How to convince your suppliers to switch to electronic invoicing?
While a majority of the world is making a swift move towards electronic invoice processing and accounting methods, there are still some vendors and suppliers who insist on using traditional, manual forms of invoicing and reporting.
If you are operating a business that works with such a vendor then you must know how much of an ordeal it is to be still working with paper-based invoices.
Not only is the manual invoicing process time as well as labor-intensive, but the issues and obstacles that have to be dealt with are numerous.
Now, you don’t want to be dealing with paper-based invoices forever. In this case, the best option you have is to convince your vendors to switch to electronic invoice generation and reporting.
What is the invoice processing journey?
Generally speaking, the invoice processing journey might differ from company to company depending on the needs, requirements, and scale of the organization.
However, the typical invoice processing flowchart contains the following seven steps:
• Receiving documents: The process starts when invoices are received from vendors (via email, PDF, physical, or any other means)
• Three-way matching or Purchase Order matching: Next, the invoice must be reviewed for compliance and matched with Purchase Orders or other supporting documents.
• Documentation reviewed for the required information: Following the matching process, documentation is reviewed and the required information is extracted by AP teams.
• Approval routing: The invoice is then sent for approval from the required stakeholders to ensure the payment is authorized.
• Invoice submitted for payment: After approval, the invoice is submitted to the AP department for payment.
• Documentation sent to general accounting: Once payment has been made the attached documentation is sent to the accounting department.
• AP department benchmarking: Once the accounting department receives the documentation they can record the details into accounting software and use it for benchmarking.
While this flowchart might be the same across all organizations it is important, nevertheless, to have a flowchart for your invoice processing system.
With the help of a flowchart for internal invoice processing, you can highlight inefficiencies and streamline the process with simple questions of yes/no and answers that can help direct decision-making.
How to get your vendors on board?
To ensure your vendors get on board with electronic invoicing and payment they must first understand the e-invoicing benefits. Furthermore, the best way to get this message across is by using a checklist of pointers that you can use:
1. Faster receipt of invoices
You need to highlight the benefits of invoices being received faster when vendors use electronic invoicing tools. With the manual way of sending out invoice, it can take a lot of time before businesses receive the actual invoice.
This means the process will start off in a delayed manner and the possibility of payments being made on a time is low. Using electronic invoice processing, on the other hand, means that invoices get delivered to recipients as soon as they are sent out.
The question of delays is completely eradicated and the probability of timely payments being made is much higher.
2. Cost savings on printing and mailing
When vendors work with a manual invoice processing system they will have to print out physical invoices and manually mail them.
While doing this for a small group of businesses might seem okay it is not, however, the same case when vendors have a large number of invoices to send out.
In fact, physically printing out and mailing invoices can become quite costly in the long run. Instead, tell them about how all these costs can be completely cut out with an electronic invoicing system.
With electronic invoicing systems, everything is done digitally and, therefore, there is no need whatsoever for physically printing and mailing invoices.
3. Cost savings on postage
Not only printing and mailing, but invoices also have to be posted. Consequently, postage also becomes a cost to consider. In manual invoicing systems employees have to physically post an invoice.
Similar to printing and mailing, postage costs too can pile up into a large amount in the long run. You can pitch postage cost savings as another added benefit of electronic invoicing and payment.
4. Cost savings on salaries
If your vendors are managing a manual invoice processing system they’re also likely to be managing a sizeable team that is dedicated to the system.
These employees typically are in charge of physically creating invoices, checking them, and sending them out to clients for payment. You must point out to your vendors that this is far from ideal for them.
Not only does a human team require more time and effort to send out invoices but they also have salaries that have to be paid. However, with an electronic invoice processing system, all of these jobs and tasks can be automated.
To elaborate, with software at their service vendors won’t need an entire team to manage to invoice and, consequently, they can save on the salaries that they pay to these teams.
5. No loss of invoices
Generally, the way of sending out invoices for vendors who use manual invoice processing systems is via mail. Physically sending out invoices brings its own set of issues.
Invoices are infamous for getting lost or damaged when sent via mail. You should point out to your vendors that this can easily be avoided with electronic invoicing.
With electronic invoicing software, your vendors can send out digital invoices that are sent in a safe as well as fast manner.
6. Easier invoice replacement
As we have previously discussed, vendors who send out invoices via mail or other such traditional forms of communication often have to deal with lost or damaged invoices.
When an invoice does get misplaced or damaged it becomes the responsibility of the vendor to replace that invoice with a new one. When you’re dealing with a large number of invoices this problem can become particularly pressing.
Using electronic invoice processing, however, enables vendors to bypass this issue. This is because digital forms of invoices are extremely easy to replace.
7. No need for post office visits
With manual invoicing systems employees would have to painstakingly carry invoices to the post office and then send them out to clients.
On electronic invoicing platforms, however, vendors can send out invoices in digital format straight from the comfort of their offices and the need for post office visits is completely eradicated.
8. Simpler process for resending invoices
If your vendors have to deal with clients or customers who pay late or need frequent reminders then it's likely that they have to send and resend invoices multiple times.
While this scenario is not ideal it is, however, quite frequent. If vendors have to do this via a manual system it would mean multiple post office visits and a lot of money spent on invoicing and mailing.
You can show them that they can avoid this entire hassle with electronic invoicing. Digital copies of invoices can be created free of charge and vendors can send out as many invoices as they want at a fraction of the cost and time required.
9. Faster identification of discrepancies
If vendors send out an incorrectly made invoice or to an incorrect recipient manually it’s going to take them a long time before they even find out something is wrong, let alone fix the problem.
Discrepancies and errors can be hard to track with manual invoice processing systems. If not addressed in a timely manner these errors and issues can end up costing your vendors a lot of money and resources in the long run.
Highlight this issue to them and explain how an electronic invoice processing system can catch errors automatically before you even send them out.
10. No damage to invoices done
As we’ve already discussed previously, manually sending out invoices leaves documents susceptible to damage and loss. These damages can pile up and end up costing your vendors in the long run.
When vendors send out invoices digitally, however, this problem can be completely avoided. You need to show them how easy, simple, and secure electronic invoicing platforms can be.
Digital invoices cannot be damaged and hence are far more efficient to use.
Seamless invoice processing with Volopay
Finally, the best idea you can give your vendors is to start invoice processing with Volopay.
Volopay is essentially an accounts payable automation and electronic invoice processing software that comes with a whole array of e invoicing benefits. It is a platform that can automate your entire invoice processing system.
With Volopay at hand, you no longer have to deal with inaccurate, missing, duplicate, or fraudulent invoices. The system automatically catches discrepancies and highlights them for your attention.
Additionally, Volopay’s invoice management features can drastically cut down the manual work required and process invoices faster than ever before.
The system is capable of receiving invoices, extracting data, acquiring approvals, and making payments all on its own. All you have to do is click a few buttons here and there.