Paperless Invoicing: Simple, Safe & Cost-Saving

MATEJ MEŠÁR

10 min

·

October 10, 2024

Businesses face roadblocks at nearly every corner of every process. Even something so seemingly separate from your daily activities, such as invoicing, can immensely affect your customer satisfaction, informational integrity, and bottom line.

Consequently, it should come as no surprise that more and more mid-market and enterprise businesses are onboarding paperless account payable (AP) systems to streamline their financial processes, saving time and money simultaneously.

What is surprising, however, is that small businesses with the least resources are still resisting digitizing their invoices. According to Visa, up to 70% of SMBs still use paper invoices and manual AP processing strategies.

Do you own or work for such a company? In that case, this article is for you. Today, we’ll discuss everything you need to know about paperless invoicing to join the rest of the modern market and ultimately help yourself, your partners, and the world at large.

What Is Paperless Invoicing?

Paperless invoicing can refer to one of two things. At its most basic, it simply describes the practice of digitizing your invoices to remove the most impractical and time-consuming aspects of the process, such as printing, verification, data entry, etc.

Leveraging digital invoices allows you to:

  • Take advantage of 3rd party invoicing software;
  • Collaborate in a unified, cloud-based environment;
  • Create documents (invoices, receipts, etc.) quickly and easily;
  • Streamline and automate your supplier and customer management;   
  • Monitor your financial status, including expenses and inbound revenue.

This in itself can already offer incredible benefits, as we’ll discuss in subsequent sections. However, genuinely savvy business owners and AP teams can go one step beyond this and incorporate…

paperless accounts payable

Paperless Invoice Processing

Paperless invoice processing refers to automating the majority of your AP activities via specialized software in order to eliminate even the most complex processes, such as invoice capture and general ledger (GL) code input.

Implementing paperless invoice processing allows you to:

  • Speed up invoicing to increase visible cash flow;
  • Enable supplier self-service via automated invoice capture;
  • Automatically match invoices with purchase orders and receipts;
  • Reduce financial and time data indexing costs through automation.

Naturally, these advanced automation capabilities come with a heftier price tag than standard digital invoicing software. Nevertheless, they can be well worth the money, especially for SMBs operating in demanding B2B and B2B2C markets.

Paperless Invoice Processing

Why Should You Invest in Invoice Digitization?

We’ve already touched on a few reasons why paperless invoicing is the better option for most businesses, from SMBs to enterprises. However, to further illustrate our point, here are the top 3 reasons that drive companies to switch.

#1: Streamlined Invoicing Process

Whether you’re personally in charge of your company’s invoice or have a dedicated AP team, you know how much of a headache invoicing can be. It’s quite an involved process, with printing, scanning, posting, processing, and follow-ups.

Consequently, it’s also expensive, both in terms of time and money. The estimates vary, but some sources claim that processing a single paper invoice can cost you anywhere around $18 and 15 days in related expenses and worked hours.

comparison Paper invoicing vs e-invoicing

(Source: MailerToGo)

Switching to paperless invoicing can lower those amounts by around $8 and 3 days. And though that may not seem like much in terms of a single invoice, those numbers add up rather quickly in the context of a bigger billing process.

In that sense, digitizing your documents helps you remove human error from the process and frees up valuable resources you can invest in other, more pressing tasks, like closing new deals, delivering products and services, etc.

#2: Better Customer/Supplier Experience

Make no mistake, paper-based invoices can cause just as much trouble to your customers and suppliers as they do for you. After all, they have to contend with the same processing tasks that you do, which can cause delays, late payments, etc.

This naturally taxes the customer-supplier relationship, regardless of which side of the fence you’re on, and can lead to customer churn, resulting in lost deals and revenue. Thankfully, you can alleviate this by switching to digital invoicing. 

This not only speeds up your AP process and helps ensure suppliers get paid on time. It also helps you track invoice status and send automated reminders, so you don’t have to experience the pain of late payments that 73% of SMBs do every year.

Furthermore, some paperless invoice processing tools also allow you to set up a custom self-service portal for trusted, long-term partners, which lets all parties issue documents quickly and easily, without the usual email back-and-forth.

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#3: Greener Future

Are you not only cost-conscious, but also ecologically conscious? In that case, you’ll appreciate the positive impact paperless invoicing has on your carbon footprint. Here are a few statistics to potentially motivate your switch.

According to statistics, the average office worker uses 10,000 sheets of paper every year, 50% of which ends up in landfills. But just by switching to digital invoicing, you can lower your paper consumption by <80%.

Statistics on the nature of paper invoicing

(Source: Basware)

In a company with 100 employees, this translates to saving 400 trees, 37,000 liters of water, and preventing the release of over 23,000 kilograms of CO2. Divide that by 10, and you’ll see the difference even a small business can make in the world.

Paper Vs. Paperless Invoicing: What’s the Difference?

Is all that information making your head spin? There’s no need to get overwhelmed. Below, we’ve compiled all the relevant information regarding the difference between paper and paperless invoices into a single concise table. Enjoy!

Aspect

Paper Invoicing

Paperless Invoicing

Usage

Manual entry and physical paperwork, prone to human error and delays.

Digital workflows, with automated tasks reducing manual workload.

Automation Capabilities

No automation; everything is done manually, including matching invoices with purchase orders.

Automates invoice matching, data entry, and approval processes.

Processing Time

15-20 days on average to process a single invoice.

Takes 3-5 days on average, with some fully automated systems processing instantly.

Cost Efficiency

Costs up to $18 per invoice, including paper, postage, and labor costs.

Reduces costs to $6-$8 per invoice, mainly from savings in paper, postage, and labor.

Error Rate

High likelihood of errors due to manual entry, lost documents, and duplicate invoices.

Significantly reduced error rates through automated data entry and validation.

Environmental Impact

Contributes to deforestation and high levels of waste and CO2 emissions.

Cuts paper use by 80% or more, reducing waste and emissions.

Security & Data Privacy

Susceptible to loss, damage, and unauthorized access; limited traceability.

Enhanced data security through encryption, secure cloud storage, and audit trails.

6 Signs You Should Consider Invoice Digitization

Now that we’ve covered the basics, you should have a good understanding of the difference between paper-based and paperless invoicing. But now you need to decide whether making the switch is something worth your while. Do you struggle with…?

  • Delayed Payments — Paper invoices delay when payment terms begin, which drags out how long it takes your business to receive payment.
  • Manual Work Overload — Your team spends too much time printing, mailing, and manually entering invoice data.
  • Frequent Errors — Manual processes increase the chances of mistakes on invoices, which leads to disputes and delays.
  • Customer Frustration — Communication with customers over billing issues is slow and error-prone, causing unnecessary friction.
  • Rising Costs — The expenses tied to paper, postage, and labor for handling invoices are cutting into your profit margins.
  • Customer Pushback — More customers are requesting digital invoicing and payment options to speed up the process and improve transparency.

If you answered “yes” to one, several, or even all of these, you’re not alone. According to a survey, these are the main reasons driving business owners to switch to paperless invoicing. And they mean you should consider doing the same. 

Invoice Digitization

(Souce: Versapay)

The Pros & Cons of Paperless Invoice Processing

Of course, nothing is without its downsides. Although eliminating paper invoices provides plenty of benefits, there are a couple of sacrifices you will have to make to improve your invoicing process. Below is a quick overview of the pros and cons of paperless invoicing.

Pros

Cons

Cost Savings — Reduces costs related to paper, printing, postage, and storage.

Initial Setup Costs — Software and training can require an upfront investment.

Faster Processing — Automates tasks and accelerates payment cycles.

Technical Issues — System downtime or errors may disrupt invoicing processes.

Improved Accuracy — Automated data entry minimizes human error.

Learning Curve — Employees may need time to adjust to new software.

Better Cash Flow Management — Real-time tracking of invoices and payments.

Dependency on Technology — Full reliance on software means potential risks if systems fail

Eco-Friendly — Reduces paper waste and lowers your carbon footprint.

Vendor Compatibility — Some suppliers may not be set up to handle digital invoices.

Enhanced Security — Encryption and secure cloud storage offer better protection of sensitive data.

Ongoing Maintenance — May require continuous updates and system monitoring.

6 Steps How to Switch to Paperless Invoicing

So you’re set on digitizing your invoices. That’s a wise decision! However, making that happen is a significant task in and of itself. Below, we’ll detail the 6 steps you need to take to ensure the transition is as smooth as possible.

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1. Assess Your Invoicing Needs and Select the Right Type of Solution

First and foremost, you need to determine the type of paperless invoicing solution your business needs. Start by considering your usual procedure. How many invoices do you handle per month? Do you need advanced features like invoice matching?

Depending on your answers, you’ll decide between one of two types of invoicing systems. These include:

  • Basic Digital Invoicing Tools: These are great for small businesses that want to digitize their invoices and send them electronically but don’t need complex automation.
  • Full Automation Systems: These solutions automate invoicing, including data capture, GL coding, and payment reconciliation. This option is ideal for larger companies or those with high invoicing volumes.

Pick a solution that fits your business size and future growth. For SMBs, starting small and scaling up later can be a cost-effective strategy. However, remember that switching solutions too often can cause its own share of problems. 

2. Research Providers and Test a Free Trial

After settling on a particular solution, you can shortlist potential suitable vendors. Your goal is to carefully consider each provider’s offering and eliminate them from the list until you’re only left with up to three contenders. To do this, you should:

Getting hands-on experience is one of the best ways to evaluate a solution efficiently. Thankfully, most vendors nowadays offer some sort of free trial, which means you’re only limited by the amount of time you’re willing to spend experimenting. Consider:

  • Ease of use for your team
  • Customer support responsiveness
  • Compatibility with your current accounting process

3. Prepare Your Customers and Vendors for the Switch

As mentioned, your company’s accounting is not a single-party issue. If you want to maintain business fluidity, you need to keep your suppliers and customers in the know to ensure no miscommunications or mistakes occur. To do this, you should:

  • Send Early Notices: Notify your customers and vendors well in advance. Include an FAQ explaining the transition, what they need to do, and how it will benefit them.
  • Offer Assistance: Provide clear instructions for using the new system, and let them know who to contact if they have any questions. This will help ensure a smooth transition without disrupting your relationships.

paperless invoicing software

4. Create a Detailed Implementation Plan

A successful switch requires a clear, step-by-step plan. Outline key milestones, including when you’ll be selecting your software, testing it internally, and when you plan to roll it out to your customers. Key components to include in your plan:

  • Timeline: Set realistic deadlines for each phase of the transition.
  • Budget: Determine costs for training, as well as software and hardware fees.
  • Integration: Plan for any integrations required with your existing systems.
  • Responsibility: Assign specific roles to team members, if applicable.

5. Train Your Team on the New System

Even the best paperless invoicing solution won’t deliver results unless your team knows how to use it effectively. Schedule training sessions to get everyone on board, and ensure they understand the new workflows. Training should cover:

  • Basic Functions: How to create, send, and manage invoices.
  • Automation Features: Including invoice matching and approval workflows.
  • Troubleshooting: Resources to handle minor issues on their own.

6. Roll Out the System and Monitor Progress

When everything is set, it’s time to roll out the new system. Start with a phased approach to minimize disruption. For example, roll it out to a small set of customers or a specific department first to catch any issues before a full-scale launch. Here are a few tips:

  • Run Parallel Systems: During the initial phase, run your old paper-based invoicing system in parallel with the new digital one.
  • Collect Feedback: After a few weeks, gather feedback from your team, customers, and vendors to identify any challenges or areas for improvement.
  • Track KPIs: Monitor key performance indicators (KPIs) such as processing time, error rate, and cost savings to measure the effectiveness of the new system. 

Once you’ve ironed out any problems in the initial roll-out, you can move forward with full adoption, confident that your paperless invoicing process is optimized.

Eliminate Paper Invoices with Billdu

Ready to kick off your switch to paperless invoicing? In that case, why not start by trying Billdu’s Invoicing Software for Small Businesses? Starting at just $5 per month and with a 30-day free trial for every subscription plan, Billdu lets you:

  • Automate document creation with auto-fill,
  • Save clients and templates for future use,
  • Track invoice status and payments,
  • Add multiple payment methods,
  • Send automated reminders,
  • Onboard accountants,
  • And more!

Or, if you prefer to start things off slowly, consider trying out one of our easy-to-use invoice template for Word, Excel, and Google Docs. Improving your invoicing process, customer relationships, and carbon footprint is easier than you think!

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Billdu invoice maker and invoicing app

Looking for Downloadable Invoice Templates?

Wondering what should an invoice look like? Look at our free invoice templates in a number of formats

Frequently asked questions

What does paperless billing mean?

Paperless billing refers to the process of sending and receiving invoices digitally, instead of using traditional paper-based methods. It involves generating, sending, and managing invoices through email or digital platforms, reducing the need for physical documentation.

This method is faster, more efficient, and environmentally friendly, allowing businesses to automate invoicing workflows and track payments in real time. It also cuts down on the costs associated with printing, postage, and storage.

How to write an invoice on paper?

To write an invoice on paper, include key details such as the invoice number, your business name and contact information, the customer's details, and a clear breakdown of the products or services provided. List the quantities, unit prices, and total amount owed, along with the payment terms and due date.

Once completed, sign the invoice and send it to the customer via mail or in person. Make sure to keep a copy for your own records, as it’s crucial for tracking payments and tax purposes.

How does paperless billing work?

Paperless billing works by generating digital invoices through software or online platforms and sending them electronically to customers. The invoices can be shared via email, through a customer portal, or automated systems that handle recurring billing and payment reminders.

Customers can view, pay, and track invoices online, while businesses benefit from quicker processing, reduced manual effort, and fewer errors. This system often integrates with accounting software, making financial tracking and management easier.

MATEJ MEŠÁR

Senior content writer at CloudTalk

Matej Mešár is a Senior content writer at CloudTalk with extensive experience in writing engaging and informative articles.