In an effort to digitalise purchase-to-pay processes, many businesses will procure electronic invoice software, but how do you know which software best suits your business or if you even need any at all?
In order to establish the need for electronic invoice software, you should start by ensuring you know your current AP processes and practices, these questions could help you start the process;
- How many invoices does my company process?
- How do we currently process incoming supplier invoices?
- How many people are involved in processing the data from invoices?
- Do we have any form of automation within the P2P process, for example, Purchase Ordering?
Now, based on your answers to these few simple questions you will likely already be able to establish whether your company should be exploring tools to digitalise your Accounts Payable or Purchase to Pay processes.
So, What Is Electronic Invoice Software?
Electronic Invoice Software can be defined in various ways by various people. In this article I will be discussing the need for software within Accounts Payable.
Of course, the best way to implement Electronic Invoice Software would be within a complete Accounts Payable Automation solution, but how can you be sure this investment is going to bring benefits to your department?
This is a computer program which retrieves electronic invoices (.pdf, .xml, .csv, etc.), extracts and processes the information on the invoice into a business’s finance system.
Electronic Invoices are sent from suppliers to a company through a Supplier Portal, registering and allowing the supplier to see updates of where the invoice is in the process.
Does Electronic Invoice Software = E-Invoicing?
Not necessarily, since E-Invoicing has a specific definition set out by gov.uk, electronic invoice software can mean anything from software to receive invoices to software to automate the whole process.
Why Should Your Company Look at Electronic Invoice Software?
Since technology moves at such a fast pace, you should always be looking at what’s available for your department.
If you can cross examine what you are currently spending on processing invoices with how much you could save by automating, then this would be a great place to start to justify seriously exploring your options.
The questions posed at the start of this article will help with this as well, if you can firmly establish current processes, volumes and staff needs to process your invoices then you can, more comfortably, allocate a cost per invoice.
One of the easiest starting points is establishing exactly how many invoices are processed within your business, especially if this still happens in a decentralised way. I have lost count of the number of Finance Managers I have spoken to who simply cannot answer this question when asked.
Secondly, how does your business process invoices? I am sure you can figure out that a completely manual process from start to finish is going to cost your company much more than an automated solution.
For example, are you receiving paper invoices, typing the data into your finance system, and storing all your paper files locally? Or are you scanning the invoices to store electronically but still manually typing the data across? All these steps will be costing your company money and will be detrimental to the goal of an efficient AP department.
How many people are involved in the process? If you only have one person in Accounts Payable processing invoices, who still has time to complete other meaningful tasks, then chances are you will not need to invest in automating that process – although this may help finding a replacement when they find another job because they hate data input!
However, if you have a team of ten people working full time to type data into a computer from an email/document, then perhaps it’s time to explore other options, after all, these employees could be reassigned to more productive tasks within the company!
One other indicator that you may need electronic invoicing software could be if your suppliers notify you that they will be moving from physical to electronic invoices.
A change of this nature will save your suppliers significant amounts of money on printing, postage, etc. and you will now have the perfect opportunity to start a project.
Although, bear in mind that physical invoices easily be converted into electronic documents with that dusty old machine in the corner – the scanner!
What Should You Look for In New Software?
Aside from the current buzzwords (AI, Block-chain, Machine Learning etc.) you need to know what to look for when buying new software.
This is entirely at your discretion, and the best place to start to find out is to analyse your current processes and decide which would benefit most from digitalising/automating and how could you do that in the most effective way?
Perhaps this means finding a handful of suppliers and picking the best parts of each solution and deciding what you need (and don’t need). Not just going with the supplier who shouts the loudest.
Electronic Invoice Software can range from simple to complex, and in order to find out if they work as well as they claim to, you should try to speak with their current clients.
Above all, you should aim to fulfil your objective of automating the processing of invoices from a digital source into your finance system, anything on top could help or hinder and it’s up to you to decide which.
You will find, that more often than not, procuring Electronic Invoice Software will massively benefit your company.
The outliers will likely be small companies and freelancers, but that doesn’t mean that they shouldn’t count themselves out. With the advances in technology becoming more accessible by the year, there may soon be a cost-effective solution for them too.
If you have found your way here on a journey into an Accounts Payable Automation project, why not look at our brochure for “ITESOFT Streamline for Invoices”?