How to Automate Customer Billing: The 4 Tiers of Invoice Automation

Topics: Finance, Management

Automated invoicing can help save companies time and money, but many aren't utilizing this great tool. In this article, we’ll go over how to progress from manual billing to automated customer billing. Get ready to learn about the costs of automated customer billing as well as the pros and cons associated with billing automation.  Whether you are an enterprise or SMB, invoice automation affects all classes of sellers and merchants. Here’s how.

No Automation

Many companies are using non-automated billing. This means manually tracking when to send invoices, sending them, and following up with non-payment. There is material and labor cost associated with these activities of extending payment terms

If you break down the activities involved with the generation of a single invoice to a customer, the workflow looks similar to the following:

  1. Find customer invoice in accounting software
  2. Print invoice or save as PDF
  3. Stuff invoice into a paper envelope or attach PDF to email and send

Risks of No Automation

There can be problems that arise during the above process, which can add more time to the process overall. After an invoice is sent, the employee will have to go through the same process if an overdue invoice is required some days later.

Besides the above direct cost, there are risks to consider. What if your invoice gets lost in the mail or your email is captured by a spam filter on the customer's side. Now cash flow is impacted.

There is yet more time involved as you have to call the customer — or maybe even deal with an angry customer who is getting late notice phone calls from you, when in fact they never received the original invoice. All the while, your cash flow is being more impacted.

If you are accepting checks, this is yet another risk. You'll have to cash the check and ensure it clears. If it doesn't, more time will be spent sorting out the issue with your customer.

As you can see, the lack of any automation results in an extremely inefficient A/R process.

 

EBPP And EIPP Automation

EBPP stands for Electronic Bill Payment Presentment, while EIPP stands for Electronic Invoice Presentment and Payment.

EIPP is a fairly automated method that allows billers and payers to handle invoice transactions electronically. Often, a business will remit a purchase order. This starts the EIPP automation workflow

  1. A PO is entered into the EIPP and triggers an invoice based on PO
  2. Payer receives the invoice and can pay online
  3. Payment is verified and deposited into the biller's account

The above workflow requires little human interaction. Billers and payers can see what state any PO or invoice is in. A third party usually maintains the EIPP automation software. It is a cloud-based software and doesn't require any hardware or software installations at the biller's site. This type of software is known as Software as a Service or SaaS.

EBPP is a bill generation software and is also a SaaS. Similar to EIPP automation software, EBPP allows payers to remit payments online. The EIPP software then handles deposited payments into the biller's account and greatly reduces human involvement. 

You may have noticed that there is little difference between EIPP and EBPP software. While there are many similarities, the main difference between the two is that EIPP is mostly used in business-to-business or B2B while EBPP is used mainly in business-to-consumer or B2C. 

Disadvantages of EBPP & EIPP Automation

While a number of benefits were mentioned in using EIPP and EBPP automation, there are some potential disadvantages. These include:

  • Learning curve
  • Failure points in the workflow can cause an overall delay in getting invoices to customers
  • Some payer or biller systems may not integrate with any available EIPP or EBPP systems

AI automation

artificial_intelligence_ai_invoice

Previously, we saw how EBPP & EIPP automation helped remove much of the manual work associated with invoicing. The next tier of automation is artificial intelligence or AI. 

AI is different from automation. Automation is a set of rules programmed into the software. The automation workflow simply follows those rules, moving from one task to the next based on triggers or events. AI is different in that it improves its process through learning. When new information is introduced, AI analyzes and improves its workflow

AI has begun moving into invoice automation. One company leading this charge is Compleat. Its AI invoicing software called iCompleatInvoice is able to fill out ledger entries in a customer's accounting software based on values in an invoice. This further reduces the need for human involvement in the workflow. The software is able to then select the correct approval process.

“AI makes it inevitable that all businesses will adopt paperless invoice processing. The huge time savings and improved financial intelligence across the business makes it almost impossible for even the most conservative accountant to ignore it, stated Neil Robertson, CEO of Compleat, on the company's website.

Risks of AI

AI used for invoice automation can pose some risk in terms of transparency. AI is often referred to as “black box” technology because complex AI algorithms are not easy for the average person to understand and interpret. As a result, it can be difficult for organizations to spot systemic errors and potential compliance issues. The lack of transparency makes it even more important to put monitoring and AI governance systems in place to ensure invoicing is handled properly.  

A/R Automation

In the previous tiers, we outlined the methods and software that can help businesses spend less on invoicing their customers and how to automate customer billing. Although, spending less time and materials on invoicing can save you money, extending terms to your customers always comes with the cost of capital, i.e. waiting to receive payments and the risk of not being paid

A/R Automation, like Apruve, allows businesses to extend terms and get paid within 24 hours of invoicing, without the risk commonly associated with having an account receivable. In doing so, businesses can reinvest their sales revenue immediately, drastically decrease their A/R overhead, and outsource their credit approval process.

Learn more about automated customer billing with A/R automation here.  

Leveraging Automation

For most b2b merchants, accounts receivable is a time-consuming and costly process to manage. Either because they don't know or think it costs too much, businesses continue using manual management of their A/R. Cloud-based SaaS billing is now cost-effective and in the end, will save time and money. Such services are certainly worth considering for any business that wants to continue moving forward.

Interested in exploring A/R automation? Apruve can help — manually managing your customer billing and invoicing can be challenging; save time and automate instead! Apruve makes your financing and accounts receivable process easier with Apruve’s credit and AR automation programs. Learn more about Apruve or contact Apruve’s specialists to sign up for a demo today!

Whitepaper: Unlocking Profitable Growth with Intelligent Long Tail Credit and Payment Automation


ABOUT APRUVE

Apruve enables large enterprises to automate long-tail credit and A/R so you can stop spending 80% of your time and resources on 20% of your revenue. We partner with each of our customers to solve their unique credit, payment, and accounts receivable challenges and build the right credit solutions for your markets, customers, and goals. 

New call-to-action