Sterling Commerce, an AT&T Inc company, (NYSE:T), today announced the results of a global survey looking at how companies manage the complexity of cross-border invoicing. The research highlights the cost savings benefits to be gained by automating country specific mandates for cross-border invoicing around processing, archiving and auditing; notably through the elimination of error-prone manual processing and the reduction of associated penalties and fines. The survey found that:
â¢ Each paper invoice error costs companies $53.50 on average to rectify.
â¢ Over a third (35 percent) of invoices are still sent as paper documents.
â¢ Only a quarter (25 percent) are sent via a fully automated electronic process, a method that automates cross-border compliance.
The survey, commissioned by Sterling Commerce and conducted by Forrester Consulting, was undertaken across accounts payable, accounts receivable and tax management functions in enterprises with annual turnovers in the range of $250 million to $5 billion, in the United States, Germany, UK, France, Netherlands, Sweden, Spain and Italy. It looked at enterprises in the manufacturing, retail/wholesale, communications/media and distributions/logistics industries.
âThe survey demonstrates the irrefutable benefits of fully electronic invoicing,â said Dave Carmichael, senior product marketing manager at Sterling Commerce. âHowever, going from a paper invoice to an electronic invoice is only half the battle; the true success of e-invoicing depends on fully understanding the regulatory criteria of processing, automating, archiving and auditing, which varies geographically. This is especially relevant to US companies doing business in countries that impose a value-added tax (VAT). Fines can be severe if companies attempt to claim back VAT in breach of regulation. From our experience with customers, however, awareness of the need to prepare for e-invoicing regulation is lower in the US than in the EU.â
Approximately half (49 percent) of companies experienced two audits or more over the previous three years. Of the companies surveyed that had experienced VAT audits, over 1 in 3 (34 percent) incurred fines from tax authorities. Nearly one quarter (24 percent) incurred fines for not being compliant with customer mandates. The average cost of an audit, including fines and consultancy fees, is calculated by Forrester to be $455,970.
The survey finds that by moving from manual, paper-based invoice processes to fully automated, electronic invoice processing, businesses can achieve:
â¢ Cost savings of 90 percent on the accounts payable (AP) side, as manually-processed invoices cost on average $30 per invoice to process, while fully-automated invoices cost on average only $3.50 per invoice to process.
â¢ Cost savings of 44 percent in the accounts receivable (AR) departments, where manually-processed invoices cost on average $4 per invoice and fully-automated invoices $2.25 per invoice to process.
â¢ Error reduction of 37 percent on all types of invoices.
â¢ Storage costs savings â With over 40 percent of companies retaining archives for up to 10 years, these will be significant.
Savings amount to 67 percent on AP and 32 percent on AR invoices, with fully electronic invoices of all kinds costing on average $1.30 to store, while paper AP invoices cost $3.90 and paper AR invoices $1.90 each to store.
âCompanies trading internationally must be alert to their financial and regulatory responsibilities, or risk fines and sanctions,â said Carmichael. âCompanies are usually aware of VAT regulations in their own country, but often lack the depth of knowledge required for compliant cross-border invoicing. In addition to the cost of fines, unsuccessful audits also may affect âvendor ratingâ, making a further case for e-invoicing. Simply creating an electronic document such as a PDF invoice is not sufficient to achieving compliant e-invoicing and avoiding fines.â