Paperless Invoicing: Why It Matters

In today’s fast-paced business environment, efficiency is more critical than ever. The shift towards paperless invoicing in Accounts Payable departments is a decisive step in this direction. From reducing human error to lowering processing costs, the benefits are numerous. In this guide, we’ll explore what paperless invoice processing is, why you should consider going paperless, and how to successfully implement a paperless invoicing system.

What is Paperless Invoice Processing?

Paperless invoice processing is an automated approach to managing supplier invoices in a digital format throughout their lifecycle. Instead of handling paper invoices that require manual sorting, data entry, and physical storage, everything is done electronically. This helps in streamlining the approval process, ensuring quicker payments, and simplifying record-keeping. With features like e-signatures, instant verifications, and digital trails for auditing, paperless invoice processing minimises delays and errors, making the whole system more efficient.

Key Steps in Invoice Processing

The efficiency of your paperless invoice processing hinges on a well-structured procedure. Key steps include:

• Invoice Receipt: Your accounting team reviews and verifies incoming digital invoices, matching them with purchase orders (POs).
• Invoice Approval: Digital invoices are cross-verified for accuracy. Those matching POs may not require another round of approvals.
• Invoice Payment: Payments are made based on mutually agreed terms, ensuring a seamless process and avoiding late fees.

Common Pitfalls in Invoice Processing

Errors in paperless invoice processing can wreak havoc. These often stem from:

• Data Entry Errors: Even though it’s digital, human errors can still happen.
• Payment Before Product: Paying an invoice before receiving the goods is risky.
• Duplicate Payments: This happens when invoices are not adequately marked as paid.

Why the Move to Paperless Invoicing is Crucial

Businesses cannot afford to lag behind competitors, particularly where cost and time efficiencies are concerned. Statistics show that going paperless is not only good for the environment, but equally beneficial in practical terms, reducing overheads and human error.

How to Implement Paperless Invoice Processing

Transitioning is not as complicated as it might seem. Here’s how:

• Planning: Consult with your accounting team to outline your existing workflow and propose improvements.
• Digitising: Convert your existing paper documents into digital formats.
• Automating: Choose software that aligns with your needs, like Medius for both small and large businesses.
• Configuring: Customise your software to increase efficiency.
• Learning: Train your team to use the new system proficiently.

Benefits of Paperless Invoicing in Accounts Payable Departments

Here’s a look at the top five advantages of adopting paperless invoicing solutions in your Accounts Payable department:

1. Faster Processing Time

The traditional invoicing method involves multiple paper-handling stages, from collating invoices received via email, post and fax, to entering them into the ERP system. Switching to paperless invoicing solutions allows companies to dramatically speed up this entire process. A study by the Aberdeen Group shows that invoice processing can be cut from an average of 20.8 days to a mere 3.8 days.

2. Less Human Error

In a paper-based Accounts Payable system, you’re vulnerable to human error—misplaced documents, misfiling, and so on. However, paperless invoicing reduced such errors by 37% according to a survey by Sterling Commerce.

3. Lowered Processing Costs

The cost implications of paper-based systems are not to be underestimated. According to Sterling Commerce, traditional paper invoicing can cost between $12 and $30 per invoice, depending on the process adopted. Whereas with paperless invoicing systems, the cost is just $3.50 per invoice.

4. Easier Audit Compliance

Audit time is a stressful period for Accounts Payable departments that still rely on paper documents. Paperless invoicing solutions store all relevant data digitally, making compliance with tax audits more straightforward and reducing the likelihood of fines.

5. End The Paper Mountain

Between collecting, categorizing, copying, processing and storing paper invoices, the paper mountain can become almost K2-esque quite quickly. Research from Kyocera says the average UK office worker uses 45 pages of paper every day. With an estimated 25 million office workers in the country, that makes for a staggeringly high amount of paper use.

By switching to a paperless Accounts Payable process, a business can dramatically reduce paper consumption and with it lower the cost of paper purchasing, support the environment and win the office clutter war.

Achieving Paperless Invoicing

There’s no doubt that businesses must maximise efficiency and minimise costs, especially in competitive markets. The transition to a paperless invoicing system in Accounts Payable departments is a highly effective way to achieve these goals.

Click here, to find out more about how we can help you make the switch to a paperless Accounts Payable department.