Paper payment still reigns, but electronic solutions are gaining favor
by Staff -- Manufacturing Business Technology, 7/1/2005 12:00:00 AM
It takes a company an average of 40 to 45 days—sometimes as long as 120—to receive an invoice payment. That time is spent routing, reviewing, matching to accounts receivables, and approving for payment. It's said that even for electronic B2B transactions, more than 80 percent are paid by paper checks and reconciled with paper invoices and purchase orders (POs).
With the right purchasing and payables software, however, a company can receive and process invoices electronically, automatically matching them against POs before handing them off to a back-end accounts payable or ERP system for payment.
According to a survey by MasterCard and supply chain software vendor Ariba, two out of every three U.S. companies with annual revenues exceeding $500 million now use some form of electronic invoicing presentment and payment (EIPP) technology, and 69 percent of those that don't use EIPP have plans for future deployment.
Sarbanes-Oxley compliance is one driver in EIPP adoption. Additionally, electronic invoicing systems are supposed to reduce paperwork, improve efficiency, lend visibility into spending patterns, deliver faster payment cycles, and reduce maverick buying.
E-purchasing and payables vendor PurchasingNet recently released its ePayables software. Tim McEneny, CEO, says PurchasingNet is "the only provider that offers a complete solution, linking a company's procurement, payables, and treasury goals."
With ePayables, a company can receive, process, and automatically match invoices against POs before handing them off for payment. The software includes the Supplier Invoice Portal, which enables even small suppliers to submit electronic invoices. While PurchasingNet is marketing ePayables to customers that use its eProcurement suite, the system can operate stand-alone and link to most ERP systems, says McEneny.
Calabasas, Calif.-based Countrywide Financial Corp., an early ePayables adopter, says it has reduced the number of people handling invoices in accounts payable from 12 to three. Two other early users, General Mills and Black & Decker, report shortened payment cycles, reduced invoicing errors, improved credit ratings, and savings via early-payment discounts. n
