Invoices, one of your most important transactional documents
What are transactional documents?
Transactional documents are a company’s most important because they drive business. Transactional documents, like invoices, financial statements, order confirmations, proof of delivery documents, are one-to-one communications containing information on a completed transaction or process between a company and its customers.
They are also the only kind of communication that customers will actively miss if they don’t receive them. As a customer, imagine ordering something online and not receiving an order confirmation or an invoice, one expects these documents to arrive.
As anticipated events these documents guarantee a certain amount of attention that your company can leverage by including relevant promotions and information. This isn’t even viewed negatively by customers, quite the contrary. According to an InfoTrends survey, customers prefer to receive marketing messages contained within a bill or statement over all other channels, because they “trust these sources, and it makes the marketing messages seem more relevant and important.” So in every transactional communication, invoice or shipping notification a company sends out there lies an opportunity to reach your customer in the most effective and non-intrusive way possible.
The important thing then becomes better understanding these documents to be able to get the most out of them. Here we will focus on one transactional document, the invoice, what it is, its challenges and what can be done to get the most out of them.
Different ways to optimize different types of invoices
The information included on an invoice depends on what type of the invoice it is. We are all familiar with the standard invoice, but it’s not the only kind out there. You can also find pro forma invoices that just show the buyer the amounts they’ll have to pay when the work is complete, progress invoices which are sent while a project is ongoing to maintain cash flow, recurring invoices sent by businesses supplying ongoing services (e.g. utility bills), and other types such as credit notes, payment reminders, statements, self-billing invoices, timesheet invoices, and commercial invoices.
Each kind of invoice has varying degrees of automation. Electronic invoices don’t only benefit the issuer but also makes it easier for the recipient to process, and ultimately pay the invoice. This brings us to the next crucial point for any business: getting paid!
Getting paid is the goal of an invoice
Creating an invoice is one thing, but getting paid is another story altogether. 400 billion invoices are issued annually (paper and electronic )and it’s easy to wonder how many of these invoices are paid on time, or at all.
Atradius research reveals that nearly half of B2B invoices are at one point, overdue. Why does this happen? A lot of the reasons mentioned in the research are, in part, outside of a company’s immediate control. Things like insufficient funds on the part of the recipient, disputes, complex payment procedures, and banking systems inefficiencies. But remarkably a payment is quite often delayed because of incorrect information on the invoice, up to 10-20% of them depending on the region. Even worse is in 7 to 15% of the cases the invoice is sent to the wrong person!
Processing and issuing invoices: a real challenge
Let’s assume for a moment that none of the problems above exist, the invoice is correct and the recipient has every intention to pay, they even want to pay early in order to benefit from possible discounts. Simple, right? Well, it turns out that many large recipients are unable to process paper invoices faster than within 23-25 days, with each inbound invoice costing them €17.60.
Manual process and paper still plague more than 90% of all invoices worldwide and are a major source of inefficiency for businesses. Expensive, time-consuming, error-prone, are all terms used when talking about invoicing. The process is in desperate need of a revamp, given its importance to the business.
There is clearly room for improvement both in the process of issuing and receiving invoices. A big step towards fixing some issues is to realize that paper and manual processes need to be addressed.
The aim of digital and automated invoices
There is a lot of pressure to get the invoice right and reduce associated costs. This is why invoices are the most common entry point for digitization and automation in a business. When moving towards digitization and automation companies are trying to:
- Increase efficiency and reduce costs – Paper-based processes are slow and expensive and get more inefficient with higher invoice volumes. As a matter of fact, a paper invoice can cost anywhere between $11.5USD and $30USD to produce!
- Get the basics right – Accurate information with timely and confirmed delivery to the right person.
- Respond to customers preferences– More than 70 % of customers prefer receiving communications via email (MarketingSherpa). Even more so, customers are open to having relevant marketing messages in their transactional communications instead of paying a fee to receive paper copies of their bills and statements (InfoTrends).
- Respond to partner demands and government regulations –Increasingly, governments are supporting the transition to digital from paper-based systems, impacting both its citizens and the business they work with, some 45-65% of all businesses in their country.
Your invoices are one of most important transactional documents. The best time to go digital is now. Objectif Lune can help you in your digital transformation. Contact us to learn more.