How to Improve Invoice Delivery
Cash flow depends on reliable invoice delivery and payment processing. Without invoices reaching buyers on time, cash flow is disrupted, and business suffers. Accounts receivable departmental success is judged on KPIs such as days sales outstanding (DSO) and days beyond terms (DBT), which are contingent on invoices reaching customers quickly for prompt payment.
Fixing a business problem like invoice delivery normally comes down to the correct application of people, process and technology, so let’s explore what has changed and how businesses are improving invoice delivery today.
How invoice delivery suffered during the pandemic
Few countries escaped some form of lockdown during the COVID-19 pandemic. One of the biggest impacts on business was in staff working from home. For businesses who had relied on printing and posting invoices, this was a disaster – invoices would reach empty offices and sit waiting for members of the accounts payable department to return before they were opened, processes and paid.
Many businesses relied on office-based systems for invoice production and delivery, particularly if this involved print and post, so delays occurred both in the delivery and receipt of invoices. A double-hit for DSO and cash flow.
Even as staff returned to work, there have been increasing pressures on postal services across the world and paper invoices may well have been delayed in transit.
This delivery bottleneck contributed to more than half (53%) of the invoices sent in Western Europe last year (2021) being paid past their due date (according to the Atradius Payments Practices Barometer), impacting sellers’ cash flows and losing buyers the opportunity to maximise early payment discounts to improve their bottom line.
How invoice delivery has changed
Nothing forces business change more than a threat to bottom line profitability or cash flow, and so businesses have rushed to embrace electronic invoicing at an incredible rate over the last two years.
The urgency to switch to electronic delivery has led to some businesses simply attaching invoices to emails as PDFs, or embedding invoice details in email content. Whilst this may have got them out of a hole when trying to ensure delivery, it delivers poorly on the promises of e-invoicing.
We’ll go into more detail later about how simply taking traditional invoices and sending them via email, or perhaps configuring the ERP to send them directly as emails, leaves much to be desired. Suffice to say, it should be considered a sticking-plaster (sorry, that’s a Band Aid if you’re reading this in the US) fix, rather than a long-term solution.
Alongside the risks to deliverability, security can be another casualty of hastily deployed electronic invoice delivery processes. When invoices are sent via email as details within the email text, or an attachment (e.g. PDF), these run the risk of being intercepted and replicated by scammers phishing, such as invoice redirection fraud, where payment details are altered to deliver payment directly into scammers’ bank accounts.
As well as the delivery and security limitations of quick fix e-invoicing solutions deployed during the pandemic, many of these involve very manual processes – simply replacing manual print and post with copy-paste of invoice details or attachments to emails. Manual processes lead to human error, which causes invoice payment disputes and delays.
Turning basic electronic invoicing processes into more powerful, secure and efficient solutions, with real-time insights and electronic audit trails, may seem like a daunting job, but the time and cost-saving benefits can be dramatic in the long run. Furthermore, there are managed solutions, such as Corcentric EIPP, which significantly reduce the need for IT involvement, can be deployed in parallel (preventing loss of service) and spread the cost over the lifetime of the solution.
Why sending invoices by email, or directly from your ERP system is a risk to deliverability
First of all, let’s be clear, ERP systems and email systems are great at what they do – but they were never designed to be used as full-blown electronic invoicing presentment and payment (EIPP) solutions.
One of the most common challenges is that ERP and email systems are likely to be sending invoices from the domain of the company, which may also be sending marketing communications or suffer from a range of other challenges to the whitelisting of the domain for email clients. If the sender authority is compromised (e.g., appears listed on any spam blacklists) then emails are likely to go into the spam folder. Adding attachments, such as PDFs of invoices, only increases this risk.
EIPP solution providers, such as Corcentric, take full-time responsibility for ensuring maximum delivery by checking and dealing with any needs to remove the sender domain from blacklists.
One of the biggest challenges found when using email or ERP systems to send invoices is the balance between automation and control. If invoices were always sent to the same contact, on the same date, pulling in data from one source, this may not be so challenging. But frequently, businesses want more control over the approval process, perhaps only in certain conditions (e.g., above an invoice value threshold), or may have different sending requirements relating to what the invoice was for, how much it was for, or other criteria.
E-invoice automation solutions also generally include visibility of receipt, opens, reading and even the intent to pay, but these are not normally possible when emailing of invoices from Outlook or an ERP system. Full-blown EIPP solutions can even automatically resend when there are delivery failures, or to accounts showing they haven’t opened or read the invoices.
While an ERP system may offer a template (or templates) for invoices, these are not always sufficiently customizable for all customers’ needs. Data capture and presentation in the correct way for each invoice is important in any invoice automation solution.
Invoice delivery: Customer experience matters
With customer experience improvements as a top priority for many businesses in 2022, it’s a shame to send invoices out as traditional paper invoices, or basic emailed invoices, which can look a little amateur and give a poor impression of your brand. Also consider the customer experience of making payments for each invoice, or batches of invoices.
Customer experience improvements many reduce churn in the customer lifecycle due to poor customer experiences.
Worse than a poor customer perception of your brand would be a customer experiencing invoicing fraud if your emailed invoices were intercepted and scammers used invoice redirection fraud to funnel payments into their accounts.
If using email to deliver invoices, consider using emails as a notification to customers to click through to a secure online portal and view their invoices there instead. Security levels can be set to match online banking processes, via appropriate login and identification procedures.
Portals provide a single location to access everything in one place, including older documents, and even make changes to some personal details (e.g., contact info).
If using a portal, consider single sign on and how it can be integrated with other customer content areas, or if there are other documents (not just invoices and financial documents) to include for each customer.
Improving invoice processing for Accounts Payable
It’s also important to consider how your customers’ accounts payable departments process their supplier invoices. By sending invoices electronically, in the correct format, you may enable them to improve their invoice processing speed, reduce delays and queries, and get paid faster. Electronic invoices with purchase orders or other details included can be checked against packing lists and other resources to validate and automatically process invoices more quickly.
Also, consider what payment options are open to your customers – are these easily accessed from the invoice or online portal? Can customers pay partial invoices, or pay in batches? Do you support all the ways your customers might want to settle their invoices, and can you easily support future payment needs as they arise?
Uploading Manually to Customers Invoicing Portals
Invoice delivery can mean manually uploading or rekeying invoices into customers’ AP or invoicing portals. This often arises when customers adopt electronic invoicing in their accounts payable department to streamline processing, but then push the responsibility (and effort!) for loading invoices into these portals on to the sellers at point of invoice :delivery”.
Like the other examples above, manually uploading invoices to portals runs the risk of human error in data entry, even when there is the capacity to copy-paste the invoice data. An incorrect invoice number, or mismatched account detail is all it takes to derail the processing and payment of an invoice – inefficiencies that simply do not need to exist.
While customers may insist on you using their invoicing portal to upload data, there are ways that even this can be automated, either via direct data connection or through web-session automation. Read this white paper to find out how Corcentric can automate uploads to customers’ AP portals.
Electronic invoicing via EDI and XML
As the adoption of electronic invoicing matures, many businesses seek to automate and streamline beyond the delivery, receipt and processing of human-readable invoice formats, such as PDFs. Indeed, government invoicing portals — which require direct XML or EDI delivery — now exist across much of the European Union, Latin America and other forward-thinking regions. In fact, the U.S. government is starting to look at mandating and regulating more efficient electronic business practices, similar to what’s happening in Europe and elsewhere. If this takes off, e-invoicing will quickly move from “nice to have” to “must have.”
Invoice management systems, whether delivering or processing and paying invoices, are better suited to processing structured data formats (such as XML or EDI) rather than converting from human-readable documents first.
Even if you don’t need to comply with direct electronic delivery, such as used in networks like PEPPOL, it may be wise to keep your options open in future and establish an invoice delivery process which can easily connect and deliver invoices in these highly-secure, structured data formats.
Get in touch to find out how Corcentric can quickly and easily help you improve your invoice delivery, without the cost and time of a lengthy internal IT project.