Before we get down to serious business, I thought I would start off with a fun fact about Earth Day:
Why is Earth Day Celebrated on April 22nd?
The April 22 date was selected in part because it fell between colleges’ spring break and final exams, and also from the observance of Arbor Day, which began in Nebraska in 1872, a day when people are encouraged to plant trees. The idea was to pick a date when as many college students as possible would be available to participate in the planting of trees. At the first Earth Day in 1970, an estimated 20 million Americans took to the streets, parks, and auditoriums to demonstrate for a healthy environment and to participate in teach-ins.
The environment is something we should be concerned with all the time and not just one day per year. Some of you are probably wondering 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 AP (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 that number to be in the hundreds of billions, yes, billions. In North America alone, we estimate there to be tens of billions invoices on an all basis. Of all the invoices in North America, roughly half are still sent in paper format according to Ardent Partners’ 2020 State of ePayables research that reported that 49% 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 invoice also requires a paper envelope for delivery. Any way you look at it, we are talking about an incredulous amount 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 2020 State of ePayables research showed that 57% of payments were being made electronically. While the trend to electronic payments is moving in the right direction, we still have a long way to go. And again let’s not forget about the paper envelope required for each paper check payment.
Why should we care about the amount of paper being used for invoices and payments? Let’s start off by looking at some of the environment 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, safe, and cost effective for suppliers and buyers alike. Electronic invoicing and electronic payment solutions (Bottomline, Nvoicepay, Coupa, GEP, Esker, Taulia, Tradeshift) have been around for years but, as shown above, uptake on them both is still not near where they need to be.
On their own, eInvoicing and ePayments make sound 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. There is only one planet earth and eInvoicing and ePayments are a great way to help us safeguard the environment while benefiting our businesses at the same time.
RELATED RESEARCH
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