4 minute read

Paying and getting paid are crucial to businesses’ livelihood, no matter their size.

There isn’t a one-size-fits-all approach to invoicing and reconciliations, and the market remains fragmented — caught between traditional workflows and innovative solutions.

“Paper invoicing certainly remains a major method,” Kevin Baker, head of merchant services for EMEA at Bank of America, told PYMNTS.

“Legacy systems and processes still remain, and some companies might not be ready to go digital,” he added. “Demographics [of decision-makers] also play an important role, with some cohorts more digitally savvy while others are more comfortable with using paper.”

Regulatory factors can also play a part, as some countries have legal requirements around paper invoicing processes, he said.

However, the tide is turning toward digital invoicing, which offers a myriad of payment methods including cards, pay-by-bank account-to-account (A2A) transfers, embedded QR codes and other solutions. This shift is driven by efficiency, cost reduction and even environmental considerations.

“Digital invoicing is a great development in the B2B [business-to-business] and even B2C [business-to-consumer] space,” said Baker.

Agility and efficiency reign supreme in the digitized business landscape. That’s why businesses, irrespective of their size, are turning to digital solutions to streamline their invoicing and payment processes.

Digital invoicing, facilitated through email or other digital channels, offers a plethora of advantages over its traditional counterparts. Not only is it faster and more efficient, but it also enables instant transmission of invoices, quick payments and seamless, digital storage of important invoice data and payment information, all of which can lead to cost savings and enhanced environmental sustainability.

Moreover, as Baker explained, the speed of payments facilitated by digital invoicing accelerates working capital management, offering businesses greater liquidity and financial flexibility. By expediting the invoicing cycle, organizations can optimize their cash flow and bolster their financial resilience.

“Reconciliation is key,” Baker said. “If you can track what invoices have been sent, which ones have been paid and which ones are outstanding, that will bring benefits across the organization.”

Still, several factors contribute to the persistence of traditional, paper-based invoicing methods, despite long-standing frictions around processing costs, storage and slower payment speed.

Lack of awareness and education, as well as comfort with existing processes, are barriers to digital adoption, Baker said, noting the importance of educating companies about the available options and the benefits of integrating B2C and B2B payment methods.

“Some companies simply don’t know what options are out there,” he explained.

However, efforts to educate businesses about available solutions are gradually dismantling these barriers.

Digital invoicing is not just about eliminating paper; it also eliminates manual bottlenecks, and enables real-time tracking of payments and invoices.

Baker explained that innovations in digital invoicing are poised to drive growth and adoption. Initiatives like e-invoicing and request-to-pay are redefining the invoicing landscape, offering streamlined, standardized and secure alternatives to traditional methods.

“There’s no reason why you can’t try to scale the B2B collections using some methods that have been around for a while in other channels,” he said.

As businesses navigate the digital transformation, the importance of choice and strategy cannot be overstated, Baker said. The transition must be tailored to each organization’s needs and circumstances. Collaboration with banks, FinTechs and technology providers is crucial in executing the right strategy for digital invoicing.

As Baker explained: “Choice is important.”

It will help businesses embrace the opportunities offered by digital invoicing and chart a course toward a future of streamlined operations and sustainable growth.