What is Electronic Invoice Presentment and Payment?
Electronic invoice presentment and payment (EIPP) is likely not a term you hear daily. It refers to the processes and technologies used to create, present, and deliver invoices to clients or customers. It's a critical component of the billing cycle in business operations, facilitating secure payment transactions and affecting cash flow and customer satisfaction.
An EIPP solution allows accounts receivable (AR) teams to simplify invoicing and payment processes. It involves the electronic creation, delivery, and management of invoices and the electronic processing of payments. These solutions provide the necessary digital infrastructure to manage the invoice and payment process electronically and are designed to replace traditional paper-based invoicing and payment methods.
While paper-based invoicing presentment methods have their place, this article explores what EIPP platforms can do and why they have gained such momentum.
How does electronic invoice presentment and payment work?
With EIPP platforms, sellers automatically use specialized electronic bill presentment (EBP) tools to create electronic invoices, also known as e-invoices.
- Invoice validation and approval functions automatically apply rules and flag exceptions for review and resolution before an invoice is sent to customers.
- These systems can customize invoices to fit buyers' priorities and preferences, simplifying the payment process.
- By integrating an EIPP platform with a seller's enterprise resource planning (ERP) or accounting platform, the ERP uses customer order information to automatically create an e-invoice and upload it into the EIPP platform.
Customers receive and process e-invoices through their accounts payable (AP) invoice processing software or by logging into a shared online payment portal. They can review the e-invoice and approve payment through these platforms.
Key components of EIPP
- Invoice creation and delivery: Invoices are created digitally and delivered to customers through secure online platforms, email, or other digital means.
- Interactive invoices: Customers can interact with digital invoices, view details, and sometimes dispute or make adjustments to invoice items directly.
- Automated payment handling: EIPP automates payment processing, reducing the need for manual reconciliation and data entry.
- Customer portals: Businesses can provide customers with secure portals to view, manage, and pay their invoices.
- Access control: The systemEIPP systems allow for different levels of access and permissions, ensuring that sensitive financial information is protected.
- Invoice tracking: Businesses can track when invoices are sent, viewed, and paid, giving them better insight into their accounts receivable.
- Reporting tools: EIPP systems offer reporting tools that provide insights into invoice statuses, payment trends, and customer payment behaviors.
What is driving the adoption of EIPP platforms?
While paper-based processes of invoice presentment are a necessity for many businesses and mandatory for certain industries, there are shortcomings associated with manual billing and remittance processes. Sometimes, even the most on-time and accurate email or physical mail invoice is at the mercy of uncertainties like:
- Whether the post office delivered your paper invoice on time to the correct address.
- If the physical mail or email was opened – and by the correct person.
- What the approval and payment status of the paper or email invoice is.
- If the invoice was in dispute (or disappeared into limbo), and if there's been no payment or response.,
- If information has been accurately or erroneously entered into the buyer's AP system, even if it'sthe invoice has been received and seen.
Why should businesses transform their invoicing process?
Invoicing is a critical AR function; the efficiency and quality of the AR process is crucial to maintaining a positive customer experience since it directly impacts the quality of the payment process. Prompt and accurate invoicing, timely follow-up on overdue payments, and clear communication help build customer trust and credibility, driving a better overall experience and higher satisfaction levels.
Here are some benefits:
- Improved cash flow and faster payment cycles: Timely and accurate invoicing helps ensure payments are received promptly. Also, digital delivery and immediate payment options allow businesses to accept payments faster, improving cash flow.
- Lower operational costs: Reducing the need for paper, postage, and manual labor reduces operational expenses.
- Enhanced customer satisfaction: Customers can access and pay their invoices anytime, anywhere, using their preferred payment method. Providing detailed, interactive invoices also improves transparency and helps resolve disputes faster.
- Better security and compliance: EIPP systems help businesses comply with invoicing and payment handling regulations, such as tax reporting requirements. It is also a secure platform with encryption that protects sensitive financial information.
- Ability to scale: Automated systems can easily adjust to handle varying volumes of invoices, making it easier for businesses to scale up operations. These systems can integrate with other business software, such as ERP or accounting systems, enhancing overall business efficiency.
Companies are pivoting to electronic invoice presentment and payment platforms to add much-needed certainty and efficiency to the payment process. These systems provide a digital solution to traditional invoicing and payment processes, making them more efficient, cost-effective, and customer-friendly.
If you’re interested in transforming your invoicing and payment processes with an electronic invoice presentation and payment solution, Quadient can help.
