Nobody likes to be overtaken by the facts. Or redoing work that was already done. And yet, overdue invoice processing is a common business problem. It creates uncertainty about the organization’s liquidity and adds to the nervousness among suppliers – Who will think twice about selling their wares to defaulters. With the right tools at hand these issues can be eliminated in 2017.
Companies that process their invoices manually fall behind at an increasing pace; particularly growing companies that experience an influx of invoices have difficulties managing when processed by hand. Payments slow down and purchasers need to keep their contacts in suspense. It has nothing to do with solvency, which is generally fine. The organization is overtaken by events causing invoices to pile up. That is, until proper action is taken.
Paying on time is not an art, it is a duty
European payment terms are defined in directive 2011/7/EU. It states that, without contractual arrangements, the payment period is 30 days. Thereafter, the creditor is entitled to interest. This applies to debts between companies, but also for governments.
However, apprehending and upholding a directive are altogether different things.
At the Municipality of Purmerend, a town north of Amsterdam, the Netherlands, payments had slipped down to 58 days in 2011, while the directive also includes local administrations. Something had to be done, especially because in 2013 the directive was going to be transposed in legislation at a national level.
Purmerend was not an exceptional case, but a good example of how an organization – of any type and size – can turn the tide.
Minimal change, maximum impact
What many organizations don’t realize is that automated invoicing perfectly integrates with any ERP system, and that the right purchase-to-pay application can be fitted so that none of the internal processes change. Employees are not asked to adapt, making the transition easily accessible.
The big change is that invoices are handled digitally and automated, so no one can ever lose another invoice again. Budget holders are actively reminded of pending approvals with an alert and a relevant dashboard upon login. They can jump into the system with any device that is connected to the internet, take directed action based on their feed, and move on with their lives within minutes.
P2P application reduces payment period by 59%
After introducing GO-Spend, the purchase-to-pay solution by WorkFlowWise, the administration of Purmerend managed to reduce the payment period by 59% to an average of 24 days. The stretch goal is 20 – and in sight.
Their reliability as a business partner improved and non-financial staff can engage in core tasks again, further improving the community.