Value Engineering: the Strategy to Maximize Your Invoicing Process’s Value
How your company collects payments is a more strategic question than you might think. Here, Billogram’s expert explains why Value Engineering can be a game-changer for your invoicing and payment processes.
First Things First: What is Value Engineering?
Value Engineering is the detailed value analysis of every step needed to create a product, service, or process. The goal is to identify areas that can be optimized to reduce costs and increase value without compromising quality and functionality.
In manufacturing, Value Engineering could mean switching to lower-cost materials; in services, it might involve reducing time-consuming administration. Large companies sometimes engage consultants to conduct value analyses of core processes, including the overarching business strategy and business model.
A key principle of Value Engineering is to question the status quo: Are we doing things the best way possible, or could we optimize? And which changes will yield the greatest ROI?
“Many underestimate the strategic value of invoicing and payment”, says Magnus Ekenstam from Billogram.
Focusing on invoicing might not seem common in this context, but that’s something Magnus Ekenstam, Value Engineering expert at Billogram, wants to change. He believes that today’s companies often overlook the strategic value of their invoicing and payment processes. The reasons for this, he explains, are understandable:
“While collecting payments is fundamental for every business, it’s not their core operation or area of expertise. That’s why these processes often don’t receive the attention they actually deserve.”
3 Benefits of Applying Value Engineering to Your Invoicing and Payment Processes
In this on-demand webinar, Magnus explains how to maximize the value of your invoicing and payment management. Below, he shares three compelling reasons to adopt a strategic approach to these critical processes.
1. You Can Uncover and Minimize Hidden Costs
“In a typical invoicing process, there are hidden costs tied to time-consuming manual handling, even when everything is running smoothly. When something goes wrong, it can take time to locate and fix the issue, which may mean restarting the process. All in all, an invoicing cycle can take anywhere from two days to a full workweek to complete,” explains Magnus.
“If you could handle invoicing in just one day instead, imagine the resources you’d free up for other tasks.”
2. Avoid Impulsive (and Costly) Decisions
Magnus warns that failing to give invoicing the strategic attention it deserves can lead to expensive mistakes. He uses the example of introducing card payments for ongoing services:
“A few years ago, offering card payments, even for ‘silent’ products like utilities and broadband, became a trend. Providers saw demand from customers and were eager to meet it.”
The result, however, had consequences many companies may not have anticipated, particularly a decline in profitability due to fees:
“Transaction fees on card payments may seem small, but in industries with tight margins, it can amount to giving away 20% of your profit margin. This impact becomes even more significant as margins shrink across many sectors.”
3. Gain a Holistic, Long-Term Perspective
Value Engineering allows you to take a broad view and think proactively, Magnus says.
“Of course, you should listen to your customers. But before making big decisions, like adding a new payment option, consider the long-term consequences and balance costs against value.”
Some useful questions to ask at this stage are:
- What is the underlying goal we want to achieve with this change?
- Can we achieve the same goal through other, more cost-effective means?
- Which solution best aligns our customers’ interests with our own business goals?
Learn More in Our Value Engineering Webinar
Would you like to hear Magnus explain how Value Engineering can turn your invoice-to-cash process into a strategic asset? And see specific examples of how companies in various sectors have benefitted? Stream our on-demand webinar today.