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Accounting and finance has certainly come a long way since Luca Pacioli, the 'Father of Accounting', popularised double-entry bookkeeping in 1494. Before technology got started, everything was entered manually, mistakes could mean hours of recalculation and 'missing money' and finding errors was tedious and labour-intensive work. It's easy to think that all this has been swept away in a technology tidal wave as specialised software introduced over recent decades has turned 30 hours of work for several people into 10 minutes of number-crunching for one smart software program. E-invoicing, for example, must surely be commonplace now?

Well you would think so, but surprisingly, according to Deutsche Bank research from 2010, only 5% of the 30 billion invoices processed across Europe are being carried out electronically. The rest were still, amazingly, being done manually. While Scandinavia and the Baltic States lead the way - with up to 40% of organisations in those countries saying they use e-invoicing - the UK lags well behind with only 10%.

That data is something that the CFO really needs to take notice of, especially when you add in the fact that such manual processing can push up the cost of processing each invoice by a factor of 20. That equates to a bottom line cost of £80,000 for 20,000 invoices at £4 each (done manually) versus the much lower £4,000 if they were done electronically (at approximately 20p each).

That's a serious differential in terms of overheads. But in fact that's not really the heart of the problem around invoicing at all. What is starting to bother a lot of people looking at the use of technology in the Finance Department is actually the build-up of latency - the delay left between cause and effect.

HAS THE BUSINESS CAUGHT UP WITH TECH YET?
Think of it like this: industry research has shown that of the 100% of time that an invoice is working its way through the system, 20% of it can be accounted for as transport processing time, 5% actual processing - and an astonishing 75% of the time is basically spent idle, doing nothing at all.

Idle, that is, in the sense that workflows are usually designed so as to need lots of supervisory or managerial attention to get things done. So anything that reduces this 'idle time' is bound to have huge benefits in terms of cost and time. Routine, labour-intensive clerical tasks that could instead be carried out by electronic triggers that move everything along more efficiently can no longer be justified in an agile business.

This was made pretty plain in a big piece of research that EASY Software commissioned in 2013 that looked at the use of modern Electronic Document Management in UK businesses. We found that Finance is blazing the trail in its usage of EDM, with 52% of respondents in finance teams confirming that they were 'going paper-lite', compared to just 20% of their colleagues in IT and 26% in Operations/Manufacturing.

The motivation behind all this was brilliantly summed up by one Finance Director we interviewed, who said: "Cost reductions and increased efficiencies for purchase ledger when distributing supplier invoices throughout the company are the simple reasons why we did it."

There's no plausible reason for that 75% 'idle time' statistic nowadays. Businesses have the technology option to deal with invoices much more rapidly than they currently are doing.

But here's something else to think about: while the Finance Department is getting highly skilled at using technologies like EDM, EDI (electronic data interchange) and even email to distribute invoices, not to mention Optical Character Recognition (OCR), the rest of the business just isn't keeping up.

WHERE IS YOUR VISIBILITY INTO YOUR REAL CASH POSITION?
Some organisations, of course, do like to guard their cash flow - and there are often, in SME contexts, but also for enterprises, policies in place to push payment out as far as possible to protect that position.

But while there is a legitimate business motivation behind that, there are also two issues that that position can cause. Firstly, key suppliers and partners may not be so tolerant of delayed or inefficient payment cycles and may penalise late payments accordingly. And secondly, even if you don't want to process a payment straight away, if you don't have an efficient payment cycle internally, how can you have 'visibility' into your exact current cash flow situation at any given time, if it's spread across several spreadsheets?

And that's where e-invoicing really comes in to its own, because not only can it help you with better management of your spending and better management of your cash flow, but it also gives you greater visibility in the whole invoicing process. This means less need for human intervention and the end of invoices spending 75% of their time, sitting doing nothing. And that has to be a result for everyone.
More info: www.easysoftware.co.uk