Today's finance teams face many challenges to modernization, but one of the biggest digitization hurdles is missing customer accounts payable email data. Without accounts payable email addresses, finance teams are forced into paper-based, manual with slower response and payment times, and longer days sales outstanding (DSO).
Of course, a major way finance leaders can effectively develop efficiencies and cost savings while better managing cash flow is to eliminate paper from accounts receivable. Paper is expensive; creates a highly manual, time-consuming workflows; and is bad for the environment. When you think about your invoicing process, including writing invoices, printing (paper plus ink), postage, the costs add up. As your company grows, this manual, paper-based process eats up time and delays payment.
State Systems, a leader in life and fire safety technology, had to host monthly “folding parties” to get their invoices out the door. Each month, 10 - 15 people would gather in a room where they would print 4,500 statements and spend the day folding and stuffing envelopes. These folding parties were expensive. Not only was it costly to be printing and mailing 4,500 statements, but there was a large opportunity cost of gathering 10 - 15 employees to stuff the envelopes rather than their typical work. Logan Hale, CFO of State Systems estimates that among all the employees, this amounted to about 80 working hours each month.
On top of this, mailing out paper invoices increasingly carries the risk of your customer receiving the invoice late, or not at all. And that is just on the front end of your accounts receivable (AR). If you invoice on paper, your customers are likely to pay you with a paper check.
With paper checks, an employee must physically collect payments from an office, making your hybrid work environment dependent on staff managing these tasks. If you are using a lockbox, you are having to spend money on the lockbox and figure out how to apply the payment. In addition, check processing and applying the payment against the proper invoice is all manual. These added factors could negatively impact your DSO, as well as your bank balance.
Why so many organizations are still using paper is a complicated issue. But the solution is simpler than most finance leaders expect.
Automating AR workflows is one solution. Software, like those provided by Lockstep, takes the challenge out of sending invoices, statements, and reminders electronically, enhances well-organized activity management, and even increases your ability to accept and remit electronic payments.
“Understanding what it costs to scan and process a single check, including fees and time, was a big deal for us,” notes Matt Lucas, assistant controller from The Benevolent and Protective Elks of the USA. “Automation and online payments not only creates more efficiencies and saves us money but allows us to focus more on who our customers are. The ROI is huge!”
Beyond the economic benefits, there are some clear strategic advantages of moving to paperless AR. By moving more customers to paperless invoicing, you significantly reduce your (and your customers’) carbon footprints. Given today’s hybrid workforce, less paper means less dependance on in-office staff. These benefits help buffer the bottom line and the employee experience.
But, if you don’t have accurate customer email data, automating the invoice process won’t be effective. At a time when over 95% of your customers would prefer paperless invoicing, how do you collect missing accounts payable email addresses?
The obvious answer is through a phone call, but that is not a scalable process. To call (likely multiple times), obtain the correct data, track your progress, and enter details into your system, can take upwards of thirty minutes per contact. With 1,000 missing customer accounts payable emails, an average of 30 minutes spent collecting and cataloging email addresses would take 500 staff hours.
“How do I scale paperless adoption in a way where I can collect emails by customers entering their own information into the billing system?” This is a question that we hear often from finance teams.
We help make paperless adoption easy by getting your customers to register themselves. Lockstep has developed a paperless adoption tool that allows your customers to directly provide their accounts payable email details using a branded signup link, unique to your company, and their customer identification number.
Through Lockstep’s innovative signup link, you can easily promote paperless invoicing through your existing contact channels and even on your invoices. This let’s your customers sign up for paperless invoicing, while self-registering their email addresses, in a safe, secure way. Lockstep has built in a custom security check for you to verify the accuracy of the email address, to prevent unauthorized account access.
Finance digitization means you can eliminate paper invoices, envelopes and checks from your AR workflow. With Lockstep, enhance the customer experience and ease-of-use with secure, password-free online account access, while being eco-friendly. Visit Lockstep for more details.
Award-winning Lockstep connects the world’s finance teams so they can work better together. Founded in 2019, Lockstep eliminates cash traps and leaks created from manual synchronization of books between B2B trading partners. Based in Seattle, Lockstep’s connected accounting cloud empowers trusted, compliant accounting relationships between businesses of all sizes. Streamline paperless adoption and connect customers directly to their accounts online to accelerate payment timeliness and accuracy with Lockstep.
Matthew Shanahan is the chief strategy officer and co-founder of Lockstep whose mission is to help the world’s accounting teams work better together. Matt specializes in building new software categories and finding product-market fit. Matt holds an MS and BS in Computer Engineering from the University of Washington.