Paying invoices late is a worldwide issue. Many companies attempt to apply late fees but are not successful in collecting them. Obviously this is important since it directly impacts cash management including corporate borrowing. Apparently smaller vendors have often become a lending institution for larger companies resulting in government action in the European Union.In the EU, they are working to secure a level playing field and clear-cut rules for all players, to the benefit of Europe’s many small and medium-sized companies. This deal means that SMEs will no longer be forced to serve as banks for public enterprises or big companies. They are working on legislation that will in most cases require payment within 30 days. If not paid in 30 days there will be an 8% surcharge along with a fixed fee of 40 Euros. While this applies to the EU it is fair warning for the rest of the world.In the UK, many corporations have already accepted the challenge by the government to pay within 10 days yet late payment continues.It is my opinion that to assure timely payments, corporations will have to optimize their Accounts Payable solutions including document archive, OCR and most certainly business rule driven automated processing. Other options while appealing on the surface typically add more than late fees. These options include quick pay without any analysis or at the most spot analysis.
For those corporations utilizing SAP as their system of record, the solution is immediately available. SAP provides Document Archiving, OCR and Invoice Management for full Accounts Payable optimization. These solutions when implemented should allow not only for improved accuracy, lower staffing requirements, elimination of duplicate payments and compliance control, they will also ensure payment within the 30 day window…or better yet 10 days as in the UK.