Switching to a digital invoice system may seem daunting for small to medium businesses, with many considering digitization more beneficial to larger enterprises. However, SMBsactually have a lot to gain from making the move from a paper-based to a fully digitalised invoice system.
What are the main benefits of a fully digitalised invoice process?
A key benefit is around cost savings. Not only will the digitalization of invoices reduce your administration costs, but it will free up time for staff to focus on value-adding activities within the business rather than the time-consuming process of generating invoices and following up on unpaid invoices.
The business will also save money on paper, print, and waste, which, though it may not sound like a significant amount, does add up over time. An Ernst and Young Worldwide electronic invoicing survey 2018 found that the cost of an electronic invoice was 95% lower than sending a physical invoice. It also found that on average, a business would save 12 days generating an electronic, as opposed to a paper, invoice.
Digital invoices will help to reduce the company’s footprint and contribute to sustainability, an increasingly important consideration for clients when choosing who to do business with.
Digitalisation will also optimise your invoicing process by making it streamlined, simplified, and easier to monitor and oversee. The digitalised system will give you instant access to real-time, accurate information on the progress of the invoice through the payment system. It will eliminate errors introduced by manual interventions and time wasted in revisions, which can ultimately result in delayed payments.
Ideally, you should choose a system that generates digitalized invoices that will integrate with yourclients’payment system so you can monitor whether the invoice has been sent, received, read and is on track for payment.
Arguably the most significant benefit of digitalisation of your invoice process is that it enables you to engage in proactive cash flow management and ensure your account receivables book is in good order.
You’ll have the benefit of a clear and accurate overview of all your outstanding invoices and where they are in the process. Having this insight ahead of time allows you to make plans to avoid any possible cash flow problems down the line.
If you see that you are heading towards cash flow issues, you can arrangeto speed up the financing of other invoices that may be due and could bridge the gap. By setting up a relationship with an invoice finance company ahead of time, you can better manage the cashflow of your business. Find one that offers you flexibility on the invoices you would like to fund as well as one that can giveyou access to up to 95% of the invoice amount. With clients sometimes paying invoices 30, 60 or even 90 days late, invoice finance can give you access to the funds from your invoices as soon as they are issued. Having put in place a digitalised invoice system, the process of raising the invoice finance will also be far quicker given that you can electronically exchange the information on a real-time basis.
Thus, by taking steps to digitalise your invoice process, you will be able to manage your accounts receivable book far more effectively and proactively than continuing with a manual, paper-based approach.
For businesses that have been operating for a long time with a paper-based, mostly manual invoice process, the prospect of moving to a digitalised system may be overwhelming and seem potentially tricky, time-consuming, and costly.
Of course, with any transition to new technology, there are several things you need to take into account when introducing new ways to work. Key factors that will contribute to a smooth transition include choosing the right system for your business the first time around, ensuring implementation is smooth, and that staff receives adequate training and support.
Fortunately, with cloud-based software as a service, digital invoicing systems are now accessible and affordable, and thus SMBs can comfortably and confidently take the leap.
Once you have incorporated the system into your business and staff are trained up to use it, not only will the company stand to save considerable time and money, but it will come across as a future-fit and digitally-savvy business geared for growth.