Manual invoice processes not only waste hours of precious employee time, but also increase financial inaccuracies – adding to an overall lack of transparency. Visibility into payments can also be problematic, leading to difficulties with tracking and tracing supplier payments. When adding international invoices to the mix, it’s easy to see how you can face the additional challenge of control around foreign exchange rates and fees.
International payments are typically more time consuming and costly compared to domestic invoices, and they often take several days when done manually, incurring high fees for both the buyer and the seller for foreign exchange.
What we find it that the value of VAT reclaim on AP invoices is often unknown or low on the priority list, as it’s cumbersome to recover funds. Taxback International recently conducted a study that identified that 70-80% of supplier invoices charge VAT incorrectly. Despite this, many organisations perceive their policies and processes as adequate.
It All Adds Up
Let’s take a look at an example of the average SAP Concur small and medium business (SMB) client that typically processes over 250 invoices per month:
- Of these, 75 invoices per month are cross-border
- The average invoice value is £5,000
- Therefore total cross-border payments value per month = £375,000
And with TransferMate’s AP payment and VAT reclaim solution:
- Cost of Foreign Exchange (FX): £125 per invoice [2.5% of invoice value]
- Total FX cost per month: £9,375
- TransferMate’s FX Margin at £40 x 75 payments = £3,000
- Therefore, savings per month = £6,375
In addition, traditional cross-border payments charge a sender fee on top of FX costs. Altogether, the fees and less competitive FX rates add up, and then they are taxed.
- Sender Fee: £30 [assuming priority same-day transfer]
- Average total sender fees per month: £2,250
- TransferMate charge ZERO Sender Fees.
- Estimated cost of fees and non-competitive FX rates per month = £8,625
- The total VAT incurred on these invoices is estimated at £78,750 (based on an average VAT rate of 20%).
Now imagine if there was a way you could speed up these payments, and recover up to 27% of the cost of the total invoice?
Our automated invoice software creates more efficiency, putting companies back in control of spend, and providing a clearer picture of where money is going and where you might be able to reduce costs.
- Same/next-day payment of invoices
- Full visibility throughout the payment journey
- No sender/receiver fees and competitive FX rates
- Invoice and payment data saved for future use
- Maximum VAT reclaim potential identified
SAP Concur has partnered with TransferMate and Taxback International to provide automated invoice payments and simple integrated VAT reclaim all from the same platform.
“PaymentsHub provides SAP Concur customers with a better way to pay invoices with the unique value add of maximising your VAT recovery simultaneously.”
– Tim Page, Senior Director, Head of Partnerships and Alliances at SAP Concur.
Automating international payments improves productivity and accuracy, and can create new revenue streams through VAT reclaim for companies who may have considered the process cumbersome.