Automating AR: Putting Control in the Hands of Customers

Editor's note: What are the best practices in moving data to the clouds?

Considering how much faster and less expensive it is, electronic delivery of customer invoices would be standard procedure in virtually every company if accounts receivable professionals had their way. One top ERP software vendor has estimated the cost of mailing a single invoice to be as high as $15 USD. In study after study, IT analyst research has found that the average U.S. company can save up to millions of dollars every year by sending invoices electronically.

At this point nearly everyone recognizes the advantages of taking the inefficiency of paper out of the process, which include DSO reduction and accelerated cash collection in addition to lower costs and higher efficiency. So what is standing in the way?

Technology certainly is not the issue. For years now, software solutions have been enabling companies to send 100 percent of their AR invoices and related billing documents electronically -- even if some customers on the other end want to receive their invoices by postal mail. And more recently, the same capabilities are available through the Software as a Service (SaaS) and Infrastructure as a Service (IaaS) models.

More than anything else, the barrier to automated AR invoicing is a contact management issue. Companies need a practical way to resolve varying customer and supplier preferences for receiving documents. Along with the customers who still prefer to have their documents mailed to them, there continue to be those who rely on fax. Other customers can and want to have their suppliers send billing documents by email or other electronic means.

Satisfying these customer preferences consumes internal resources. Setting up a customer to receive invoices via fax can place impractical demands on IT staff time to maintain output information in the company's ERP system. Moving customers to email delivery may require manual modification of individual customer files by data management personnel or customer service staff. In some cases, companies even have to get programmers involved in switching documentation types.

Helping Customers go Paperless

While some customers are neither ready nor willing to change entrenched processes that are set up to handle paper invoices, others understand that they can benefit from electronic invoicing. They know there are operational advantages to be gained by moving money faster. Receiving supplier invoices electronically can help to lower a company's accounts payable overhead by dramatically reducing or even eliminating the time and money spent on manual handling of billing documents. And of course, every step toward quitting paper supports sustainability and green business initiatives.

Companies today can expect more and more of their customers to request electronic invoices. By responding to those requests quickly and making it easy for customers to go paperless, companies improve service and enhance the customer experience.

AR document process automation can enable companies to easily satisfy changing preferences and tailor invoice delivery to the circumstances of each customer. It can also empower customers to control their own methods and frequency of communication. As they become ready to adopt e-invoicing, customers can log on to a secure web page choose paperless electronic delivery and designate the appropriate recipients for documents, filling in their preferred delivery method(s) and format(s). They can direct specific documents to multiple recipients via multiple delivery media, or different documents to different people.

Clearing the Hurdle

As a way for companies to reconcile their need for automated billing with customers' desire to receive paper invoices, top-tier AR process automation includes on-demand mail delivery services hosted by the vendor as part of the solution. AR staff simply "print" to the automation platform and customers receive invoices in the mail.

Such a solution enables companies to look up delivery preferences in databases and address books to manage contact information automatically. Retrieval of customers' delivery preferences and details can be as simple as pulling from an Excel spreadsheet via ODBC Address Book connection, or as integrated as an ERP database lookup. If no preferences are set for a particular customer or the customer prefers postal mail, the invoice can be automatically sent by mail using the on-demand mail service.

All of this is seamless and transparent to the customer, and it effectively eliminates manual paper handling and mail processing on the biller's side. No change is required on the part of customers. The only difference a customer might notice is that the invoices they receive are consistently accurate and timely.

Portal Power

Automation can allow both business users and customers to control AR document communication. Depending on the level of sophistication needed for its specific billing process (which, of course, can evolve over time), a company can decide how its AR invoice delivery preferences are managed.

Maintenance of delivery media preferences can be pushed out to customers via subscription functionality through a web interface where customers can choose how they want to receive invoices and other documents. Such a portal can also enable customers to search and retrieve their invoices online. On the seller side, companies can select media options they want to offer customers, and take advantage of online tracking to see when invoices have been read.

Case in Point

After looking at a variety of solutions, including options offered by its ERP software vendor, Ball Horticultural Company worked with Esker, Inc. to integrate output subscription management functionality with the Ball customer portal. Improving customer service was Ball's primary objective.

The Esker automation platform essentially serves as a hybrid between contact management and document management. A single sign-on gives Ball customers the self-service ability to choose electronic delivery and designate recipients for documents including invoices, order confirmations and account statements. Customers also can store and retrieve past invoices and order confirmations, eliminating the need to print and file paper documents.

Only eight weeks after implementation, Ball was mailing about 8,000 fewer documents, which could be five to 10 pages each, and already 140 customers and suppliers had created subscriptions for themselves. For these customers Ball was able to stop printing documents and start sending them electronically. "We save the time and costs associated with printing, postage, mailing, filing and internal handling," said Mark Morris, the company's IT director. "And this was in response to customer requests, so we're providing them much better service. By putting this self-service tool into the hands of customers and suppliers, we reduce internal effort -- whether it's my IT staff having to change outputs or our data relations and customer service people having to change the customer file." Workload in the Ball mail center was also reduced with the ability to merge order confirmations and invoices automatically.

Strategic Steps to Savings

The end result of this type of AR process automation is a risk-free, step-by-step approach that lets companies start electronic invoicing right away. The solution can take a company from manual processing to automated delivery via mail or fax immediately, providing a practical means to the end of 100 percent automated invoice delivery in a completely electronic format with virtually no manual intervention. When customers are ready to receive their invoices in an electronic format, they can do so through the portal or the company can switch their delivery preferences. Either way, companies can easily set up a customer for automated delivery of invoices without IT involvement.

Even at a modest 10 percent per year adoption rate, automated AR invoicing delivers significant incremental savings year after year. Following the initial reduction of costs associated with manually sending invoices, savings continue by facilitating movement of more customers from postal mail receipt to electronic methods -- steadily cutting more paper costs out of the picture.

Companies using Esker solutions have reported up to 96 percent reduction of AR document handling time while cutting the cost of sending billing documents by 40 to 80 percent. Every invoice can be processed automatically and sent electronically in real time along with supporting documents, and customers can choose how they want to receive. In addition, immediate availability of billing documents helps to optimize dispute resolution and cash collection.

Automated AR Invoicing on Demand

Along with the contact management issue, old-fashioned budget constraints can present another obstacle to AR invoicing automation. The SaaS/IaaS model is solving this problem for many companies, from large corporations to small and medium businesses. Esker, for example, offers AR document process automation both as part of an on-premise server platform or as an on-demand service leveraging the capabilities of that platform without capital expense, IT complexity or maintenance costs.

With the service model companies can pay for what they use with minimal up-front investment. Features of the Esker service include ready-made portal capabilities for online customer subscription and invoice management, built-in support for auditing and compliance with international invoicing regulations, and electronic archiving for as long as 11 years.

Creating a Continuum

Whether implemented on site or used on demand, AR document process automation can bridge the gap between legacy media and future invoicing mechanisms. Companies can send both electronic and paper invoices to small and large customers instantly, removing the contact management barrier while eliminating the time and expense of managing costly mailroom operations or other manual means of delivery. Virtually any company can automate its customer invoice delivery via mail or fax and give customers the choice of switching to electronic invoices. With a solution that provides a path from manual to automated to electronic, following adoption curves and putting control in the hands of customers, AR professionals can have invoicing their way.

About the Author

Steve Smith joined Esker in 2003 as the Director of Sales, and is currently responsible for all operations in North and Central America. Upon graduating in 1984 from the University of Wisconsin - Whitewater with bachelor's degrees in Marketing and in Finance, Steve spent 2 years in sales at Pitney Bowes, and 17 years at Equitrac Corporation where he was the Senior Vice President of Worldwide Sales.

More by Steve Smith