Many companies may consider government-mandated eInvoicing regulations a hassle, requiring them to revamp time-tested processes and upgrade to new technologies while adding new responsibilities and risk throughout the organization. However, eInvoicing can ultimately deliver business benefits, reducing costs, streamlining workflows and driving ROI.
Consider these top 6 positive impacts of eInvoicing:
- Reducing costs – In Mexico, according to The Economist, paper invoices used to cost about $12.50 a piece with printing, delivery and storage factored in. The move to mandated eInvoices significantly reduced these costs. In fact, IBM estimates the following eInvoicing cost savings:
- 90% in accounts payable
- 44% in accounts receivable
- Storage costs savings of up to 67% on AP and 32% on AR invoices
- Minimizing environmental impact – eInvoices also reduce the environmental impact of traditional paper invoices. A study by the Federal Reserve Bank of Minneapolis noted that “a reduction of 10 billion paper invoices annually in the U.S. could eliminate close to 200 tons of paper, save over one million trees and reduce greenhouse gas emissions by 360 tons.”
- Automating accounts payable, accounts receivable and tax reporting – Because information from eInvoices can be directly input into payment and accounting systems, companies have a single source of truth through the entire process. Standardized invoice formats mandated by tax authorities simplify accounts payable, enabling companies to easily ensure that invoices are valid and approved. For accounts receivable, eInvoicing eliminates the lag time related to lost or incorrect paper invoices, shrinking payment windows. Finally, eInvoices support tax reporting, streamlining reconciliation and facilitating automation of tax filings.
- Minimizing labor – Automating accounts payable in turn requires fewer staff hours to handle invoices. This automation also supports Straight-Through Processing (STP), in which electronic data from the invoice is matched with backing documents, such as a purchase order and goods receipt. When there are no discrepancies, eInvoices can be processed and made ready for payment without manual intervention, enabling staff to focus on invoices that may be more problematic. In fact, Sovos estimates that eInvoicing enables companies to handle 90 percent of invoices automatically.
- Improving recordkeeping and visibility into transactions – eInvoicing, when integrated into other processes like logistics and VAT compliance, provides real-time access to data that helps safeguard companies from risks of fines, penalties and the possibility of operational shutdowns. Greater visibility, down to the line-item level, gives companies the opportunity to analyze the data and gain real-time insights for better decision making and process improvements.
- Creating a defensible audit trail – With more accurate records and greater visibility into transactions from start to finish, companies have a strong audit trail that will help them answer any questions from tax authorities.
Schedule a demo to learn why companies like Kellogg’s, Mitsubishi Electric and Brown-Forman trust Sovos to help them realize benefits like these through intelligent eInvoicing compliance.
About the AuthorMore Content by Gustavo Jimenez