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As competition increases in a fragile economy, more businesses and organizations have started showing interest in revenue cycle optimizations which have been previously ignored. The need of the hour is to optimize financial workflows and reduce the burden over the accounts payable department, while embracing newer technologies and recent advancements made in e-invoicing, such as electronic document management for increased efficiency and better invoice payments.
At the same time, owing to archaic practices, most organizations still receive more than 80% of their invoices in a paper format, as a result of which the e-invoicing market, especially in the USA, grows at a meager 2-3% annually. This is especially true for government organizations which are historically slow to adopt a new technology. However, with the gradual availability of subscription-based or hosted software, organizations now have a cost-effective and efficient method for invoice automation.
In the simplest of forms, e-invoicing, or electronic invoicing is the exchange of invoices between a supplier and buyer in an integrated, electronic format which mainly depends upon machine-to-machine processing. As invoice process automation gains prominence throughout the world, there are quite a few trends we can expect to see in the coming years as far as invoice management is concerned. These include -
There is no doubt that the process of invoice automation with the help of electronic invoicing is environmentally friendly. But at the same time, it still is a common to come across an office with stacks of paper invoices piled up on desks and burgeoning filing cabinets filled with more than 10 years' worth of useless invoices. Such offices don't need a larger filing cabinet, but an education on how accounts payable automation can actually help them cut costs and increase efficiency. Paper consumption per office worker in the US alone ranges between 10,000-20,000 sheets a year!
In the future, e-invoicing solutions will help to completely remove more than 80% paper from most accounting departments, while reducing an organizations carbon footprint drastically.
According to research, more than 500 billion electronic invoices travel from one part of the globe to another every year. Each invoice is replete with data and information waiting to be tapped into. Not only large invoice issuers and recipients, but many service providers, analytics firms, and even tax authorities are interested in the ramifications of big data in electronic invoicing.
Until recently, most invoice data was available in an unstructured and de-centralized format. But with better implementation of technology and digitization, organizations will be able to make the most out of data in real-time. Big data also has several other ramifications when it comes to better invoice management, including helping to reduce tax fraud, and giving businesses a better picture of consumer behavior.
As invoice automation technology improves, the flow of accurate and timely data from e-invoices will reinforce a businesses' need for real-time services which would help them pay invoices on time, manage their cash flow, and take advantage of time-sensitive features such as dynamic discounting. In many parts of Southern America, tax agencies are already making the most use of real-time data flows in e-invoices for business validation and reporting purposes.
One of key factors which will help global economy to actually go real-time is the spurt of mobile apps and software services which would allow businesses to manage, review, and approve electronic invoices through their mobile devices. In the future, we can easily expect real-time tax applications to be facilitated by technology.
According to most research organizations, the e-invoicing service industry is headed towards market consolidation, especially in the light of international procurement mechanisms. The ability to develop and manage business needs, such as affordable and cost-effective e-invoicing solutions, procure-to-pay services for large organizations, and development of mobile apps for AR and AP officials is not an easy task. As a result, competition is strong in this service segment, and going into the future, not all players will be able to juggle the above-mentioned roles easily.
As a result, we can expect only a few larger players to remain in this services field, as people are already willing to hire larger agencies and pay more just to ensure security of their invoice data. At the same time, this would also ensure better customized services for both suppliers and buyers, while helping to bring the prices down.
The future of invoice processing automation is bright, as the European Union and Latin American countries have shown the rest of the world how beneficial e-invoicing can actually be. The American government is finally taking adequate measures and pushing government-backed mandates to ensure businesses adopt e-invoicing faster.
A study conducted by the Accounts Payable Network found out that 56 countries had either implemented, or were in the process of implementing electronic invoicing mandates. This in turn helped them easily track invoices, reduce approval process times, and reduce overall errors, including chances of data entry errors.
There are many reasons why offices and organizations all over the world are gravitating towards electronic invoice management solutions. Some of them include -
Over time, as invoicing processes become more streamlined, organizations will be able to eliminate repetitive and time-consuming tasks, while realigning their responsibilities to generate more revenue.
At O2I, we have been providing bespoke finance and accounting services for the past 17 years. We have seen trends come and go, and when we realize a potentially disruptive technology such as invoice automation, we are quick to integrate it within our existing capabilities.