The benefits of electronic invoicing are REAL: accelerated cash flow, reduced days sales outstanding, increased productivity, elimination of human error, as well as the appeal of “going green.”  But, research shows AR is still a largely paper-based function.  Why would a company be reluctant to adopt electronic invoicing if the benefits are so great? Maybe a little education will help.

What is an e-invoice? E-Invoicing Defined
Adding to the confusion is how to define an electronic invoice. Is it a document sent only by electric data interchange (EDI) or extensible markup language (XML) or is it an email with an attachment or a PDF file? The answer it is all the above. Larger companies will sned data via EDI or XML but that doesn’t mean small companies can’t adopt e-invoicing. With the wide acceptance and use of Adobe PDF, any company can prepare and send electronic invoices.

Still Wedded to Paper
There are two reasons companies do not want to receive electronic invoices. One is that they don’t have the systems to process electronic invoices. Two is that some customers just like receiving paper. The good news is the trend is changing and in the future more companies may be willing to forgo paper.

Help Customers With Paper Withdrawal
The first step in moving from a paper-based invoicing system to e-invoicing is a proactive approach to encouraging customers to accept e-invoices. Give customers a choice about their invoice formats and gradually introduce electronic invoicing. While this approach may take more time, adoption rates typically are between 10 percent and 25 percent the first year.

Example: an AR department could begin by planning to send 20 percent of its invoices electronically during a six month period and distribute half of its invoices electronically by the next year. Within two or three years, the department could expect to send 80 percent of invoices electronically.

To give customers an incentive to adopt e-invoicing you can offer monetary incentives or more favorable payment terms. Remember, the more you can move toward e-invoicing the more benefits you can reap!