice process is just one of the capabilities of a comprehensive business network. Think what social networks have done for us consumers, it only scratches the surface of what business networks will do for businesses!
The good news for companies is cloud technology
Cloud computing makes e-invoicing an attainable goal for many companies. With no upfront licensing costs, and no hardware or software requirements, moving to the cloud is simple and inexpensive. The discussion moves from costs to savings. Company data is protected by leading-edge security systems, and solution will always be up-to-date.
Not only does the cloud integrate with back-end accounts receivables systems, but it is completely scalable – and shared service centers allow for large volumes of invoices.
Making small strides to reduce complexity – like transitioning from paper invoices to the cloud – will help your company realize the true benefits of the business network one process at the time to Run Simple.
This post originally appeared on http://blogs.sap.com/innovation/.
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