Invoice payment times can be significantly improved when the process is understood and followed by all stakeholders, buyers and suppliers alike. Major challenges remain, in particular regarding the visibility of these deadlines, the possibility of preventing pitfalls and the simplification of the P2P process for the supplier, so that it can be paid on time.
Issues related to payment deadlines
Understand delays and be able to anticipate and correct them
With regard to payment terms, visibility of invoices is a major issue. Ideally, finance teams would like to be able to:
– Know in real time the payment deadlines.
-Identify all potential deviations in order to be able to deal with them in advance and protect against them: for example, identify delays and their causes.
– Visualize the steps and be able to properly segment the process.
Succeed in measuring each step with precise indicators (and be able to zoom in on a supplier in real time, see its habits and history), identify exceptions.
– Extract data in real time while monitoring the completeness of a transaction.
Some process mining tools make it possible to measure the end-to-end invoicing flow and extract data in real time, with a very detailed level of information. However, it is difficult for these tools to establish standards or to group all the steps within a single, more global and more “macro” step.
Troubleshoot receipt of invoices
The correct receipt of invoices, in the right place, is a big issue. It is important to identify, in the event of a problem, whether it comes from the supplier or the buyer, for example to identify the source of the invoice: Was it sent directly by email by the supplier or was it sent by the buyer who scanned it and then sent it?
Suppliers are sometimes the cause of late payments. For example, if they send an invoice too late, or backdate an invoice: this creates a lag, this delay not allowing them to be paid on time. Worse: the case of the invoice which is both backdated and sent after due date, for which payment is already late when it is received.
The problem of invoices without an order is also another cause of late payment, it can come from both buyers and suppliers.
A few ways to streamline payment deadlines
– Educate buyers on the impact of their practices
The training of buyers is essential: it is necessary to make them understand the impact of receiving invoices, to make them aware of the fragility of suppliers and what the receipt of the invoice entails, as well as all the problems generated by poor reception. We can organize regular exchanges with major buyers, go around the entities of a group, in order to transmit good practices.
We can also communicate to Purchasing the list of suppliers who regularly send their invoices late, so that they can raise their awareness and monitor them closely, because the group remains responsible for the fluidity of payment to its suppliers.
Some companies choose to penalize breaches with internal posting of all disputed, late, or missing-receipt invoices. And some CSPs choose to re-invoice financial departments for the cost of invoices without an order.
At the same time, good practices are rewarded with, for example, the introduction of bonuses depending on the payment period for rigorous buyers.
-Facilitate certain purchases that take up too much time
The process of transforming a purchase order directly into an invoice can be extremely useful in simplifying the process. Or, the prepayment. Some companies set up the automatic receipt of certain invoices, up to a certain amount.
Shortening the process and lightening the steps for small purchases also makes it possible to streamline the entire ecosystem:
The generation of a virtual bank card also makes it possible to simplify these small purchases. Many invoices are added to an already time-consuming processing time, while these purchases made are neither strategic nor expensive (for example a purchase at the bakery, small purchases of general services, etc.). With this card system virtual, the purchase is validated and made more quickly and it is up to the buyer to justify his transaction in a second time by scanning a receipt. In addition, this avoids entering a supplier in a database that does not need to be referenced. The logic is to simplify the purchase immediately, while respecting the process of justifying this purchase.
Finally, a Marketplace system also saves time, without loss of information.
– Support suppliers, key players in fluidification
As with buyers, support for suppliers is necessary in order to make them understand all the stakes of the process and all the benefits that good practices can bring.
First of all, by informing them in an exhaustive manner: sending a letter re-explaining the correct procedure to follow in order to be paid on time can be useful for clarifying the process.
Also, by giving them visibility on the deadlines and the date of payment. It’s a real plus in the relationship, at a time when pre-reminders have become the norm.
Also, where possible, reward the adoption of good practices, with reduced payment terms when the invoice is presented on time and in the right format.
This support for suppliers also involves streamlining their procedures. For example, with the provision of a portal allowing them to directly enter the elements of an invoice, so that this generates a document in the right format: this is good practice with small suppliers, who are poorly equipped to invoice correctly .
The entry into force of electronic invoicing in 2024 should make it possible to give the supplier access to a single portal, allowing it to invoice all of its customers.
Payment on time is also conditioned by a good quality repository with up-to-date bank details. Some portals allow suppliers to enter their data online, directly for the customer. The supplier goes to a platform with secure access, to change his bank details directly, with an IBAN check. Or, to upload some of its documents such as the Kbis, which must be renewed regularly.
But be careful, the multiplication of portals can quickly become time-consuming! This is why, in the same way as a universal invoicing portal, a universal repository could be ideal, because too many models coexist, obliging the supplier to register with each of its customers.
Pending general simplification, the adoption of electronic invoicing without waiting for the official timetable can already be a first step in reducing delays. Similarly, a close relationship with suppliers and a cross-disciplinary approach to all process stakeholders can significantly reduce disputes.