Corporate sustainability has become a top priority for businesses globally in the wake of the expanding climate crisis and increasing pressure from consumers to ‘go green’. More than one-third of the world’s largest publicly traded companies now have net zero targets and over 2,000 companies have set science-based targets to reduce emissions.
There’s no denying that the digitization of Accounts Payable (AP) processes such as adopting e-invoicing and automation can help organizations reduce their carbon footprint. However, Mineral Tree’s 2021 State of AP report indicates that 45% of businesses still make more than half of their supplier payments via check, and 70% of all invoice processing globally is still paper-based.
Thankfully, AP automation is on the rise and its market size is expected to reach $6.7 billion by 2032. In this article, we’ll explore the sustainability benefits of AP digitization and help you understand how you can start your e-invoicing journey.
How Does AP Digitization and E-Invoicing Improve Sustainability Efforts?
Electronic invoices generate 87% fewer greenhouse gases than a paper invoice, a significant number when many organizations are processing thousands of invoices at a time.
Research by shared services link estimates that, on average, organizations with a shared services function receive 750,000 invoices annually. Roughly 60% are received as paper or printable PDFs. amounting to 3.6 billion paper invoices per year. Each invoice is two pages long, making 7.2 billion sheets, or 36,000 tons, of paper per organization per year.
The same study found that 17,000 gallons of water are used to produce a single ton of paper. So, to produce the 36,000 tons of paper used for invoices each year, organizations are using as much as 612 million gallons of water.
Adopting e-invoicing reduces the need for paper invoices, helping organizations cut their carbon footprint dramatically. Meanwhile, introducing automation and cloud-based technologies reduces electronic waste and releases less carbon due to using fewer servers and less power than on-premise solutions. The rise of e-invoicing coincides with the rise of Supply Chain Financing (SCF) and the two are often linked. As such, businesses could ask suppliers to fulfill certain ESG requirements to qualify for their SCF program. An example of this is Bridgestone partnering with EcoVadis, JP Morgan and Taulia to offer credit to suppliers who had met certain ESG requirements.
Automation can help businesses to optimize supply chains, allow for paperless reporting, and integrate sustainability objectives directly into workflows allowing them to cut down on energy usage and waste, driving sustainability and ESG performance.
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Why ‘Going Green’ is Good for Business
Going green will not only help save the planet — it can also help drive revenue and improve the reputation of your business.
Consumers across the world are becoming more aware of brands’ responsibility to respond to global warming challenges. As such, buying habits are changing in favor of businesses that are environmentally conscious.
In a study by Deloitte, 40% of consumers admitted to choosing brands with environmentally sustainable practices. In the B2B landscape, corporations and suppliers are equally eager to work with ‘green-friendly’ brands to enhance their own ESG efforts. By implementing sustainable practices such as e-invoicing, businesses can boost brand reputation and prominence in the marketplace.
Sustainability can also help companies to save money in the long run. Cutting down on energy — whether it’s by switching to a cloud-based model or removing internal servers — can help businesses reduce maintenance costs while decreasing their carbon footprint.
What are the Other Benefits of AP Automation?
However, digitizing AP processes isn’t just good news from a sustainability standpoint, it also provides a wealth of benefits for your business too.
Swapping paper-based invoicing for e-invoicing enables businesses to improve security, accuracy, and speed of generating and distributing invoices. It’s also an effective way to prevent manual errors, eliminate fraudulent invoices, and meet invoice deadlines, critical to maintaining strong relationships with suppliers.
By simplifying typically time-consuming manual processes and increasing productivity, AP automation can also help businesses to cut costs and boost profit margins. To read more about the benefits of e-invoicing, read our article ‘Why Automate AP Processes?.’
Another factor for businesses to consider is the uptake of e-invoicing and e-reporting mandates. To help ensure accurate VAT collection, and to drive digitization efforts, governments in every corner of the globe are making it mandatory for companies to submit invoices electronically and comply with strict reporting requirements.
By digitizing AP processes now, businesses can avoid hefty fines and reputational damage, two impacts commonly associated with non-compliance.
How Unilever Drove Sustainability through E-Invoicing and Accounts Payable with Tungsten Network, a Kofax company
Leading global consumer goods manufacturer, Unilever, took the strategic decision to migrate suppliers to electronic invoicing with the support of Tungsten Network, the world’s largest electronic trading network. Sustainability is central to Unilever’s core values, with a target of going net zero by 2039. E-invoicing has become a key component in their ability to reduce paper and increase efficiency within their AP function. Unilever’s Paperless Invoice initiative has now become the required method of payment for all suppliers. Read more on this here.
Switch to E-Invoicing and Decrease your Carbon Footprint with Tungsten Network
If you’re considering digitizing your AP function and adopting electronic invoicing, Tungsten Network is here to help your business on its journey.
As the world’s largest compliant business network, we support our customers in enhancing their invoice process via our digital network of buyers, suppliers, and other business ecosystems, helping them to achieve first-class processes and efficiency in Finance and Accounts Payable.
Made up of a global team of technologists, B2B commerce experts, compliance specialists, and digital evangelists, we can help you solve your Accounts Payable problems with innovative, digital solutions that are good for the planet (and good for your business).