The Role of E-Invoicing in the Financial Ecosystem

Friday, December 21, 2012

In the wake of the recent recession, CFOs at global businesses are taking a larger role in their companies' liquidity management, cash flow analysis, risk management, and accounts payable (AP).

These new responsibilities for CFOs aren’t terribly surprising when you consider that 61 percent of companies surveyed by Aberdeen Group indicate that the financial ecosystem is a critical component of global business. Yet most organizations lack the cash flow visibility that CFOs require.

The average organization holds visibility into only 35 percent of all corporate cash flow, Aberdeen Group Senior Analyst Chris Dwyer said during a recent webinar sponsored by Direct Insite. Worse, the bottom 70 percent of corporate performers have only a 20 percent rate of visibility into overall organizational cash flow on a day-to-day basis, Aberdeen Group finds. It’s for these reasons that 78 percent of organizations rate improved cash management and cash flow visibility as a top priority.

So how can companies improve their cash flow visibility? Aberdeen Group offers three suggestions:

  1. Automate all facets of the AP function to drive strategic awareness and financial value
  2. Leverage supply chain finance solutions as a means of improving buyer/seller relationships and enhancing visibility into cash flow & liquidity
  3. Develop a program for managing the interconnected components of the financial ecosystem

E-invoicing solutions like Direct Insite’s PAYBOX® platform address all of these suggestions.

For starters, businesses that have fully automated all facets of AP — such as invoice receipt, approval workflows, and payment-scheduling processes — report 60 percent lower invoice-processing costs compared to organizations without AP automation, Aberdeen Group says. Importantly, AP automation such as e-invoicing delivers 30 percent higher visibility into corporate cash flow.

Additionally, payments automation provides global organizations with 70 percent lower payment-processing costs than organizations not currently using these solutions, Aberdeen Group says. Payments automation also delivers 68 percent higher visibility into organizational cash flow.

Read a report sponsored by Direct Insite on the evolving financial ecosystem.