In July of 2011, the U.S. Department of the Treasury mandated that all Treasury Bureaus implement electronic invoicing by the end of Fiscal Year 2012. This mandate was issued in support of President Obama’s “Campaign to Cut Waste.” Electronic invoicing helps cut costs and improve efficiencies. How much does it reduce costs and improve said efficiencies? In the case of the federal government, the Treasury estimated that implementing electronic invoicing would reduce the cost of invoicing by as much as 50 percent — to the tune of $450 million per year.
Costs associated with paper invoicing include: paper and human resources. By switching to electronic invoicing, paper is eliminated and the amount of time required to enter, process, and respond to invoice-related inquiries, is slashed. In addition, the amount of time from invoice to payment is slashed from an average of 17 days to just three days.
Governments Around the World Pushing Electronic Invoicing
It’s not just the U.S. Treasury Department, governments around the world are pushing for electronic invoicing as are businesses. According to a recent article on Information Week, “Europe and Latin America show how government-backed mandates are pushing businesses to adopt e-invoicing to foster positive financial outcomes for government and private businesses.”
The Accounts Payable Network did a study back in 2013 which found that 56 countries had implemented or planned on implementing electronic invoicing mandates. The European Union’s Electronic Invoicing Directive of 2001 requires every member state to accept electronic invoices, with many of those member states having created their own electronic invoicing mandates.
For governments, the advantages of electronic invoicing are huge both in terms of cost and efficiency. For businesses, switching to electronic invoicing can bring similar advantages.
For example, according to Dolphin, a provider of solutions of SAP accounts payable:
“Paper invoices still arrive, must be keyed into SAP, are then filed in cabinets and ultimately warehoused in boxes. The invoice is not easily tracked, the approval process is prolonged, and timely, accurate information is not available on demand. Couple this manual process with vendor queries and error resolution tasks…and a simple vendor inquiry becomes painful. The journey from mailroom to paid invoice is time-consuming, repetitive, and error prone. And, oh yes, it is expensive.”
These problems disappear with electronic invoicing. Invoices arrive electronically, and can easily be approved and processed. There’s no need to rekey the information or scan paper invoices, resulting in an immediate time savings. Plus, there’s no chance for a data entry error. The entire process is streamlined, and costs slashed by as much as 50 percent.
With the European Union and Latin America leading the way, and the United States government appearing to now be following suit, it’s very probably that electronic invoicing will soon be standard operating procedure for private enterprises throughout the business world.