Digital technologies have impacted almost every aspect of business. Well, almost every aspect. The way companies and suppliers exchange orders and invoices still seems mostly still stuck in the pre-Internet days.
Let’s take invoices as an example. They may sometimes be received by email, but they still need to be manually compared to what was ordered and what was received. It takes an average business 10 days and between £15 to £25 to approve an invoice for payment. After that, someone still needs to manually enter the invoice in the accounting system and trigger a payment with their bank.
No wonder people hate it. 82% of UK finance professionals say that poor invoice process management was impacting their teams’ ability to perform effectively and leading to low job satisfaction.
Suppliers aren’t happy either. They usually only find out if there are issues with the invoice when payment is already overdue. They also have little control over working capital as their customers are often trying to pay them later which in turn, does nothing for the overall buyer/supplier relationship.
There are a number of solutions on the market that help buyers streamline this process, but they are all what I would call “making the best of a bad situation”. They scan the invoice (OCR) and automate parts of the process but they offer little help when there are invoice mismatches and they do nothing to make life easier for the supplier.
The reason for this misery is that invoices haven’t really changed for millenia. They may now be PDF files, but they are still a list of items and prices with no link back to what was ordered, what was shipped or what was paid. We need to completely rethink how the B2B ordering process should work in the digital age.
The good news is that, as William Gibson said, the future is already here — it’s just not evenly distributed. In the 1990’s, General Motors invented a process which they gave the catchy title “Evaluated Receipt Settlement”. The idea is simple: the invoice is no longer required. Once GM received the goods, they would pay the supplier on the due date.
So if this is a good idea, why is it not evenly distributed yet? The main reason is that this process depends on implementation of Electronic Data Interchange (EDI) protocols which costs most companies millions to implement and years to roll out. Unless you are GM or a company of similar size, it is not worth the effort.
Our vision at Yordex is to enable online buyer/supplier collaboration between any two companies worldwide to allow them to conduct B2B business at Internet speed and with Internet costs.
We’ve built the technology with the option to take a ‘stepping-stone’ approach so getting rid of the invoice is now feasible for anyone, from day one. Even if you do still want invoices from your suppliers for a while, there are many other immediate benefits:
Accuracy: The supplier is involved early on in the ordering process which means any mismatches are fixed before the goods are receipted. The supplier has to approve the PO and can confirm delivery at which point prices or quantities can be corrected
Consistency: Supplier contracts terms are automatically enforced for every order. This allows the platform to ensure every order matches the contract and it allows it to identify opportunities to improve those contracts
Profitability: Early payment discounts can be managed differently to the benefit of both sides. The supplier can be allowed to offer a discount real-time on the platform only when they need it which allows the buyer to negotiate better payment terms for all orders You don’t have a PO process yet? No problem, this can be included as well. Do you want to also automate expenses? Also no problem, we offer a complete solution to manage all your spend.
If you’re under pressure to find ways to free up resources, operate lean, clean, green and fast then reach out as I’d love to discuss how Yordex can help you and your business make sure the old invoicing model becomes a relic of the past.