Invoice Discounting Overview

Invoice discounting is an important process that allows business buyers and accounts payable (AP) departments to obtain discounts for paying invoices in a timely manner, typically a 2 percent discount if an invoice is paid within 10 days. Discount offers are also beneficial for suppliers by improving working capital, cash flow management and customer relationships.

Technology’s Impact on Invoice Discounting

Accounts payable (AP) technology, such as Direct Insite’s PAYBOX® platform, enables several key business benefits:

  • Reduce Invoice Receipt-to-Pay Cycles and Increase Invoice Discounting: Electronic invoicing and ePayment technology can significantly reduce invoice processing and approval time, typically from 23 days down to just five, enabling companies to capture more discounts and save money. This is important because while 85 percent of AP professionals rank invoice capturing as a top priority, only 27 percent of companies capture discounts effectively, according to research by Direct Insite and PayStream Advisors. One-fourth of organizations fail to capture at least 10 percent of invoicing discounts. Gaps in discount capture are due to a heavy reliance on manual processes and paper-based invoicing.
  • Efficiency Improvements: In addition to helping companies capture more discounts, Direct Insite’s electronic invoicing solution automates processes to streamline workflows and reduce time spent entering data. Electronic invoicing scan and capture technologies dramatically increase efficiency and productivity in AP processes.
  • Increases Security and Compliance: Transitioning to electronic invoicing improves security. With electronic invoicing, companies are no longer at risk of losing or damaging invoices. Everything has a paper trail and can be managed through a single, easy-to-use portal. Direct Insite’s PAYBOX® platform is also PCI compliant, so companies can rest assured that customer information and payment data are protected. To increase compliance with industry-specific or other financial regulations, administrators can set alerts, rules and monitor compliance.
  • Accuracy and Visibility: Electronic invoicing reduces dependency on manual processes and data entry routines that are prone to error. With a unified digital payments and invoicing solution for AP departments, senior leadership and AP professionals will gain visibility into available discounts, invoice history, payment trends and an organization’s complete financial health. This is critical to cash flow optimization, improved working capital, better forecasting and reduced costs.
  • Data Extraction and Reporting: Direct Insite’s PAYBOX® platform provides companies with a comprehensive picture of critical AP information and overall financial state. PAYBOX® offers interactive reporting tools, an easy-to-use interface and valuable analysis to build a stable financial future and avoid issues down the road.
  • Lower Labor Costs: By reducing manual processes and time-consuming data entry requirements, electronic invoicing can reduce labor costs by automating invoice scanning, capturing and managing.
  • Stronger Supplier Relationships: Buyers that pay on time without hassle build better relationships with suppliers, which can result in future discounts and elevated levels of service. Suppliers also benefit from electronic invoicing technology, so it is a win-win scenario.

Direct Insite’s PAYBOX® platform is an all-in-one solution for organizations’ AP needs. Our solutions and services automate complex manual processes for both AP and AR transformation. For more information about how PAYBOX® can improve invoice discounting in your organization, give us a call at (613) 873-2909 for a personal consultation with one of our experts.

Working Capital Management