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Three Steps to a Successful Transition to Paperless Invoicing

Stephanie Dula 23 Mar 2016

In order to enable organizations to successfully select and implement a paperless invoicing in their AP department and beyond, the following steps are recommended for companies to manage change before and during the transition.

1. Outline the most suitable invoice management process.
This entails examining the current internal invoice processing structure. Organizations should take into account the number of ERPs they are using, the number of invoices they receive on a monthly basis, the type and complexity of invoices they receive, the number and type of locations to which these invoices are sent, and the current amount of touches (or people involved) these invoices require to process. The organization must apply these metrics to several different scenarios to measure their potential success.

For example, a large organization that processes thousands of invoices a month in many different locations may not benefit from implementing internal mailrooms in each location. It will likely be better served by centralizing all invoice receipt processes in one location for mailroom processing. The main question this organization must answer is whether the implementation of an internal mailroom operation is more or less cost-effective than outsourcing all invoice management to a third-party document management provider.

If the organization is smaller and its plan involves using front-end imaging systems in each AP department, it is important to evaluate the cost and labor benefits or drawbacks of having the staff process their own invoices. It also important to make sure that the software will be accessible to the end users, that is intuitive and easy to learn, and that the provider offers training where necessary.

2. Whatever the result of the cost and structural analysis, make sure that this plan will be consistently maintained throughout the organization. This means establishing controls that prevent employees from bypassing certain protocols for a special invoice. For example, if a company receives a large number of invoices that must be processed and paid more quickly than the typical supplier invoice, it should ensure that a method is implemented to support this process flow and that employees will not be tempted to bypass the rules. In this case, it may benefit the company to implement an inexpensive front-end imaging solution for quick processing of certain invoices, while shifting the majority of the regular invoice volume to an internal or external mailroom processing center.

In another example, a company may have seasonal influxes of invoices. The organization should ensure that the paperless invoice strategy can support the increase in demand. Many times, it is not efficient or realistic to expect internal mailrooms to be able to support the increase of work with the same productivity; in this case, employing a third-party provider will bring the advantages of a variable labor model. Many providers have enough staff to handle increases in volume; by contrast, in an internal mailroom it is costly to temporarily hire labor to handle short-term increases in volume. In addition, many contracts involve a SLA that will ensure that the provider meets their deadlines and process commitments, no matter the volume.

3. Take a flexible and firm approach to supplier onboarding. It is rarely viable for an organization to decide to get rid of paper invoices and immediately demand their suppliers comply by sending only EDI or email-based invoices. This is especially difficult for small companies with limited leverage over their larger suppliers, or for any company that procures a diverse range of goods, such as an automotive parts reseller that works frequently with towing companies. In many cases, suppliers will not comply because they do not depend on the buying organization’s business, or because the method does not align with their business structure, strategies, or culture.

It is important that organization properly evaluates its supplier base before finalizing a new paperless invoice process so as to not lose any suppliers. For example, an organization may receive the majority of its invoices through the mail, and only a small percentage through email and/or EDI. The most realistic option would be to give the suppliers a new mail-to address, which would send the invoices to an internal or external centralized mailroom. The organization can migrate those suppliers to email or electronic invoices over time. In another scenario, the company could have progressive suppliers that primarily send invoices through email. Those invoices could simply be routed to a new email which connects them to a data capture system. The remaining paper invoices can be sent to a small mailroom location, or to a few AP departments using inexpensive data capture tools.

There will still be some challenges in this migration process, stemming both from general stubbornness and when suppliers are unclear of new policies. For example, if a supplier is directed to send invoices to a new P.O. box, it may also send unrelated mail to that same address, such as a notification of an organizational change it feels is relevant to the buyer. In this case, the notification will likely get lost in the shuffle, so suppliers must be directed to send this type of mail to a different place. Outsourced providers often help with driving discipline in the supplier community, such as with an automatic rejection policy for invoices that are not completed properly.

PayStream’s benchmarking research has found that most suppliers soon realize the benefits of faster payments that come from correct and compliant invoices, and they will adjust their methods accordingly. When companies are flexible, encouraging, and consistent with their new policies, supplier compliance consistently increases, and each year brings organizations closer to a paperless, streamlined invoice process.

For more information on how to achieve a successful transition to paperless invoicing, download the 2016 Data Capture and Mailrooms Technology Insight Report.

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