Why it’s time to put paper invoices in the recycling bin

Finance

Sponsored by Tradeshift

Chris Todd, Senior Account Executive at Tradeshift

If the thought of an avalanche of paperwork puts you in a cold sweat, spare a thought for the CFO who called our sales team early in the pandemic. They had more than 1 million paper invoices stacking up in a shared services centre – and no one could access them. This well-known, global business couldn’t pay its suppliers. Even worse, the quarterly results were due in two weeks and they had no way to reconcile their numbers.

Is your business drowning in paper? Are suppliers constantly chasing to ask why they’ve not been paid? You’re not alone. According to a study by Ardent Partners, nearly half of all invoices are still submitted manually, on paper. Whatever happened to the dream of all-digital supply chains? And just how much of a problem does our continued reliance on paper pose?

Papering over the cracks

Digitalisation within large enterprises is, in general, quite advanced. However, the processes that underpin the critical relationships between these organisations and their ecosystem of suppliers have been largely overlooked, while budgets were allocated towards projects designed to digitise internal processes.

A lot of businesses have learned the hard way that you can have the greatest level of digitalisation internally, but if the partners you are dealing with – banks, suppliers, buyers, logistics handlers – are not engaged and connected, the whole process reverts to the lowest common denominator.

Senior decision-makers often tell me that their processes are already digital. Further discussion usually reveals that invoices are submitted using electronic means rather than collected in the post room. However, receiving a PDF invoice via email offers no real benefit over opening an envelope beyond speed of receipt. Why does that matter? Have you ever tried to fix an error on a PDF, or share data centrally with another teammate using a static file? Now consider how easy it is for multiple people to collaborate in real-time on a digital document accessible centrally via the cloud.

Without digitalisation, people cannot work on the same documents remotely, while the limited visibility of paper-based processes makes it impossible to make smart, collaborative decisions based on a shared view of the same truth. The result? Business leaders are flying blind at a time when they need to be able to see around corners to remain agile and avoid making costly decisions in today’s volatile market.

Breaking the cycle

Businesses are increasingly waking up to the urgent need to digitalise their relationships with suppliers. But where buyers see transparency and efficiency as the obvious and compelling benefits of digitalisation, suppliers often see it as an extra hassle just to get paid. Many are understandably resistant to a change that they perceive as largely for someone else’s benefit.

At Tradeshift, we believe in encouraging suppliers to join buyers in going digital. Tradeshift started as a free e-invoicing tool for suppliers, so seller value sits at the core of our technology proposition. We understand that when it comes to convincing suppliers to digitise, they care about three things above all else: simplicity, transparency and speed.

Facilitating every transaction across a digital platform enables each party to track and manage transactions in real-time and automates time-consuming processes such as compliance and formatting.

Of course, digitalisation offers a host of other supplier benefits, including enhanced collaboration, unlocking new forms of data-driven supply chain finance and, best of all, opportunities to connect to a growing, global network of other buyers. Additionally, the more transparent and intuitive processes mean suppliers get paid faster.

All of this provides a strong foundation on which to build deeper and more meaningful relationships.

The power of the network

Today Tradeshift is home to the world’s most dynamic community of digitally connected buyers and suppliers. And for large organisations looking to digitise at speed and scale, the beauty of being a single network is that very often we’re not starting from scratch.

For example, we recently started working with a large customer in the transport and logistics space. We were able to show them that roughly 50 per cent of their suppliers were already active on the Tradeshift network and connecting with them was simply a matter of plugging into the network.

That’s the power of connecting through a digital network. It’s not just about improving processes, important as that is. It’s about creating a new, digital-first model of trade, where everyone can equally (and instantly) share the strategic benefits of better connected, more agile, more efficient and more resilient business. It’s time for every organisation to put paper where it belongs: in the recycling bin.

Find out how Tradeshift can help you digitise, automate and grow at tradeshift.com