E-invoicing and cash flow: How e-invoicing can revitalize and optimize your AR collections

e invoicing and cash flow
Cash flow - it impacts almost every aspect of your business. Yet, in the AR department, it can feel as if ensuring and maintaining a healthy cash flow is very much out of your hands. Except, it doesn't have to be. What if your AR teams could speed up the collections process, improve client communication, reduce Days Sales Outstanding (DSO), and boost cash flow in one fell swoop?

Perhaps your knee-jerk reaction is, 'Sounds great, but our AR team is swamped as-is.'

To that, we say - why not free up their capacity while you're at it? How? Have you heard of e-invoicing?

What is e-invoicing?

E-invoicing isn't just about switching from manual, paper-based invoices to digital. Far from it, in fact. An e-invoice is a document that is transmitted, in a data-processable format, straight from your IT system (usually your ERP) to a corresponding system at your customer's end.

Ways e-invoicing can revitalise and optimise your AR collections

At first glance, this may seem more complex than simply attaching a PDF to an email. So, why are all the more businesses switching to e-invoicing, and what does it have to do with cash flow? Let's take a look.

Automated invoice and statement distribution

With the right e-invoicing software, AR teams can automate invoice and statement distribution with zero manual effort from their side. This significantly frees up AR teams to focus on other business-critical tasks, like focusing on late accounts that genuinely require some intentional intervention. With quicker invoice distribution comes lower DSO and faster payments as clients can process your invoices more quickly on their side, improving cash flow.

Speaking of DSO - how does a high DSO impact cash flow? A high DSO is often an indicator that there's a kink in the process. Perhaps customers are struggling to make payments, customer service is declining or payment options aren't customer-friendly. The lower the DSO is, the quicker a company converts its credit sales into cash.

Ability to trace data and invoices

Having a centralized view is critical for tracking down incoming payments. With electronic invoicing, businesses can view the entire audit trail and even see when invoices have been received and opened. Additionally, some e-invoicing software allows users to automatically link invoices with supporting documentation directly on the e-invoicing platform. This enables all parties to have access to all relevant documentation at all times, reducing the need for documentation-related queries and consequent payment delays.

E-invoicing platforms can leverage the data underlying documents sent out to provide data-driven insights on sales, collections, trends, risks, and outlying activity. This reassurance gives much-needed stability when it comes to predicting cash flow, allowing AR teams to prep and intercede when necessary (without feeling as if they're running against the clock).

Improve customer relationships

As important as cash flow and getting paid on time is, they shouldn't have to come at the expense of the relationships and trust you've built with clients. Fortunately, e-invoicing significantly enhances the collection experience for customers. Not only is the documentation you send out to your clients easier for them to navigate and interact with, but certain e-invoicing platforms also facilitate comprehensive and automated payment allocation and remittance processes, allowing suppliers and customers to be rest assured of error-free and transparent invoicing.

How to make the transition to electronic invoicing

Transitioning from manual invoicing to e-invoicing shouldn't have to come at the cost of your capacity or business operations. Fortunately, you don't need a full-stack IT team to facilitate direct integration into your ERP; you just need the right tool - or one application to manage all your company's accounts, communications, deliveries, interactions, payments, receipts, and reporting.

Ready to experience modern billing and AR collections process firsthand?
Visit the System1A website and request a demo today.

Request a demo

More Insights

The benefits of automated cash flow forecasting

A Finance Team's Guide To Account Payable Automation

Three things businesses need to know about their EDI capability

What Your AR Team Wish You Knew

The Digital Advantage: Unveiling the Power of ERP Systems

Fortifying Financial Integrity: Defending Against Invoice Fraud In The Digital Age

AR Automation in the Era of Remote Work: Enabling Seamless Operations in Distributed Workforces

The Link Between E-invoicing and Customer Experience (CX)

E-invoicing and risk mitigation: Safeguarding data in a growing threat landscape

Switching To AR Automation

The Psychological Impact of AR Automation on Work Stress and Burnout

Global e-invoicing requirements: Will SA follow suit?

E-invoicing: Five ways your PDFs are costing you money

How e-invoicing solves the top 3 challenges in AR

The future is e-invoicing: The critical role of e-invoicing in today's marketplace