Lower Your Cost per Invoice and Days Sales Outstanding with Digital Document Management
Accounts receivable (AR) and accounts payable (AP) departments know how many steps are involved in both making and obtaining payments. But have you considered whether you can optimize your current processes to improve key metrics like days sales outstanding and cost per invoice?
Digital document management may be the solution you need.
What are “days sales outstanding”?
Days sales outstanding (DSO) is a measure of the average number of days it takes for a company to collect payment from accounts receivable. The lower the DSO, the better. This means your company is getting paid quickly rather than waiting on overdue payments to come in for products or services you’ve already delivered. Typically, accounting departments calculate their DSO monthly so they have an up-to-date metric to know how they’re doing with collecting payments on time.
A 2021 report found that some industries deal more substantially with late payments from clients, including publishing, construction, manufacturing, and more. Keeping track of your DSO is critical to understanding where there may be room for improvement in your AR processes, especially if your industry struggles with getting paid on time.
What is “cost per invoice”?
Another key metric accounting teams should track is the average cost to process invoices in accounts payable—known simply as cost per invoice.
Processing invoices can involve many expenses, including costs associated with:
- Setting up invoicing processes with new vendors
- Manually entering invoice data into your accounting software
- Performing two–way matching or other means of verifying accuracy
- Dealing with exceptions or errors
- Approving, generating, and sending payments
One survey found that per invoice, companies spend anywhere from $2.07 to $10 depending on how efficient their processes are. Imagine how much your company could save in the long run if you shaved off even a dollar or two on every invoice you process! Lower costs mean a better bottom line, so it’s smart for companies to eliminate waste wherever they can, including on invoice processing.
How does digital document management fit into AP and AR processes?
A document management system is a software solution for systematically handling your documents throughout their lifecycle, from their initial capture all the way through storage, processing, security, and more. Document management is vital to any business and department that deals with documents and records—and that’s certainly the case with accounting.
Specifically, AP and AR processes involve a lot of documentation and data that needs to be carefully recorded, logically organized, and accurately processed. With a digital document management solution, you can bring order and efficiency to the way you handle all your documentation and data involved in invoicing.
How can digital document management lower your days sales outstanding and cost per invoice?
Especially when paired with invoicing software, digital document management software can streamline your processes in both AR and AP. Let’s look specifically at how a modern solution for document management can help you lower your average DSO and cost per invoice.
With digital document management, you can benefit from the following:
Ripcord’s solution can extract and organize unstructured data with impressive speed without your accounting staff needing to work on it manually. This lowers your indirect costs involved in invoicing. Additionally, it means your invoicing software can automatically perform tasks like two-way matching because your data is structured and accessible.
If you’re still dealing with paper records, consider how digital document management could lower your costs. Eliminating your dependence on paper invoices and other documentation can save you from having to spend money on printers, ink, paper, and postage, along with storage fees to maintain physical records.
Going digital also means there’s no longer room for human error in your processes. You may worry about automation leading to errors of its own, but Ripcord’s solution can digitize your data with 99.95 percent accuracy. You can count on getting it right the first time, preventing mistakes that could otherwise lead to delayed or lost revenue.
When all your data is digitized, well-organized, and fully searchable, you never have to waste time and money hunting down the documentation you need. You can resend invoices or provide proof to customers as needed by quickly pulling the appropriate records. You’ll be doing your part to contribute to a speedy DSO and a low cost per invoice.
Ripcord can streamline your AR and AP processes.
Ripcord combines powerful automation and artificial intelligence to help companies fully digitize their accounting processes. Say goodbye to manual data entry and disorganized folders of files. Instead, your staff, your customers, and your company as a whole can benefit from an optimized system for managing your invoicing.
Want to learn more? Download our checklist to evaluate your current AR processes and see how Ripcord can help you optimize them!