Earth Day 2019 doesn’t take place until April 22nd, and this blog post might be better suited for then, but the way I see it, the environment is something we should be concerned with all the time and not just one day per year. Some of you are thinking, what does ePayables have to do with the environment, and can we really make a difference? The short answer is YES to both questions. The policies, procedures, and technologies that Accounts Payable and Procurement employ can have a huge impact on helping to preserve the environment.
It’s impossible to get an exact number of how many invoices are sent globally on an annual basis, but we at Ardent Partners estimate the number to be in the hundreds of billions, yes, billions. Of all these invoices, more than half are still sent in paper format. Our own Ardent Partners 2018 State of ePayables research showed that 55% of invoices are still being received manually in paper format. And we can’t forget that each paper invoice needs to be sent to the buyer in order to get paid. That means each also requires a paper envelope for delivery. Any way you look at it, we are talking incredulous amounts of paper.
Now let’s turn our attention to payments. Over the past 5 years or so we have seen a large increase in electronic payments being sent. Our 2018 State of ePayables research showed that 59% of payments were made electronically. This is the highest percentage we have ever seen in our study and progress is definitely being made. However, 41% of billions of payments is still an insane amount of paper, and once again, let’s not forget about the envelope required for each payment.
Why should we care about the amount of paper being used for invoices and payments? Let’s start off by looking at the environmental impact of all this paper.
- 1 tree = 8,500 pieces of paper
- 1 million invoices = 118 trees
- 1 million invoices = 36 tons of carbon dioxide (CO2) footprint
- 1 billion invoices = 118,000 trees
Any way you look at it, the impact to the environment is significant. Talk of global warming is all over the news these days. Reducing the amount of trees and increasing the amount of CO2 into our atmosphere is not a value adding proposition.
The irony behind all of the paper being used for invoices and payments is that there are electronic means of sending both that are not only much better for the environment but also more efficient and cost effective for suppliers and buyers alike. Electronic invoicing and electronic payment solutions (Tipalti, Tradeshift, SAP Ariba, Coupa, Basware, AvidXchange, Nvoicepay) have been around for years but, as we showed above, uptake on them both is still not near where they need to be.
On their own, eInvoicing and ePayments make business sense, but when you add in the environmental benefit both provide, there really is no reason why they are not being used by most, if not all, businesses around the globe. Technological advancements and financial investments in both areas have been significant over the past 5 years and solution providers are making it easier every day for suppliers to send invoices electronically, and buyers to pay their suppliers electronically. In the future, I will go into each of these technologies in more depth but in the meantime it’s up to all of us to safeguard the environment, and eInvoicing and ePayments are a great start.
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