The APQC Blog

USPS Move Reinforces E-invoicing

Today’s consumer is riding the latest technology wave and moving digital purchases and payments to mobile platforms. In contrast, B2B billing and payment processes remain mostly paper-based. That said, we see on the commercial side a strong and growing desire for accounts payable (AP) process automation and (more recently) adoption of accounts receivables (AR) data digitization and straight-through processing. The latter means customers can receive, process, and pay invoices without the touch of human hands.

The main reason large organizations throw in the paper towel and opt to migrate toward electronic invoice submission, automated workflow, and computer-driven payment comes down to a burning need for operating cost savings. Now, there’s another good reason to go digital. To some, it’s a higher-order concern involving process effectiveness, not efficiency.

The United Stated Postal Service, in a frantic scramble to address its financial distress, has announced plans to close one-half of its 500 mail processing facilities nationwide. The implication: most first-class mail will be delivered in two-to-three days, not overnight. And that means a slow-down in cash collections for AR organizations that interface with B2B customers, which tend to be large-dollar-invoice payers. That, in turn, could mean disruption of treasury management models and higher short-term interest expense. On the AP side, the USPS move could cause undesired payment slowdowns, which could then wreak all kinds of cash-flow forecasting havoc and the loss of planned discounts.

CFOs are not going to stand by without comment while they watch their DSO metrics rise, their payment discounts evaporate, and their treasurers go bananas. It’s time to look closely at the rationale for e-invoicing.