Health Care Accounts Payable Departments Cutting Costs to Avoid Financial Scars
The 21st-century health care faces numerous challenges with increasing costs being among the most pressing ones. Operating costs are the number one drainer of finances in most healthcare institutions. An average hospital incurs approximately $2,200 per day totaling to millions per year. Large hospitals that serve major metro areas record billions of dollars in operating costs. These huge costs are leaving health care with major scars, hence the need to devise strategies to reduce them and attain cost savings. One way of cutting costs is embracing technology in the health care accounts payable departments using electronic invoicing.
Problem Identification
Many hospitals make purchases through purchase orders. Suppliers ranging from medical equipment suppliers to drug companies make payment claims using invoices. They submit the invoices through the health institution’s EDI system for processing and payment. However, smaller and local vendors such as bakeries and delivery services do not tender invoices through the EDI. This means that many invoices are processed each month manually.
Traditional paper invoicing is costly. A majority of organizations spend between $3-13 per invoice. On average, manual invoice processing for a medium sized hospital costs around $250,000 per annum. Health care accounts payable professionals spend much time preparing invoices, securing approvals, and processing checks. Also, manual invoice processing poses various risks associated with duplicate payments, misplaced invoices, late payment penalties, missed early payment discounts, and incorrect allocations.
Solution
Heath care accounts payable teams do not need to process thousands of invoices manually and spend hundreds of hours chasing approvals and handling paperwork. The best solution is adopting electronic invoice processing that helps AP teams to save time, reduce labor, and importantly, bring cost savings in accounting. For example, iPayables’ electronic invoicing cuts the cost of invoicing by around $1-3per invoice. Electronic invoicing also eradicate the risks associated with manual invoice processing such as invoice loss and errors.
Benefits of Electronic invoicing
- Cost Reduction
The number one benefit of electronic invoicing is cost reduction. Your hospital can save tens if not hundreds or even thousands of dollars. Electronic invoicing gets rid of the many hours AP professionals spend on manual processing and soliciting for approval. It also eradicates operational inefficiencies that are equally costly. You get cost savings from reduced bank fees, fewer errors, and the expenses of compliance. You devote less money to administrative process and divert more funds to patient care.
- Fast Approvals
Electronic invoicing reduces approval time by around 80%. It lessens the probability of late payments that come with penalties, and you can enjoy dynamic discounting. Dynamic discounting allows suppliers to receive their payments early at a discount.
- Prevent Mistakes
Electronic invoices eliminate errors that occur when you process invoices manually. Mistakes can be costly for health institutions both monetarily and non-monetarily. They can result in financial loss and a ruined reputation for your organization.
- Reduce invoice duplication and overpayment
Whether accidental or intentional, invoice duplication and overpayment can take a toll on an organization’s bottom line. Electronic invoices such as the iPayables AP automation solutions have features that prevent duplicate payments and overpayments.
- Guarantee Compliance
E-invoices ensure that invoices adhere to corporate policies. They are more likely to guarantee that invoices comply with organizational policies on payments such as required approvals, approval amount threshold, and GL code.
When health care accounts payable departments do not automate, they risk incurring huge costs that leave them with major financial scars. Manual invoices are costly, time-consuming, labor-intensive, and vulnerable to lose, unauthorized access, duplicate payments, and overpayments.
Electronic invoicing has numerous benefits: reduced inefficiency, faster approvals, eliminated mistakes, and ensure greater compliance. Importantly, it has immense cost savings in accounting by improving the payment process, eradicating expensive and tiresome paperwork, eliminating costly mistakes, and reducing bank fees. Try electronic invoicing today and enjoy these enormous benefits.