We may be living in the electronic age, but a lot of us retain a fondness for “analog” paper items. Some people are die-hard fans of physical books and shun e-readers. Others favor writing letters by hand and mailing greeting cards over sending emails — especially, in an unexpected twist, younger generations. And who doesn’t love receiving a paper bill versus an electronic invoice?
All joking aside, there is one form of media where the electronic version trumps paper every time: invoices.
Paper invoices are the enemy of on-time payments and efficiency. We’ve covered in detail the main challenges of invoice processing and paper is especially onerous. It adds too much complexity and time to what could be a fast, simple, automated process.
At the very beginning of the pandemic, Tangoe saw the risks of relying on paper invoices. With disruptions forecasted in nearly every sector, we started a comprehensive effort in January to switch as many of our customers from paper to electronic invoices as possible.
Since then, we’ve converted around 25% of all the paper invoices we receive to electronic. Here’s why that’s good news and why we need to convert yours.
Save the Trees, Save the World
Tangoe receives around 60,000 paper invoices each month, 720,000 per year. Doesn’t sound like much does it? Here’s a visual. 60,000 paper invoices a month equates to about 780 trees each year. Vertically stacking all of that paper, it’d be about 100 feet higher than the world’s second-tallest building, the Shanghai Tower (2,073 ft/632 m). And we’re just one company. Now imagine how many invoices a telecommunications company like AT&T prints with millions of customers globally. That’s a lot of trees.
And it’s not just the trees that suffer. Paper invoices are time consuming to process. Provided that the delivery system runs smoothly, it can take 30 days (not including the payment part) to do everything involved with bill handling, including:
- Vendor sending the invoice
- Receiving the bill
- Loading and validating data
- Sending it for approval
- Batching it out
- Getting the AP department to pay up
After all that, the vendor needs the payment to register into their system as “on-time.” With most bills on 30-day payment cycles, every single step in a paper invoice process is on a tight schedule, with no room for human error. And what happens if the invoice is lost? Or the mail delivery system has slowed down?
The Oasis of Electronic Invoice
If you’re not sending/receiving invoices and payments electronically, you’re missing out on a big opportunity in efficiency and cost savings. When invoices are not processed on time, they often lead to late payments and poor relationships with vendors. And from a supplier’s point of view, late payments impact the budget and expected return from sales.
Now, imagine for a moment a serene oasis of automation and on-time payments. Simply removing the printing and post office visits can save 7 days. Additionally, customers’ scanned invoices take about 10 days from invoice date to receipt for loading. Electronic invoices, on the other hand, take between two and three days when customers use Tangoe’s automated invoice download technology. Electronic invoicing has now given you back at least 14 days!
Could your accounts payable (AP) department use more time for validation and review? Could they benefit from a streamlined approval process? Would you like to stop the cycle of late fees? By moving to electronic invoicing, your business will be able to pay your vendors on-time and this could potentially lead to vendor discounts. That translates into reduced risk of late fees or service interruptions.
Revved up Performance
In addition to being environmentally friendly and saving on time, electronic invoices come with a whole host of benefits.
- Reduced costs: Using an E-Invoice saves you a significant amount of money compared to paper and digital invoices because it will take less time for your data to be entered.
- Efficiency: Electronic invoice users typically find that E-invoicing makes their businesses lives more efficient and easier. E-invoices can be automated and can be paid by with just a click of the mouse. Utilizing Tangoe’s platform also allows you to cut out the time consuming and (sometimes) pricey data entry process.
- Speed: Electronic invoices can be sent, received, paid, and settled several times faster than paper and digital invoice methods; the speed at which these processes occur can drastically reduce the amount of time it takes for your invoice information to be put into your accounting system.
- Accuracy: Electronic invoices are more likely to be accurate than paper and digital invoices. When you use an electronic invoice, there are fewer steps, and therefore less friction, in the invoice process.
Get More from Your Invoice Management Process
It’s clear the best way to ensure a smooth, well-run invoice management process is electronic invoicing.
Ideally, the invoices should be formatted in an international standard like electronic data interchange (EDI). Other electronically delivered flat text files of billing data are also good. The second-best option is electronically delivered PDFs downloaded from a vendor website or “portal.”
Tangoe has recently improved the way we process these portal invoices. We provide all the fancy formatting from a paper bill, but cut receipt times by at least half, compared with waiting for that PDF to come to a mailroom and be scanned and loaded.
Additionally, Tangoe has patented optical invoice recognition (OIR) technology. This allows us to automate at a much higher degree of accuracy for manual invoice loading when using electronically downloaded PDF invoice copies, compared with scanning a paper bill to a PDF.
Even though the contents of scanned and downloaded PDFs may be the same, one is electronically generated. The other is a scanned representation of the same data, to which optical character recognition (OCR) technology then must be applied. OCR is a newish technology that can create inaccuracies, and OCR providers are still working to get it right.
If you’re looking to reduce costs, increase efficiency, and save the planet, ditch the paper and go electronic.