Why is Your Business Facing Challenges in Adopting Electronic Invoicing?

Why is Your Business Facing Challenges in Adopting Electronic Invoicing?

discover | Thursday - 05 / 12 / 2024 - 8:05 am

While the global electronic invoicing market is experiencing continuous growth, and Arab business owners are becoming aware of the benefits of eliminating paper invoices, statistics indicate that our reliance on them exceeds 61% of total business transactions! This issue has prompted us to think about the potential reasons that make institutions and companies hesitant to adopt electronic invoicing. We found the following:

 

The Misconception that Electronic Invoicing is Complicated:

– Open your text editing software.

– Switch between tabs in accounting programs to gather data, while simultaneously creating invoice statements and checking whether your clients have paid or not.

– Convert that data into a PDF file.

– Write an email and attach the file.

How much time do such tasks take from you? A lot, right? (Especially if you have to issue invoices regularly. So how can we then say that paper invoicing is easy?)

A study on payments and financial transfers has proven that delayed payments are a common problem for suppliers who use paper invoices. Contrary to popular belief, paper invoices are extremely cumbersome and prone to human error, leading to delayed payments.

On the other hand, electronic invoices can be sent, reviewed, and approved relatively quickly, resulting in faster payments and fewer errors. This is due to the integration of all processes into a single platform for creating purchase orders, accessing customer lists, tracking payments, etc.

Since electronic invoices are entirely digital files, you can also allow the system to automate specific tasks (e.g., sending reminders and comparisons).

These benefits far outweigh the supposed complexity of electronic invoices.

The Difficulty of Fully Adopting Electronic Invoicing:

To deliver a paper invoice, all you need to do is send a payment request (either by email or traditional mail). In contrast, sending an electronic invoice requires both parties to have compatible Enterprise Resource Planning (ERP) systems. The problem is that some small and medium-sized enterprises do not even have an ERP system, while others cannot afford to upgrade their accounting systems to accommodate electronic invoicing. In fact, the solution is simpler than you might think: using cloud-based ERP systems. Electronic invoices are prepared in the Universal Business Language (UBL). This computer language allows you to send invoice data from your accounting system to your clients’ systems without any issues; this ensures that clients always receive the correct payment details (account numbers and amounts), and that the data matches what is in purchase orders, delivery notes, and more.

Considering Electronic Invoicing as an ‘Added Cost’:

Businesses used to send paper invoices quickly and at little cost through postal or email services. But what happens when you send hundreds or even thousands of paper invoices annually? Of course, this means incurring significant losses, right?

While investing in an Enterprise Resource Planning (ERP) system might seem costly initially, it will save you substantial amounts in the long run. Not to mention that the speed of payment with electronic invoices enhances your relationship with customers.

When you consider these factors, adopting electronic invoicing in your organization becomes a truly wise decision.

Considering electronic invoicing to be unsafe!

Yes, one of our clients shared their concerns about this. They probably haven’t heard about cloud-based ERP systems. For instance, Logix AI only requires a computer or tablet with an internet connection. This allows you to securely store your data in the cloud, making it accessible anytime, anywhere. So, even if your computer is lost or damaged, your data remains safe.

Logix AI offers numerous advantages, including automatic updates to ensure your electronic invoicing system is always running on the latest version. This enhances compatibility and performance. Additionally, it strengthens security with features like encryption and access controls to protect sensitive invoice data and ensure compliance with data protection regulations.

But the most significant advantage is:

Logix AI is equipped with intelligent algorithms. For example, the system will send you a notification if your customer adds an incorrect IBAN number to a purchase invoice.

Common Challenges in Adopting Electronic Invoicing:

While electronic invoicing can significantly enhance efficiency and compliance, it requires careful attention to common pitfalls.

Inaccurate Invoice Data:

This often occurs due to data entry errors or insufficient validation mechanisms within the electronic invoicing system. Fortunately, you won’t face this issue with Logix AI system, as its data extraction feature (which captures invoice details directly from documents and inputs them into the electronic invoicing system) ensures more accurate and consistent data entry.

Invoice Discrepancies with Purchase Orders:

There are numerous reasons why an electronic invoice might not align with a purchase order (PO), including price discrepancies, mismatched quantities, incorrect units of measure, and erroneous product descriptions or part numbers.

Logix AI system ensures that documents match in subsequent stages. This guarantees that your electronic invoices align with each supplier’s invoice. Two-way and three-way matching ensures that your organization only pays for the goods and services it has requested and received.

Difficulty in Persuading Suppliers and Customers:

Persuading suppliers to use an electronic invoicing system can be challenging, especially for smaller suppliers who may not have a system that can be integrated. Many of these smaller suppliers may not have the resources to adopt an entirely new electronic invoicing system, making it easier for them to continue using handwritten invoices or PDFs.

The onus is on you to provide a solution: Try explaining to suppliers how they can benefit from electronic invoicing, such as receiving payments on time and issuing invoices more quickly.

Electronic Invoicing is The Future of Payments:

Despite the aforementioned challenges, 39% of companies have already adopted electronic invoices and started reaping the benefits. Compared to paper invoices, PDF files, and emails, electronic invoicing is a faster and more secure way to exchange invoices with other entities. By transitioning to electronic invoicing, buyers will no longer need to manually enter or scan invoices into their systems. This, in turn, will reduce the number of manual entry errors and make invoice approval and payment faster. Even in terms of cost, electronic invoicing remains more efficient, as each paper invoice costs around $30, and the situation is not much different for PDF invoices sent via email, which cost $27. In contrast, an electronic invoice costs no more than $10. Security is another strong point for electronic invoicing. Companies can conduct instant transactions with other companies on the same electronic invoicing system without worrying about inform