Hi. My name is Drew, and I’m a paperholic.
I do not own a Kindle or an iPad, and I have never read an e-book.
My driveway is one of three houses on my block with a daily newspaper laying on the blacktop every morning.
I get a rush from the tactile thrill of heavy stationery or journal paper, and the weight it seems to impart to my words as I write them.
The scent of a library or bookstore is an irresistible siren song.
And yes, if a document or report is more than two pages long, I will often print it to read it and make notes on it.
I can’t help it! I just love the feel of paper between my fingers, being able to underline things, make notes in margins, and draw doodles during boring presentations (while appearing to take notes). I love Sunday mornings with my thick Minneapolis Star-Tribune newspaper, my coffee, and my easy chair. I love being able to drop my paperback in the sand at the beach without worry, or leave it on my towel as I take a dip without worry of theft. I love paper, because in many ways it offers many advantages over its electronic analogues.
However, one area where paper is nothing but trouble is accounts payable and the invoice receipt and approval process!
The invoice process itself is an absolutely necessary control step in the procure-to-pay business cycle. It is the guardian of the cash flow gate. It is supposed to ensure that payments compliant to negotiated pricing and discounts are made on time and without duplication. Yet the information delivery medium upon which this critical process is built (i.e. paper-based invoices) has in many companies not changed since the days when they were delivered via horseback or by carrier pigeon. This despite the clear facts and evidence that paper invoices unnecessarily costs companies millions every year in inefficient processes, lost savings, and missed discounts. For example:
- By some estimates, almost 77% of invoice volume is still paper based
- According to a recent report by The Accounts Payable Network, 15% of invoices have exceptions adding 6.6 days to the cycle
- Other analysts state that almost $5 million in negotiated contract savings is lost per $1 Billion in spend due to invoices not reflecting correct pricing…and no way to connect paper invoices to paper contracts.
- And the inefficiencies of processing paper (exceptions, routing, etc.) delay the payment approval time such that companies often miss a majority of negotiated early payment discounts, not to mention miss the opportunity for net new discounts through dynamic discounting…to the tune of around $2 million missed opportunity per $1 billion of relevant spend.
Clearly paper is a problem! Trying to solve this, many companies have tried to remove paper by making the documents digital through scanning or OCR (optical character recognition) technologies. But the problem with paper is not the paper itself…it’s the disconnected, unverified, unfiltered data that populates the source paper. A PDF image of a paper invoice or digital data taken directly from a paper invoice does nothing to help that. The old maxim holds true here: Garbage in, Garbage Out…and a digitized paper invoice does nothing to clean up the garbage that creates exceptions, it simply gets the garbage in faster.
The only way to solve the root problem with paper is to uproot paper at the source and start with electronic data that can be verified, cleansed, and filtered before it ever reaches Accounts Payable. True e-invoicing (invoices submitted electronically via a business network) enables Smart Invoicing, where invoice exceptions are caught and corrected, contract prices are verified, and the invoice is validated as correct at the point of submission, thus capturing negotiated savings and creating the opportunity for early payment discounting through rapid and accurate approval to pay.
There is much more to write about regarding the benefits of kicking the paper invoice habit, but rather than risk tempting you to print this out to read it, I’ll stop here for now.
Take it from a paperholic, identifying the problems with (and IN) you paper invoices is the first step in solving them.