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August 16, 2013
Electronic Invoicing, Part 2: Big Savings with EIPP
By Frederic Portal, Ataway Director of Strategy and Alliance

This is the Second in our Series on Electronic Invoicing.

Last week we talked about how to decide if EIPP was right for your business. This week, we’ll focus on Measuring the Savings and Return on Investment (ROI) of Implementing an EIPP Solution

To calculate ROI, you’ll need to find the cost of implementation and quantify the benefits in term of cash and when they occur. It is critical for your organization that you properly quantify the benefits. “Fewer errors”, “less disputes on the phone”, “less match errors” -- these are benefits that are not quantifiable or useful for ROI calculations. So what are some appropriate elements needed to calculate ROI?

Let’s start with The Cost of Processing an Invoice. You can spend a lot of time trying to calculate costs to process invoice in your organization. Or you can just start from an average. The Hackett Group created a benchmark for this, determining that moving from a paper-based process to electronic will save you $4.77 each time.

If we take an organization that produces around 100,000 invoices per year, the savings can be substantial. Over a 3-year period, the benefits will add up to around $1.4 million!

According to a report by the Aberdeen Group, only around 17% of the settlement cycle time is spent on approving invoices for payments. The remaining 83% is spent on mundane Functions, such as keying-in paper invoice data into AP system and disputing discrepancies. Just imagine how much you will save if everything were done electronically. Suppliers will be able to see invoices and resolve online disputes in product like eSettlements.

Another source of cost is the time your AP team spends answering supplier calls regarding invoices and payments. EIPP solutions eliminate the need for your supplier to call your organization to get the information. Instead, they can see everything online! eSettlements deliver Dashboards and inquiries that will free your Accounts payable team from supplier calls. Enabling online access for suppliers will help reduce their dependence to your teams and could save you another 3%.

Savings with Suppliers is another important element to take into account when measuring the ROI of an EIPP implementation.

From our experience with clients, the best approach is to start with your top vendors and turn them electronically using cXML, OAG format. It should be a quick win. You should work with several suppliers at the same time from the very beginning of the implementation. This will allow you to Go –Live with a good set of suppliers and see a quick ROI early on.

Using EIPP Solutions will also help you to improve performance in purchasing. The payment terms discount will be better utilized. It will also improve transparency and decision making in the Procure to Pay process and can save another 14%.

Finally Electronic invoicing will also help you to save an extra 3% by reducing duplicate invoice and payments, and accelerate data availability for reporting and analysis. Organization who turn to EIPP have now more time and use the AP resources not to key data but analyses data.

Now you have some important information to begin with in order to measure ROI! Implementing an EIPP solution can help you achieve the following tangible benefits:

  • • Cost reductions from reduced headcounts for key invoices in the system, reducing the cost of printing and mailing
  • • Compression of the Procure-to-pay cycle resulting from the reduction in mail and check floats
  • • Increased ability to capture early payment discounts offered by suppliers due to shorter processing cycle times
  • • Improved visibility into invoices, payments and overall procure-to-pay translations, leading to better cashflow forecasting and risk management abilities
  • • Positive impact on the environment: Going Green (invoice and payments), which can have a large impact on your brand recognition

If you’re currently using PeopleSoft 9.1, you can leverage a feature called Dynamic Discounting to get an even higher ROI. Please refer to our blog post on Dynamic Discounting for more information: Reinvent the way you do Business with Dynamic Discounting

In the next blog post on this series, we’ll explore some real customer use case scenarios of successful EIPP implementations.

Read more of the Ataway E-Invoicing Series

Part 1: Is EIPP the Right Choice for Your Business?

Consult with Ataway’s Team of Experts today, and learn how we can provide Solutions for your business in Electronic Invoice Presentment and Payment.

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