You think you did everything you reasonably could to get your supplies at the most economical price. You did your research, shopped around to find the best product, the best service and the best price. You placed your order and like clockwork, the truck pulls up to the dock. The goods are verified, inspected and accepted in good order. Docking list and bill of lading signed and invoice delivered. Check. Check. Check.
Done deal? Not hardly. The efficiency with which you manage your accounts payable (AP) business practices can have a significant effect on your ability to get early payment discounts from your vendors. By some estimates, the savings achieved with early payment discounts can be as high as 36%. For instance, when vendors offer an early payment of 2/10, net 30 essentially they are asking to be paid 20 days early, 2% for 20 days equates to 36% for 360 days. Why such a sweet deal? Like you, suppliers want to be paid as quickly as possible to ensure the health of their own business.
Paper intensive AP processes can effectively kill any chance of getting an invoice pushed through the receipt and approval process in time to receive prompt pay discounts. Let’s face it, 10 days isn’t a lot of time. Something as common as unscheduled absences or illness by key players can blow any chance of meeting early payment deadlines. Paper invoices need to travel through a workflow like this one:
• Goods are signed for and paperwork is routed to AP
• The invoice is mailed to the recipient
• Copies of the invoice and proof of delivery is routed to the appropriate AP staffer for approval
• The approver reviews the documentation, approves or denies it, and then returns the paperwork to AP for processing
• An AP associate then processes the invoice and schedules it for payment
• Another AP staffer prints the checks and prepares them for mailing
• Documentation is filed for future reference
Sound old-fashioned? Absolutely. But despite technical advances made in many areas of business, in the AP arena more than 75% of invoice volume is still paper-based, delaying the payment approval and increasing costs.
Faster Invoice Processing With Electronic Data Capture Services
Companies that use a document imaging service can improve the efficiency of their AP process by eliminating much of the waste that goes along with these paper intensive office practices. Among the benefits of going paperless are:
Convenience and efficiency of file sharing that allows multiple people to simultaneously work on the same document
Ability to track progress of invoice and re-assign work as needed
Savings in paper, copying, postage, and envelopes
Reduced labor costs required to coordinate paper invoices, checks and mailing
Elimination of lost and damaged paper documents
Streamlining the invoice approval workflow
And most importantly, meeting negotiated early payment discount deadlines
For companies with legacy paper invoices filed away in boxes and file cabinets, converting these documents to digital will also reduce labor costs, improve customer service and reduce costs.
Converting paper invoices to electronic files requires integrating these documents into an imaging system so everyone who needs to access these files can do so easily. For more information about saving time and money with document imaging services, download our FREE eBook, Manufacturers: What Document Management Solution Is Right For Your Business.