Accounts Payable News^®

By James Tucker, Global Director of Marketing, Financial Solutions, Ariba Inc.

In recent decades, companies have devoted significant time and resources to improving the efficiency and effectiveness of their accounts payable (AP) organisation. And in the current economic environment where cash is king and companies are looking for any and all ways to free up and maximise it, many are stepping up their efforts. But what do they need to succeed?

By Drew Hofler, Senior Manager Financial Solutions, Ariba Inc

In 2011, roughly 5 million European businesses and 75 million consumers are expected to send or receive more than 30 billion electronic invoices. And according to research from Billentis, they will shave between 60 percent and 80 percent off paper-based processing costs (E Invoicing/E Billing in Europe and Abroad: From Evolution to Revolution).

Unfortunately, far more companies will continue to process invoices manually. And they will miss savings opportunities and lose productivity as a result. Industry analysts estimate that 85 percent of invoices and payments are still sent on paper at a cost of more than $650 billion a year.

Electronic Invoice Exchange is an interactive online portal enabling buyer organisations to work more collaboratively with suppliers to increase visibility, reduce transaction costs and accelerate the transition from paper to electronic invoicing.

By providing suppliers with the capability to upload invoices directly to the portal or submit them as paper, buyer organizations can benefit from higher electronic invoicing adoption rates, reduced costs associated with handling suppler enquiries and discrepancies, and working capital improvements through the ability to proactively pursue early settlement discounts and supply chain finance opportunities.

The essential features of electronic invoicing are the replacement of manual paper-based routines, with new electronic integrated systems and processes. Benefits include the creation of integrated supply chains which are more cost effective, less error prone, faster and simpler to manage. The manual processing of paper invoices is labour intensive and time consuming, with high associated administrative costs. Other benefits of e-invoicing include improved customer care (typically nearly half of supplier queries relate to invoicing). Prompt payment is also facilitated through the elimination of manual interfaces in the invoice reconciliation process.