Only 8.4 per cent of invoices issued globally are paperless. According to a white paper – How to Instantly Boost Profitability Invoice Automation – published by Supply&DemandChain Executive in December 2015, of the 500 billion invoices issued globally last year, only 42 billion were paperless. This suggests that more than 90 per cent of companies are still incurring the higher costs and inefficiencies associated with issuing paper invoices, from opening mail, to data input and manual verification, all of which are expensive and prone to errors.
Electronic or automated invoicing can enable companies to benefit from dynamic discounting and avoid late penalties, while the cost of manual labour to process one invoice is US$15. These factors make it an imperative for finance departments – particularly those with oversight for accounts payable (AP) – to explore how invoice automation can cut costs and resources.
The Supply&DemandChain Executive white paper lists five ways that invoice automation can instantly boost profits:
- Ensure you don't miss out on early payment discounts or late payment penalties. According to the white paper, up to 60 per cent of early payment discounts are missed and 12 per cent of payments are late due to inefficient manual payment practices.
- Avoid duplicate payments. Duplicate invoice payments can cost companies as much as $100,000 for every $10 million spent.
- Processing a paper invoice manually can take staff an average of 27 days, which is part of the reason why many invoices are paid late. Automating the AP process means receiving and entering supplier invoices 75 per cent faster than traditional paper-based methods.
- Manual data entry offers an accuracy rate of 70 per cent, compared to 100 per cent accurate data capture with invoice automation.
- Manually processing invoices costs an average of US$15 per invoice, compared to US$3 when invoicing is automated. This means a reduction of administration and transactional costs by up to 80 per cent.
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