Published November 5, 2019
How E-Invoicing and E-Payment Solutions Accelerate Cash Flow
and Reduce AR Costs
The wholesale distribution industry consistently adds more than $6.01 trillion to annual U.S. economic activity. Surprisingly, the majority of this money is still billed manually via paper or static PDF invoices, and paper checks make up the bulk of payments received for these invoices. This paper saturation in business to business (B2B) account receivable cycles is counter-intuitive in today’s digital society, and a significant negative impact to already thin wholesaler-distributor margins.
Static paper invoices and checks have always been inefficient. They waste AR and AP teams’ most valuable resource – time – and further delay days sales outstanding (DSO) and invoice-to-cash timelines. The typical paper invoice-to-cash round trip can take a minimum of 20+ days even in the absence of payment terms. While this is the norm, it should be unacceptable and a priority for improvement. Ask any CFO, business manager or owner and they will all tell you the faster they are paid, the better.
Paper checks, like static invoices, not only come with fulfillment costs, but also the often-overlooked costs associated with manual, back office processing, including mail room handling, reconciliation and more. Studies quantifying paper invoice and check processing costs report a range from $15 to $21 per paper transaction.
Despite their limitations, paper checks are often thought to be the safest form of payment. However, the reality is quite different. Businesses are ten times more likely to experience attempted fraud with paper checks than with electronic transactions. It is only through complacency, lack of awareness, or fear of technology that paper invoices and checks continue to thrive.
Why do static paper invoices and checks persist when so many other business processes have transitioned to dynamic and digital approaches?
Simply put, financial institutions have monopolized the treasury management of U.S. businesses. Their product innovation, however, has focused on the B2C space and consumer acquisition which they see as more profitable than developing innovative B2B solutions for enterprise, mid-market and SMB markets.
This negligence by financial institutions has a compounding negative effect on the B2B environment in terms of cash flow, AR costs, financial accuracy and client satisfaction in all business sectors, but especially the wholesale distribution industry which processes an enormous number of B2B invoices and payments.
While most recognize that paper processes won’t completely disappear anytime soon, the good news is that electronic invoicing and electronic payment methods can address all these problems. New, digital B2B solutions including cloud-based AR and payment acceptance technologies are already in-market and address the top five reasons Enterprise and Mid-market Businesses should move to a more digital AR workflow.
Unified Commerce, NAW’s Trusted Partner for cloud-based AR Technology and Payment Acceptance Solutions in the wholesale distribution industry, was recently recognized as a “TOP 10 AR Solutions Provider.” Unified simplifies AR to help Enterprise and Mid-Market businesses accelerate cash flow, reduce costs and improve efficiency with digital solutions which can be incorporated easily into your existing workflows and processes with minimal disruption.
Ready to find out what a Smart e-Invoicing solution can do for your business? Click the “Contact Us” button at the top of the page or give us a call at (888) 440-0117 to speak with a Subject Matter Expert for a free AR consultation and savings analysis. For more information on electronic invoices, digital payments, and surcharging solutions check out our News & Resources page and follow us on LinkedIn and Facebook for updates.