One of the most important aspects of a business’ order to cash cycle is the process of billing and invoicing and receiving payment in return. However, sending invoices only comprises a small portion of what actually goes on in billing and cash collection. The only thing that hinders the process is sending the invoices in a timely manner. This is important because customers only pay when they receive appropriate documents proving that the service/goods are going to get them on time. Explore more about how businesses have molded them to suit the needs of the customer and how the process has evolved to incorporate technological advancements.
As businesses continue to expand, the cut-throat competition among them in a race to establish themselves as a mammoth in a crowded space doesn’t seem to mitigate anytime soon. The market is brimming with companies with overlapping visions and goals. Because of this similarity, companies need to have a differentiating factor that sets it apart from others. This is where Accounts Receivables and more importantly, Billing and Invoicing come into play. The Accounts Receivables process at the time of billing and invoicing is often overlooked which might possibly snowball into reasons contributing to the gradual decline of a company. The impact your accounts receivable department has on your business is undeniable. Not only is it the department that allows you to get paid and therefore to make money, but it also deals directly with what is most valuable to your business: your customers.
Billing and Invoicing plays a pivotal role in customer relationship building for your company. It is the only process in the Order to Cash cycle where your company is in direct contact with the customer. In fact, it is the only touchpoint that affects your relationship with your customer. Excellent customer experience has always resulted in enhanced business growth. Not only does a memorable experience trigger brand loyalty, but it sparks word of mouth, which is certainly the most effective marketing tool of our age. Yet, businesses pretty much ignore all this and still use archaic methods. While Latin American and many European and Asian nations are already advanced in this field, a vast majority of other nations are also taking strides in having an advanced Billing and Invoicing System.
A very important part of any business’s Order To Cash cycle is the process of generating invoices for the goods/services sold, sending invoices, and getting paid in return for it. The traditional Billing and Invoicing process, in sharp contrast to the current process, relied heavily on a manual intervention which not only slowed down the entire process but also made it difficult to settle disputes.
The invoicing personnel that oversee invoicing and billing needed to manually generate paper invoices with the help of reference documents such as:
Data points like costs, credit terms, shipping dates, etc. were filled out manually so that the invoices could be sent out as soon as possible without any delay. The invoices usually were sent out by two means:-
Issuing an invoice physically means creating the invoice filling up the necessary details and then creating a printed paper copy that is sent to the customer either via fax or postal mails or other physical means.
The Digital mode of issuing and sending invoices is a faster and better way of sending invoices than the physical means. One way to do this is by creating an electronic PDF copy of the invoice and save it locally and then distribute it via electronic means like Email or upload to portals for the user to download it later. Not only is this a faster way of sending invoices, but also helps reduce overdue invoices.
The initial phases mark the beginning of invoicing in the supply chain system by the use of paper invoices as a means of transaction. The companies had dedicated staff employed to manually print copies of invoices in certain formats and then include specific details of the transaction and then send it via snail-mail. The staff had to have a financial bookkeeping system that bore details of the invoices from the supplier. This was a time and labor-intensive process and was prone to human error.
The next phase saw the digitization of the invoicing process with the advent of the internet age. Companies now generated electronic copies of the invoices and saved it as PDFs to be sent across the internet via electronic mails for the user to be downloaded later. It was a major leap as now companies spent significantly less on paper and ink. Furthermore, now companies could better track invoices and use it for later references.
As the internet age began to pick up the pace, companies now leveraged it to make the invoicing process more seamless. By now, the internet and personal computers were ubiquitous and corporations took advantage of it by uploading the invoice copies on portals for the user to download and pay via the portal. More often than not, customers uploaded the invoice copies on the portal which was verified. Customers then clicked a link that redirects them to a secure payment processing page where they could enter their credit card and bank information for a secure and seamless payment experience.
Over the last few years companies have developed their own frameworks and implement the invoicing solutions over the cloud to not only achieve a greater degree of personalization but also a greater degree of integration and efficiency. Integration makes it all the more easy for automatic data updates and updates regarding ERP. Where once an invoicing program was simply used to write and send invoices, now it can also be used to track and record time, manage projects, schedule meetings, send emails, and so much more.
This phase marks the advent of AI into this sphere. With AI into play, companies can now predict the metrics essential beforehand that saves a lot of time and effort which earlier was not possible. Companies can now automatically scan paper invoice copies and make a digital copy for it to be fed into the ERP. Automation of key processes not only reduces manual effort but also ensure minimal error. Mobile Invoicing is yet another aspect that cannot be ignored. All the billing and invoicing can now be done via handheld devices. Corporations could send, approve, and pay via a mobile device. There is a wide range of applications that support such billing and invoicing methods.
The current billing and invoicing process across every business have the following features:
Invoice processing and validation have come a long way from manually checking on invoices and sending via postal services to electronically sending and receiving on e-invoice exchange platforms. However, almost 90% of all invoices worldwide are still processed manually. Third-party providers also provide better value services but users hesitate because of high transactional fees. The market is, therefore, searching for emerging technologies to drive user growth and solving these issues.
A future in the cloud is inevitable as the design and strategy of major ERP providers are well suited and designed for easy implementation of cloud services. Cloud services are the precursors to AI and would pave the way to the onset of AI in this domain. Almost two-thirds of European invoices are sent and received via cloud services and the number doesn’t seem to stop. It is predicted that the adoption of cloud could rise as high as 70% till 2025 which is roughly an increase in global public cloud service revenues from USD 145.3 billion to USD 278.3 billion. This major skyrocket in use of cloud services is primarily due to the wide array of benefits that cloud services provide:
Even though there is a significant amount of automation in place, one drawback that still exists is the existence of a high proportion of repetitive manual work in the field of invoice processing. However, with RPA(Robotic Process Automation) the market might shift and achieve greater value for repetitive work and rule-based processes by employing tools and bots that replicate human actions and directly interact with the system. RPA is instrumental in having a bot login to systems and extract information that is relevant, interpret it, and then feed it into the ERP.
It is predicted that about half of the manual processes are to be substituted by RPA solutions with an expansion of market size up to USD 8.7 billion by 2024. This helps in the relocation of analysts from low-value jobs to other processes that cannot be automated.
Businesses want the processes that are more customer-oriented and hence they seek operational efficiencies. Dashboards and reports help dive into deeper details and help become more transparent as an organization. However, advanced analytics are supported by models, algorithms, and solutions that help drive customers to better transparency.
Mobile Invoicing is an easy way of receiving and sending invoices on the go. The customers can now send and receive important invoices through their handheld devices anytime and anywhere without bothering to log into their respective portals. This is really flexible for clients and ensures a better cash flow and helps businesses reach out better to clients and offer better services.
Machine Learning, as an offshoot to Artificial Intelligence, is based around the idea that machines should be allowed to learn when exposed to data. This way machines learn from both structured and unstructured data, recognize patterns, and build business rules using algorithms that cannot be built by humans. Organizations now have to deal with complex business scenarios and judgment based decision making because of which they seek cognitive robots. Thus, machine learning can be really handy for organizations to simplify invoice processing that requires a lot of cognitive effort. As predicted, Machine Learning as market service would grow at a compound annual growth of 47%.
It is only a matter of time that leading B2B companies drive themselves towards automating their invoicing and billing system. European companies are on the look-out for an invoicing system that is not only automated but also complying with their tax administrative rules. Latin American nations have set a benchmark when it comes to incorporating new and advanced technologies to revamp their legacy invoicing and billing systems. A company that is moving forward and making strides in the B2B world would surely explore the option of automation to be efficient without spending much, which is what every business would want to have when it comes to invoicing.
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HighRadius Electronic Invoice Presentment and Payment (EIPP) Software provides tools that automate and speed up invoice communication and facilitate a faster collection of payments, enabling a closer and more convenient relationship with customers. It automates the invoice transmission and payment collection process providing a configurable solution that supports multiple invoice formats and different modes of transmission (fax, email, portal, etc.) depending on the targeted customer, its integration with ERP systems and a rich search capability enables efficient storage and retrieval of past invoices, backup attachments to minimize disputes and short pays. Apart from that it also has some key features that you would not want to miss out: level-III interchange and surcharge; self-service customer portal; invoicing across email, customer portals, post, and fax; advanced deduction management; and lightning e-payments. The result is faster invoicing and payment collection, better customer service, and improved profitability and cash flow.