Invoice dematerialisation as a productivity lever

What is the link between paperless invoice management and productivity?

That's what we're going to explain in this article.

But first, a quick reminder of what an invoice is and the role it plays in the management of a business.

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Invoices, pre-accounting and financial management

An invoice is an accounting document (in the same way as an expense claim or a bank statement) that records the receipt or payment of money. In a company, all monetary and financial flows must be accounted for.

Pre-accounting, on the other hand, involves collecting, organising and transmitting all accounting documents for processing. This stage is necessary for proper bookkeeping, which involves regularly monitoring the financial statements.

For a business to function, a certain number of indicators need to be monitored. Keeping track of the figures is precisely what we call financial management. When properly monitored, financial management should make it possible to take decisions (such as investing, saving or applying for a loan) in order to make profits.

In short, invoice management is key to a company's growth.

2020 trends in invoice dematerialisation

The barometer on invoice dematerialisation practices among French businesses is quite enlightening about the motivations driving companies to dematerialise the management of their invoices.

In 2020, 76% of companies surveyed had at least one solution for dematerialising their invoices for tax purposes. That's 15% more than in 2018.

There are three reasons why companies are opting to dematerialise their invoices:

1. the regulatory obligation: 52%, 30 points more than in 2018,
2. the search for productivity gains: 49% (down 2 points on 2018),
3. and meeting customer requirements at 49% (-10 points versus 2018).

💡 The regulatory obligation refers to the introduction of electronic invoicing from 2023. This provision is part of the 2020 Finance Bill to combat VAT fraud.

Aside from the legal aspects, there are a number of advantages for businesses:

• saving paper
• making it easier to archive accounting documents
• reducing data entry errors
• shortening payment times
• securing sensitive data
• make it easier to settle disputes
• and reflect a more modern brand image.

Also according to the barometer, the top 3 benefits of dematerialisation include :

• process traceability
• processing reliability
• compliance with regulations.

Finally, whereas two years ago the business benefits were more difficult to grasp than the technical benefits, the year 2020 will see the entry of two purely business benefits:

• reduced time-to-payment
• improved compliance with payment deadlines.

The challenges of electronic invoicing

The digital transformation of businesses in France, particularly SMEs, is lagging behind its European neighbours. Ranked 15th in terms of digitisation, France is also experiencing payment delays.

At the end of 2019, French SMEs were paid 11.5 days late on average. And these delays were not without consequences, as they were the cause of one bankruptcy in four. The dematerialisation of invoices therefore meets a number of major challenges:

1. Operational issues: creating accounting journals and using dedicated accounts improves operational efficiency.
   
   
2. Ecological issues: 339 million tonnes of paper are consumed every year worldwide. That's 10 kg per second. And when you realise that one kilo of paper requires 2 kilos of wood and 60 litres of water, you quickly grasp the scale of the environmental footprint.
   
   
3. Security issues: storing, archiving and accessing (sensitive) financial data is essential, and is more efficient when the process is digitised.
   
   
4. Regulatory issues: companies will have to adopt electronic invoicing by 2023-2025 or risk being fined up to 50% of the amount of the invoice.
   
   
5. Economic issues: processing a supplier invoice manually costs around €14, and a customer invoice costs €5 to €8. On a European scale, companies could save €64.5 billion by going paperless.

The cost structure of an invoice

As we have just mentioned, in addition to the operational, ecological, security and regulatory issues, the dematerialised management of invoices represents a major economic challenge.

To help you understand, here's the breakdown of costs between a supplier invoice and a customer invoice:

• 1/3 for the supplier who issues the invoice,
• and 2/3 for the buyer who has to pay it.

The supplier invoice is therefore more time-consuming and costly than the customer invoice. With dematerialisation, it is possible to save 25 to 50% of the cost of processing a supplier invoice, while speeding up the overall process.

The cost of processing supplier invoices manually includes a two-week delay (between receipt and payment) and represents €14 per invoice. To this must be added payment times (around one week) and the cost of renting storage warehouses.

The invisible costs, on the other hand, are hidden in late payment, failure to meet deadlines (with penalties and disputes) and the deterioration in supplier relations.

But despite the mandatory introduction of electronic invoicing by 2023-2025, 80% of supplier invoices are still issued in paper format. Among the obstacles companies face, the difficulty of measuring the return on investment from dematerialising invoices tops the list at 59% (followed by resistance to change, the difficulty of measuring the return on investment from dematerialising invoices).sistance to change, the difficulty of understanding regulatory constraints and, finally, at 36.5%, the difficulty of integrating with the overall management system).

Key figures for invoice dematerialisation

When it comes to measuring the ROI of paperless invoicing, a few figures are all that's needed:

• 2.5 billion invoices are issued in France every year.
  
  
• 5% of a company's turnover is spent on managing paper documents.
  
  
• The average time taken to process an invoice, from receipt to payment, is 8.6 days.
  
  
• The cost of issuing an outgoing sales invoice is €5 in electronic format versus €9.5 in paper format.
  
  
• For an incoming purchase invoice, the cost is €7.5 (electronic) versus €13.8 (paper).
  
  
• 75% of companies that dematerialise their invoices report an improvement in customer/supplier relations.
  
  
• And on average, dematerialising invoices saves 30% in time and 70 kg of paper over the course of a year.

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3 tips to ensure that dematerialising your invoices is profitable

In conclusion, here are 3 useful and applicable tips to ensure that you are profitable when dematerialising your invoices.

1. Firstly, we recommend that you be methodical when filing your invoices. Whatever your method (chronological, alphabetical, by customer/supplier or other), it should enable you to find all types of accounting document quickly and easily: invoice, bank statement, expense claim, etc. This rigorous approach will save you precious time on a daily basis and avoid stress (and/or penalties) in the event of an audit.
   
   
2. Next, equip yourself with high-performance software such as Dext. You don't necessarily need a complex tool that covers every aspect of your business. There are solutions that are user-friendly, interface with the accounting ecosystem and are easy to use. Start with a free trial as you approach your invoicing period, to get a feel for the situation. Most (if not all) software packages on the market offer this option.
   
   
3. Finally, we recommend that you seek the advice of an expert, whether in a firm or directly attached to your accounts department. The advantage of a professional accountant is that he or she is multi-skilled and can give you excellent advice, whether on accounting, finance or tax. They will help you optimise your processes and make savings wherever possible.