Did you know, accumulated the processing of each invoice may take as much as 16.3 days? More than 16 days! This is largely due to all the manual work that goes into the processing and reporting of each invoice. This article will go through some of the benefits of implementing a digital and connected invoicing solution. Connected meaning that everything is pretty much taken care of from the planning phase, the tracking of status, the invoicing, to the received payment from your client.
Following our previous article on how to setup the perfect invoice for your company, this article is going to focus on the benefits of using a digital invoicing solution, and how you can incorporate it best possible in your business. Some companies are still doing invoicing manually and keeping them organized in a folder around the office. This can work, and has for smaller as well as larger companies through the years, but with this approach you might be missing out on some of the key benefits of upgrading to a digital management solution.
Using intelligent digital solutions across your daily workflow in all departments can greatly improve flexibility and connectivity to increase efficiency and keeping important files and data linked and organized in your business. This lets you automate the invoicing process to save time and bring your data with you by connecting to other services, e.g. to sync with resource- and project management systems to ensure you run profitable projects and have a great one-truth perspective on what's going on in your organization.
There are many pros and cons of each decision you make, but hereunder we will go through some of the major benefits related to running a digitally connected invoicing tool.
This one is a no brainer. A study by the Aberdeen Group found that in some cases the processing of invoices may take up to a whooping 16.3 days. Yes, 16.3. This is a scary number, but also an understandable number in some cases. Often an invoice has to go through as many as 15 steps before it is fully processed. Some of which move hands and which are dependent on other people. Now, this is probably the main reason why you would want to implement a digital invoicing tool. Making it more simple and efficient.
The majority of financial departments want to move away from paper, but still some reports suggest that up to 80% of invoices are still sent out on paper. This number is most significant among smaller businesses though, while larger organizations have increasingly implemented digital invoicing, leaving less than 25% left on paper. Postage, paper and ink aren't the only costs though.
Another study suggests that 3.6% of invoices have typos, meaning the wrong amount and information is sent out, or in some cases international regulations may be violated, and this is often not just a quick fix. Sometimes it's not just about rectifying the error, especially if you're dealing with cross-border invoicing, there may at times be different laws and regulations in power. Infringements of those regulations might result in getting a fine. Research by Sterling Commerce, an IBM company, found that those errors on average cost 53.50 USD to correct.
Next to that is of course the usual costs of handling invoices manually and physically. The cost of a manually processed invoice is often around 30 USD per invoice, while an automated invoice is processed for just around 3.50 USD, according to Sterling Commerce. Now, if you do the calculation - this can quickly become way too expensive, just for processing the invoice. And even more so, when there already exist solutions out there to almost completely eliminate those costs and save you time. The Institute of Finance & Management found that using a high level of automation can save you up to 20 times the costs of the manual process, and this number is only going to increase as systems get more intelligent and more closely integrated.
Emphasize the benefits of a connected system; Xero and Forecast. Tracking, paid, outstanding, how much at risk? Modern systems scan invoices and send them to the right department, automatically. Forecast connects with your accounting system, to bring crucial information and data directly into your projects. This makes you able to follow every project and invoice, and always know the current status of each incoming payment.
If you're still sending invoices by physical mail, you have some additional costs to save by using a connected digital invoicing tool. You can save on paper, on postage, on ink, on management, on archiving, and on your time. Moreover, by keeping your invoices in a digital environment, online, you at the same time limit the risk of your mail getting lost, getting delayed, or simply forgotten about. With a digital solution, you can easily track your invoice from being sent, to received, and even see if the recipient has opened and engaged with the invoice. Which leads us on to the next benefit.
Being able to automate processes is a huge benefit. You can keep all of your invoices saved and secure in your digital systems, always accessible with the click of a button. You can setup automated reminders, "Thank You"-notes, etc., and tracking of your invoices as mentioned earlier. Likewise, by using an online accounting system you can effortlessly connect with other third-party apps to sync data and do magic.
One great example is linking with a resource- and project management tool, e.g. Forecast. This can automatically sync the financial data from your projects in Forecast into your invoicing and accounting system, Xero or QuickBooks, automatically setup an invoice for you, and make you able to send it to your client within a few minutes. The revenue and costs go straight into your reports, and you can move onto other work.
Keep a simple and aligned layout
Using a digital invoicing tool you can ensure that all of the invoices align with your overall marketing and communications strategy. Branding, tone of voice, graphics, etc. is all taken into account. You can have a clearly defined process of every communication point between you and your customer.
Bring your data to other services
As we've touched a bit on earlier, having your data stored digitally, lets you easily bring the data with you to other services if you so wish. Depending on your choice of platforms, you can often connect with a wide variety of services, and thereby automate processes and get a broader perspective based on all of your collected data. It also allows you to migrate to another platform if you ever have the desire to do that. With an open API and exporting tools, your data is truly yours.
Keep important documents saved and secure
Simply by keeping your documents digitally, you save yourself a lot of time and physical space, which both mean reduction of costs. I think we've all been in that situation where we just can't find that one document we're looking for. And, physically there's just no simple way to find it, other than to just look for it. Digitally though, you're almost always able to do an intelligent search inquiry to help find what you're looking for. Digital allows you to search and organize your files, and easily share and collaborate with others online if you need.
Increased productivity and efficiency
Linked to the previous mentioned benefits, keeping your data digitally saves you both time and effort, and makes you able to automate much of the work you previously had to do manually. Ultimately, freeing time for you to do all the fun stuff instead.
Better perspective on your financial situation
Integrating all the data in your organization and / or projects, you can often, depending on your software, get automated real-time reports on the current situation. Some systems, like Forecast, even bring you a forecast of the future, an estimate of how many resources you need to allocate to each task, milestone and project, and thereby do a qualified estimate of your financial future and status.
Built-in payment service provider and processing of received payments
How does your client actually make the payment? Is it easy and effortless for them? And, how's the process after you've received the payment? Or, in the case that you do not receive the payment; what is the process then? Wouldn't it be awesome if you could automate a big part part of the processes surrounding payment?
Often billing and accounting systems can also take care of a big chunk of the management concerning the actual transaction. Simply, by letting your clients do the payment online, you both save yourself and your client time. Your client can easily pay using their credit card, bank account or mobile, while you at the same time get the benefit of intelligent tracking and management of the data related to the transaction.
Now, if you can relate to some of those points and feel interested in knowing more; we have a third article ready for you, right here. This article is explaining exactly how you can get started with Xero and Forecast, what you have to do, and how the integration will help you in your daily workflow.