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Three trends driving the adoption of EIPP platforms

EIPP platforms are rapidly becoming the de facto means of managing invoicing and payments for mid- to upper-midsized companies (up to $1 billion in revenue). The expectations that have come with consumer-side digitization are certainly driving this shift, as business-to-business (B2B) customers demand the same convenience and speed they see from consumer-focused apps and processes.

But other key trends that owe to internal company expectations are pushing the advance of EIPP platforms, too. These include:

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Trend #1: Finance is central to customer experience—but it’s coming up short

Organizational leaders expect Finance to operate as a front-office function, delivering memorable, positive customer experiences (CX). But some financial functions do the opposite: They’re CX bottlenecks.

When we surveyed 400 business and finance leaders on how to build better customer relationships, the results illuminated the state of customer relationships and the changing role of Finance in delivering great CX. When asked to identify the stages where customers experience frustration, 43% of company leaders called out payment collection cycles as a key pain point.

What causes these issues? A lack of digitization in customer-facing finance functions, like accounts receivable (AR). How to eliminate them and elevate CX? With EIPP platforms.

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Another cause of customer frustration in collection cycles? Our research found that 90% of AR teams surveyed admitted contacting customers for additional information after receiving escalated billing issues. That’s a pretty in-your-face reason for customer agitation, as it makes an AR process look inefficient (because it is!).

Respondents cited the fact for this being they regularly had to deal with invoicing issues their current payment processing systems couldn’t manage. Plus, AR teams are often working with systems that don’t centralize invoice data or help AR cooperate with other stakeholders like Sales and Order Management. This frustrates not just customers but the AR professionals who are trying to resolve issues quickly. 

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Trend #2: AR is severely backlogged, and costs are spiraling

Businesses are always searching for ways to run their departments cost-effectively. Versapay research has shown that AR is lagging on this front, resulting in extended backlogs that escalate operational costs.

It’s unsettling to find that 39% of AR departments are weeks or even months behind, and 24% have admitted that they will never be able to catch up. Consider that an AR department processes 2,433 invoices per month, on average. So it’s no wonder that for mid- to upper-midsized companies, backlogs contribute enormously to payment delays—amounting to nearly $1 million monthly.

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But wait, it gets worse—that is, for upper-midsized companies with revenues above $250 million yearly: AR delays and poor invoice processing are costing them $4.5M every month.

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A direct cause for this backlog is that many AR teams spend too much time chasing paper or resolving easily avoidable disputes, such as incorrect prices or improperly applied discounts. This leaves little or no time for them to address value-added tasks that can improve cash flow and efficiency.

Fortunately, EIPP platforms can help solve this problem. By automating invoice creation, delivery, and payment reminders, EIPP digital workflows can significantly reduce disputes and free up AR teams to focus on more complex and strategically important issues. This not only leads to a better customer experience but also makes a significant difference to the company's bottom line—and the morale of an accounts receivable staff.

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Trend #3: Companies expect Finance to offer strategic input

Today, company leaders expect CFOs to provide more than just running reports, according to McKinsey & Company: They’re looking for them to supply strategic business input.

The digital transformation that EIPP platforms facilitate is playing a significant role in pushing companies towards this essential goal of transforming Finance into a strategic advisor who can mine data-driven insights. So as you might guess, the issues that weigh most heavily on CFOs’ minds these days revolve around data, with data transparency and reconciliation holding the top spots among those challenges.

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Data is now incredibly valuable: More Finance processes are being designed from the ground up around data-driven decision-making, which depends on having tools in hand to effectively capture and analyze that data in real time.

CFOs need to constantly track detailed metrics to understand differences in performance and identify the root cause of any underperformance. However, this data is often siloed among myriad outdated systems, making it unavailable for mining valuable insights.

By centralizing invoicing and payments data, an EIPP platform can be a "single source of truth” supporting CFO decision-making. That’s a standout attraction of EIPP for CFOs in their quest for a bigger voice at the leadership table.

🎥 Here’s what Russell Lester, Versapay’s CFO, has to say about measuring accounts receivable performance, taking stock of your current situation, and improving your execution:

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Why businesses need to transform invoicing processes

Account receivable teams are absolutely key to driving sustainable cash flow for any enterprise. And the invoicing and payment acceptance processes they use are integral to operational efficiency. If those processes are problematic, then what takes the hit? The bottom line.

Moreover, the efficiency and quality of the AR process is crucial to maintaining a positive customer experience, since it directly impacts the quality of the payment process. Prompt and accurate invoicing, timely follow-up on overdue payments, and clear communication help build trust and credibility with customers, driving better CX and higher satisfaction levels.

Invoicing is the critical AR function that must evolve and get optimized in order to accelerate cash flow, improve operational efficiencies, and enhance overall CX. Yet are optimized and efficient invoicing processes even possible with manual, paper- or email-dependent methods?

Here are key areas where outmoded invoicing processes create problems for an enterprise.

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Customer dissatisfaction causes customer attrition

Customers will inevitably get frustrated with non-personalized, one-way communication, the lack of online access to invoices and real-time account status, and the headaches of paper or PDF invoice intake. That’s particularly true if they’ve A) digitized their own payables processes, and B) have enjoyed working with modernized AR processes implemented by other vendors.

Why have those other vendors decided to use EIPP? By making invoice review and payment a self-service process for the buyer, they’ve created greater convenience for those buyers while reducing their own headaches and workload.

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17 common invoicing challenges

When you take a closer look at manual invoicing, you’ll find a lot of issues and costs. Here’s how EIPP platforms solve them.

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EIPP and invoice-to-cash optimization

The invoice-to-cash (I2C) process extends from the moment an invoice is created until a customer’s payment is received, and directly affects revenue generation, cash flow, customer satisfaction, and operational efficiency at practically every business. Electronic invoice presentment and payment solutions can automate a medley of what would otherwise be time-devouring chores for AR staff.

With EIPP and invoice-to-cash optimization, companies can reduce costs and errors, enhance customer retention, improve cash flow, boost security, precisely manage inventory and much more.

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How EIPP solutions automate the invoice-to-cash process

EIPP solutions can digitize, automate and accelerate a wide range of tasks that are part of the invoice-to-cash process, taking those burdens off AR staff and polishing the process until it practically gleams with efficiency and accuracy:

• Electronic invoicing helps AR teams encourage customers to pay quickly and facilitate follow-up and recordkeeping.

• Automated email reminders go out on time to customers about due dates and late fees, sparing staffers the effort of manually prioritizing and crafting dunning letters.

• Automate the setup of recurring invoices for regular customers or subscriptions.

• Automate the setup of automatic payments for customers who opt into them.

• Invoice scheduling functions ensure they’re sent at the best time for each customer.

• Real-time tracking of invoice status and payment confirmation.

• Streamlined payment processing as customers pay in a few clicks for faster remittance and simpler processing.

• Integration with ERP systems, accounting software and payment gateways reduces the need to manually transfer data.

• Two-way customer communication for resolving disputes via online portals.

• AI-powered cash application automation instantly applies incoming payments to open invoices.

• Data analytics functions monitor and measure performance to enhance decision-making and optimize the invoice-to-cash cycle.

By automating a raft of invoice-to-cash functions, EIPP solutions help AR teams create a robust, expedited I2C process that keeps everyone happy—especially customers.

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The (many!) benefits of EIPP platforms for efficient invoice processing

A slow and labor-intensive invoicing process is, to be honest, an increasingly heavy drag on a growing business. As we’ve seen, it impedes cash flow, drives up DSO and can even damage relationships with customers.

Although you can't control your customers' internal payment processes, minimizing invoicing and payment issues on your end can ensure your AR team and their AP team share a faster, smoother, less stress-inducing experience.

By deploying an EIPP platform for efficient invoice processing, an AR team can realize a long list of sizable and relatively immediate benefits. Think of electronic invoice presentment and payment as a true panacea, a remedy for the root causes behind all the aches and pains afflicting your enterprise.

Here are eight ways it does that: 

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1. EIPP accelerates cash flow and helps reduce DSO

With electronic invoice presentment and payment, automation enables faster, more accurate invoice creation and distribution, so there are fewer disputes. Plus, digital payment acceptance enhances payment speed, as customers find it easier to make payments.

By cutting down the backlog of overdue invoices, both via automation and by letting your accounts receivable teams devote more focus to them, EIPP platforms help reduce DSO—and by that, we mean the reductions can be extraordinary.

When we surveyed 300 CFOs, they agreed that having to manually process invoices compounds processing delays and prevents skilled AR teams from focusing on strategic collections efforts. These delays also account for nearly $4 million in outstanding invoices monthly (talk about a double whammy!).

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2. EIPP automation reduces invoice errors

Since EIPP solutions automate the invoicing process, it diminishes the risk of human errors. There’s no need for manual data entry, and the system can perform automatic validation checks to ensure accuracy. This helps to minimize mistakes, save time and improve the overall quality of the invoicing process.

How big a concern is human error? It’s the leading cause of invoice disputes, outstripping issues with the goods or services themselves, communication or breakdowns in customer relationships.

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3. EIPP increases efficiencies in invoicing

Automating invoicing with EIPP software makes for far more efficient workflows, because teams can jettison ungainly manual processes and now leverage the labor-saving abilities of automation.

That survey we just quoted? It also found that AR teams using collaborative EIPP technology could potentially avoid manually resolving almost $1.7 million worth of invoices monthly. So by reducing unnecessary, unpleasant tasks, an EIPP solutions adopter could automatically bring in 44% more cash per month.

If that’s not a compelling argument for EIPP, what is?

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4. EIPP drives cost savings in accounts receivable

EIPP also drives a tantalizing variety of cost savings. A big one? The staff time you’ll conserve when rote, manual tasks are automated or—in the case of dispute management necessitated after human errors – even eliminated.

According to that same study, today, 54% of AR teams spend at least 25% of their time resolving invoice disputes. Picture the potential cost savings and value you’ll realize when that time gets reallocated toward more strategic endeavors. Not to mention the savings on paper, ink, and postage from abandoning paper invoices. Or the cost of Band-Aids for paper cuts.

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5. EIPP facilitates faster dispute resolution and easier short payments

Better communication and collaborative information-sharing result in streamlined dispute resolution. Consider this: 82% of executives say their company has lost work due to miscommunication during the payment process. So the two-way communication enabled by EIPP platforms goes a long way toward avoiding friction.

Electronic invoice presentment and payment also make it easier to accept short payments for on-time payments—another convenience for AR and the customer.

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6. EIPP solutions accelerate cash application

Faster cash application happens when customers are able to make digital payments directly from invoices posted to a customer-facing online payment portal. Automating this can raise the efficiency of cash application by up to 75%, accelerating cash flow.

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7. EIPP supports growth

If you’re a growing enterprise, you’re probably sending out more invoices to accompany that growth. Manual processes limit your ability to scale invoicing volume—not least by making it painfully expensive to process more and more invoices, reminders, payments, et al.

The average midsize business sends out over 2,000 invoices per month. How much error, waste and dely can result if an AR team tries to scale up to–or above–that volume using manual processing?

EIPP platforms scale to meet the need without the costs and hassles of throwing more AR staffers into the fray.

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8. EIPP improves staff productivity, satisfaction and retention

And speaking of your AR staff: Less manual effort and drudgery results in them turning to more engaging tasks, driving greater employee engagement and productivity, which helps with retention. Considering the cost of just recruiting a new hire starts around $4,700 (and there are plenty of other/hidden costs, too), it’s good to retain good people.

Here’s just one example of how AR staff time is spent on matters that EIPP could automatically mitigate: Upper-midsized companies spend between $210 (25% of time spent resolving disputes) to $838 (100% of time spent resolving disputes) weekly on manual dispute resolution processes that are avoidable with EIPP.

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How EIPP improves customer experience

Let’s look at the customer AP side of the invoicing equation:

• One recent study uncovered how nearly 10% of all vendor invoices are duplicates. Some of them never get caught, either, which can add up to millions of dollars in wasted spend.

• If your customer’s AP team hasn’t automated yet, a jaw-dropping 84% of an AP specialist’s time gets spent on manual tasks like entering invoice data, running down approvals, rectifying errors and answering calls and emails about payment status.

• 68% of AP staffers were still manually keystroking invoice data into their ERP or accounting systems.

• Nearly half of AP teams spend over six hours per month following up on vendor/supplier inquiries about payment status.

For all these reasons and more, two-thirds of finance professionals expect their AP departments to be totally automated by 2025. Until then, many AP teams are still wrestling with their own manual processes. If your AR invoicing process is error-laden and paper-based, your customers’ AP teams are being forced to go through the same frustrating and maybe fractious process of chasing paper and resolving disputes on their side.

And if they’ve already automated? They’re not inclined to backslide and simply shrug off the intake of paper or email invoices—not when they’ve invested in the speed and efficiency of digital systems.

That’s why it’s smart to implement an EIPP platform because it creates convenience, cost economies and even compliance benefits for your customers across their AP process.

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Where and how EIPP benefits customer AP

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Here’s a real-world example of how EIPP helps improve the invoicing and collection process for one organization by assuring timely payments.

How EIPP supports governance, risk and compliance management

There’s another way EIPP platforms can improve customer experiences: By helping them manage the melee of multiplying governance, risk, and compliance (GRC) directives.

Playing by the rules, especially financial ones, is more critical and complicated than ever for businesses. The ability to send electronic invoices is, in fact, no longer an option in over 100 countries: It’s a mandate.

That’s one dimension of how EIPP platforms can help businesses meet GRC demands. Others include:

• Enhancing security by applying encryption, authentication, and fraud prevention measures.

• Improving compliance with tax, legal, and regulatory requirements by employing standardized data and documentation formats.

• Protecting the organization during investigations by securely storing comprehensive audit trails of all invoicing and payment activities and documentation, including communications.

• Increasing internal transparency and accountability by giving company GRC teams access to these records and real-time visibility and reporting of current processes.

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EIPP integration with ERP systems

Integrating electronic invoice presentment and payment (EIPP) with an enterprise resource planning (ERP) system is akin to the old chocolate-meets-peanut-butter cliché. Each provides multiple benefits, but together? They’ll streamline and automate invoicing and payments and take cost savings, efficiency and process speed to a new plateau.

What are the oh-so-sweet advantages of EIPP integration with ERP systems? Here are nine of them:

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1. Seamless data integration

Integrating EIPP with an ERP system can ensure seamless data integration between the two platforms. This eliminates the need for manual data entry. This means that data entry errors are minimized, and time is saved by precluding redundant data entry.

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2. Enhanced efficiency

Integration allows the automation of previously manual tasks. When an invoice is created and approved in the EIPP platform, it can be synchronized automatically with the ERP system (and vice versa), updating the relevant financial records. This eliminates the need for manual reconciliation of data between systems, which speeds up the invoice and payment cycle.

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3. Accelerating payments via a portal

An EIPP platform that uses a collaborative AR payment portal helps accelerate your payment cycle by giving customers online access to invoice statuses and multiple payment options, while your AR team can easily communicate with them to resolve invoice issues. Beyond this, EIPP-to-ERP integration means the latter can instantly leverage invoicing and payment data from the portal to carry out reconciliations, generate real-time accounting reports and more.

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4. Enhanced accuracy

Integration ensures the accuracy of financial data, as it’s automatically transferred between systems so there’s reduced risk of data entry errors or discrepancies. Accurate and up-to-date financial information can help you make better-informed decisions and maintain accurate financial records.

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5. Cost savings

EIPP integration with ERP systems can return notable cost savings. Invoice and payment automation can allow reductions in overheads tied to processing, data entry and paper-based systems. Additionally, eliminating manual tasks leads to faster processing times, easing the need for extra staff or resources.

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6. Real-time visibility

Integration furnishes real-time visibility into the invoice and payment processes, so an organization can have a consolidated view of financial transactions, outstanding payments and cash flow. This empowers better financial planning and forecasting, as well as improved decision-making.

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7. Enhanced regulatory compliance

EIPP integration with ERP systems bolsters regulatory compliance, since EIPP platforms often have built-in compliance features, such as secure data handling, encryption and audit trails. 

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8. Stronger security

A good EIPP platform will minimize exposure to vulnerabilities by ensuring critical data is securely transmitted between it and the ERP. Better still, the EIPP platform may offer rigorous authentication functionality to limit and monitor access. 

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9. Scalability and flexibility

As your business grows or evolves, so does the data being exchanged between your payment processing system and your ERP. Top EIPP solutions let you adapt and customize your API calls based on changing needs.

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How to choose the right EIPP provider and platform

There are more than a few benchmarks to bear in mind when you’re going through the process of choosing the right EIPP provider. These handy checklists can help!

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Product benchmarks

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Payment portal benchmarks

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Provider benchmarks

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Looking to transform your invoicing and payments processes with an electronic invoice presentment and payment solution? Book a free demo with one of our experts to see how Versapay can help.