As companies are constantly looking for ways to become more efficient and to save money, many are converting to e-invoicing. The benefits of e-invoicing become greater and greater as the number of invoices increases, the gross amount billed out increases, and the number of days to receive payment decreases.
First, the cost associated with mailing out physical invoices immediately drops to zero. These costs include: paper, envelopes, stamps, and printing costs. If a company is emailing out e-invoices individually, the amount of employee time to email an invoice is shorter than mailing a physical invoice. However, if a company uses an automated e-invoice system, the amount of employee time is almost eliminated.
Second, many companies pay bills in the order received. While an email is immediately received, a mailed bill can take days to be received. If a customer pays its bills daily, then you can receive your money days sooner than mailing an invoice. However, if a customer pays bills only once or twice a month and you just missed the last pay date, then you will end up waiting two to four weeks before bills are paid again. Thus, the sooner a customer receives a bill, the greater the chance that you will get paid sooner. Best of all, the e-invoice costs less for the advantage.
If you’re wondering if your company sends out enough invoices each month to justify switching to e-invoicing, multiply the average number of invoices each month by 12 months. Even at 20 invoices each month, that’s 240 invoices a year, which is $120 in postage costs alone.
If the cost savings aren’t enough to persuade you, add in the time value of money when you receive your payments sooner. Let’s say that your company collects $25,000 each month just 3 days earlier with e-invoicing. You’re probably thinking who cares about three days, but it adds up. If your company pays 5% for a bank line of credit, then by receiving $25,000 just 3 days earlier each month, you are saving $120.97 each month, and if you multiply that by 12 months, then you are saving $1,451.61 each year. These numbers can quickly grow. For example, if you collect $100,000 in 6 less days each month, then it’s a monthly savings of $967.74 and a yearly savings of $11,612.90!
When you add in all the benefits of e-invoicing, it’s an all around win-win situation for your company.
Alpha Capital Finance is not just another invoice factoring company. We strive for creative solutions to not-so-everyday challenges. Alpha Capital Finance is made up of successful business owners from a wide range of industries. We meet with our clients face-to-face because it’s the relationships that we develop that make us different. Located a pebble skip from the great Lake Pend Oreille in Sandpoint, ID. We love to talk with business owners who need capital ranging from $100,000 to $6,000,000 each month. Be assured that you will always refer to us with confidence. Connect with us on Facebook and LinkedIn.
David Bingaman, General Counsel
Alpha Capital Finance
Business Finance Tips
Below are a couple of helpful business finance articles to learn more about how leveraging your invoices can improve cashflow problems. As well as business finance tips on how to find the best factoring commpany that fits your needs.