Invoice dematerialization as a productivity lever

What's the link between dematerialized 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 a company's management.

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Invoices, pre-accounting and financial management

An invoice is an accounting document (in the same way as an expense report or a bank statement) attesting to a cash inflow or outflow. In a company, all monetary and financial flows must be accounted for.

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

For a company to function properly, a number of indicators need to be monitored. This is precisely what financial management is all about . This financial management, when properly monitored, should enable decisions to be taken (such as investing, saving or applying for a loan) in order to generate profits.

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

2020 trends in invoice dematerialization

The barometer on French companies' invoice dematerialization practices sheds some light on the motivations driving companies to dematerialize their invoice management.

In 2020, 76% of companies surveyed were equipped with at least one solution to dematerialize their invoices for tax purposes. That's 15% more than in 2018.

Three reasons have motivated companies to opt for invoice dematerialization:

1. regulatory obligation at 52%, 30 points more than in 2018,
2. the search for productivity gains at 49% (-2 points versus 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.

Beyond the legal aspect, this measure includes numerous advantages for companies:

• saving paper,
• easier archiving of accounting documents
• reduce data entry errors,
• shorten payment times,
• secure sensitive data,
• facilitate dispute resolution,
• or reflect a more modern brand image.

Still according to the barometer, the top 3 benefits of dematerialization include :

• process traceability
• processing reliability,
• regulatory compliance.

Finally, whereas two years ago business benefits were more difficult to grasp than technical ones, the year 2020 marks the entry of two purely business benefits into the top ten:

• shorter time-to-payment,
• improved compliance with payment deadlines.

The challenges of paperless invoicing

The digital transformation of businesses in France, particularly SMEs, is lagging behind its European neighbors. Ranked 15th in terms of digitization, 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 consequence, as they were the cause of one in four bankruptcies. The dematerialization of invoices therefore meets several major challenges:

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

The cost structure of an invoice

As we've just mentioned, in addition to the operational, ecological, security and regulatory challenges, the dematerialized 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 dematerialization, it is possible to save 25 to 50% of the cost of processing a supplier invoice, while speeding up the overall process.

Expenditure on manual processing of supplier invoices includes two weeks' delay (between receipt and payment) and represents €14 per invoice. Added to this are payment delays (around one week) and the cost of renting storage warehouses.

Invisible costs include late payment, failure to meet deadlines (with penalties and disputes), and a 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 encountered by companies, the difficulty of measuring the return on investment of invoice dematerialization tops the list at 59% (followed by resistance to change, the difficulty of measuring the return on investment of invoice dematerialization).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 dematerialization

To measure the ROI of invoice dematerialization, a few figures are all that's needed:

• 2.5 billion invoices are issued in France every year.
  
  
• 5% of a company's sales are 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, they are €7.5 (electronic) versus €13.8 (paper).
  
  
• 75% of companies that dematerialize their invoices report an improvement in customer/supplier relations.
  
  
• And on average, dematerializing invoices saves 30% in time and 70 kg in paper over a one-year period.

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3 tips to ensure the profitability of dematerializing your invoices

In conclusion, here are 3 useful and applicable tips to ensure you're profitable when dematerializing your invoices.

1. Firstly, we recommend that you be methodical in filing your invoices. Whatever your method (chronological, alphabetical, by customer/supplier or other), it must 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 will save you stress (and/or a penalty) 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 areergonomic, easy-to-use solutions that interface with your accounting ecosystem. Start with a free trial in the run-up to your invoicing period, to get a feel for the situation. Most (if not all) software on the market offers this option.
   
   
3. Finally, we advise you to seek the advice of an expert, whether in a firm or directly attached to your accounting department. The advantage of a professional accountant is that he or she is versatile and can provide excellent advice on accounting, finance and tax issues. They'll help you optimize your processes and make savings wherever possible.