More than 50% of SMEs in the UK experience late payments. This negatively impacts the cash flow. Eventually, this ruins customer relationships, and reduces business’ the ability to pay suppliers, staff, and run daily business operations.
On an average, 46.2% of B2B paper invoices are paid later than the due date.
The frequency of delayed payments increased to an all time high of 90% in 2022.
According to Forbes Advisor, 75% of Americans are falling far behind on their credit card payments.
Now, a few other stats and numbers to get perspective on e invoices.
E-invoices will reach a CAGR of up to 20.4% by 2027.
PaymentsSource reports that 92% of electronic invoices are paid instantly as compared to 45% of paper invoices.
Companies that use electronic or software invoicing see a significant reduction of up to 49% in delayed payments and a 37% reduced in failed payments.
Clearly, we see a pattern here.
Electronic-invoicing cycles are faster. Let’s dig a little deeper to know how e-invoices help businesses get faster payments.
This e-invoicing blog will cover-
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What is an e-invoice?
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What is e-invoicing?
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Benefits of e-invoicing
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6 Ways e-invoice will help you get paid faster
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Best e-invoicing software
Firstly, what is an e-invoice?
Unlike popular belief, e-invoicing technology is not a new one. Although, it’s significance and usage increased recently at an unprecedented rate.
The pandemic was definitely a catalyst in this process. Just like digital payments are becoming the new norm in the recent past, e-invoices are increasingly replacing paper invoices.
When the pandemic stuck out of the blue, companies and businesses saw digital adoption as the antidote to all economic stagnation.
American and European markets adopted e-invoicing back in 2014 and so, for them it was only a matter of scaling up an already existing infrastructure.
However, Asia Pacific countries took some time to catch up. Though initially there was a hiccup, today Asia Pacific is expected to grow to $4217 million by 2027.
Additionally, B2B will grow at 11% and B2C will experience a 7% increase.
In Countries like Singapore, Australia and New Zealand, e-invoicing was introduced as early as 2019.
Other technologically empowered countries like Japan, South Korea, the Philippines will introduce large scale e-invoicing adoption by the end of 2022.
Also, India and Taiwan implemented e-invoicing in 2020 and the Middle east countries launched e-invoicing mandates by mid 2020.
What is E-invoicing?
Electronic invoice is an electronically developed invoice that is exchanged between a buyer and seller in an integrated electronic format.
E-Invoicing fully automates the entire invoicing process from invoice capture, generation, payment, receipt printing, and payment collection.
In this process, data is read and routed directly from the seller into buyer’s Accounts Payable system.
A central cloud based platform serves as the conduit between the supplier and buyer.
An invoice thus generated is called an e-invoice and the process is called e-invoicing.
Benefits of e-invoicing
First of all, thanks to e-Invoicing, businesses can receive invoices in myriad formats from suppliers, even image-invoices.
Secondly, e invoicing platforms serve as a single place where all accounts payable information is available. This makes the entire invoice tracking process more streamlined and transparent.
A business owner or an accounts team can access, sync and transfer all data between different devices with zero chances of duplication.
Lastly, fully automated processes with minimal manual intervention helps to
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streamline the invoice processing cycles
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reduce man-hours
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eliminate human errors
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decrease turnaround time
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Optimum utilization of resources
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Increased efficiency
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Enhanced productivity
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Better customer satisfaction
When one automates repetitive and time-consuming tasks, the finance team will get ample time to focus on more value-added and strategic customer-centric tasks that can contribute to business growth.
Lastly, overall efficiency increases when business streamlines its processes. This results in optimal utilization of resources and hence enhanced productivity.
There is little doubt when it comes to transparency in automated processes. E-Invoicing is no different; there is better visibility and hence better end-to-end tracking!
Real-time tracking of invoice validation, approvals, and successful payments. Consequentially, this reduces duplicate payments or over payments, thus eliminating errors and miscommunications.
In short, e-invoicing simplifies the entire invoicing process.
7 Ways e-invoice will help you get paid faster
Do you know that up to 65% of all invoices are late payments and that a single payment cycle will take at least 35 to 45 business days to complete?
What does this do to an SME? Delayed payments are detrimental to cash flow and directly hinders business growth big time, ruin customer relationships, and stymie the businesses’ ability to pay suppliers and staff.
Delayed payments are as bad as failed payments because both disrupt the cash flow. Consequentially, it stymies the businesses’ ability to pay.
Nearly 50,000 businesses shut shop due to cash-flow issues, directly impacted by late payments.
Reasons for delayed payments
Did you know that it takes at lease 135 man hours per week and $170,000 per year to issue, process, track paper invoices.
Delayed payments further compound the financial team.
There are umpteen reasons why a paper invoice results in late payments. Listed below are a few of the reasons and disadvantages of paper invoices
- Deliberate payment failure
- Invoice wrongly delivered/ failed invoice delivery
- Get lost in the sea of invoices
- Inefficient & Time-consuming due to manual process
- Accounts Payable process & its challenges
- Extended DSO
- Cost per paper invoice is very high
However, there are ways to eliminate late payments, let’s see how e invoices help businesses fast-track payment cycle?
Prompt Notifications, Prompt payments
Globally, on an average, a person spends 5 to 6 hours on his phone. Sending your invoice over to your customer’s mobile is a great way to ensure faster payments.
Several invoice solutions have the option of sending e invoices via email or even text message.
By sending invoices digitally, businesses are enhancing the chances of customers seeing the invoice which helps in getting them paid as well.
Automated Reminders
Life happens and people may genuinely forget about payments. In such cases, reminding them is a great way to ensure faster payments.
Helping customers track invoices and due date is crucial for timely payments.
Businesses do not have to move a finger to send reminders. Scheduling reminders is easier than setting an alarm! One click and VOILA! reminder set!
Text and Pay
The text and pay option is so easy that just buy clicking “reply” customers can make payments.
Enabling customers to make payments on the go is a great way to ensure faster payments.
Text and pay gives customers the power to make payments when they want, in the currency of their choice, and from wherever they want!
Payment links
Sharing payment links is also similar to the Text and Pay option. Here, customer receives a payment link via mail, mobile application, WhatsApp, etc.
An embedded link or button on the invoice will take the customer to a secure checkout page.
They can enter all payment details safely and make payments.
Hence, Offering customers multiple payment options through which they can easily make payments at any time from anywhere is definitely an effective tactic to ensure timely payments.
More Payment Options
There is an increasing demand for convenience and flexibility. Offering clients different payment modes will increase the chances that they make payments on time.
Leveraging a payment solution that supports a gamut of payment cards-both credit and debit- will automatically ensure that payments are faster.
Most solutions and businesses support Visa and master card, but giving options to pay in all major card providers will eliminate one more hurdle to faster payments.
Automatic Payments
Most e-invoicing solutions come with scheduling automatic payments option.
Setting automated payments will ensure long-term customer relationships by relieving customers from the stress of tracking due dates and amount.
Businesses will have a steady stream of income and plan monthly revenue accordingly.
Storing payment information
Imagine having to re-enter the card details every time you shop online?
Annoying right?
A frequent buyer will have poor buying experience if he has to go through the painful task of entering card details every single time.
By digitally storing all payment information, you are making sure that your customer has the best buying experience in every way possible.
The Future of e-Invoices..
The root cause of late payments is definitely the time-consuming manual processes.
Thus, automated processes will inadvertently make the entire billing process more efficient, less time-consuming, and hence more cost-effective.
Transitioning to e-invoices will reduce your DSO, build better customer relationship, and thereby ensure greater business growth.
The Global electronic invoicing market will reach a staggering 752 million dollars in the next 5 years!
Best e-invoicing software
SmartInvoice is the go-to billing software for any business.
With it’s user-friendly and feature-rich mobile application, you can ensure that all your payments are timely and successful.
Benefits of SmartInvoice includes but not limited to-
- Comprehensive Subscription Management Solution
- Payment Gateway integration
- Real-time payment tracking
- Multi currency
- Eliminate manual errors
- ERP Integration
- Recurring and scheduled payments
- Automated Reminders
- Batch processing
- User-friendly mobile application
- Customized templates
Also read-
How digital payment can Transform your business?
What are traditional payments and Digital Payments- Definition, methods, benefits?
How digital payments are touching lives daily?