The truth about electronic invoicing? There is no “one size fits all” answer. An EDI feed is simply unrealistic for many companies. Asking suppliers to change for your benefit… that’s a hard ask. You have to show them a benefit too.
According to Billentis, 90% of all invoices globally were still processed manually…
Yes, 90% of invoices are STILL manually processed!
Yet people still claim that e-invoicing is the Holy Grail of Accounts Payable.
How often have you heard; “we are moving to e-invoicing to automate our Accounts Payable”.
This is ignoring the fact that in every country there are different descriptions for what e-invoicing is.
Assuming (ouch!) that the person you are speaking with can even explain what they mean!
What is e-invoicing?
In 2014, e-invoicing was defined by EU Directive 2014/55.EU;
“an invoice that has been issued, transmitted and received in a structured electronic format which allows for its automatic and electronic processing”.
This definition gained very little support in the wider European community. Why?
My guess? SME’s just don’t have the money to invest in tech like this.
In 2017 came Duty to Report Payment Practises.
As part of this the UK government attempted to define e-invoicing again;
“This is where suppliers can electronically submit and track invoices. It’s not just allowing suppliers to email them an invoice.”
Notice, track their invoices… Doesn’t much sound like an EDI feed does it?
There have been many attempts to define what an electronic invoice is.
In fact, it is virtually impossible to really define what true electronic invoicing is. It is different for nearly everyone.
This is another example, perhaps, the truth behind why suppliers won’t adopt e-invoicing.
My suggestion? A combination.
- Emails can be e-invoicing, if you don’t print them out, or copy the data manually.
- A supplier portal? This can be e-invoicing, without all the restrictions on formats.
- OCR / ICR can be part of e-invoicing, if you get your suppliers to send you the invoice in one of these two ways.
- EDI can be e-invoicing, if you can automate the feed.
You see the problem? There is no “one size fits all”.
For any e-invoicing to work you need structure…
And this is a major hurdle, although not impossible for some.
For a P2P process to be automated, and manual touch points to be eliminated, it is vital that data is created, processed and retained in a structured way.
There have been some great advances, particularly in countries that have moved from a post-audit VAT process to a clearance model.
However, this is not a global approach. Countries that are moving towards it are focusing on business to government invoices or bills (B2G).
Another way in which to move towards e-invoicing is using a file that already exists in many ERP’s.
Oracle, SAP and Dynamics already generate a readable PDF document when an invoice is raised.
By receiving a readable PDF you are able to reduce a number of the manual steps.
BUT this file still needs to be found, extracted and sent and this may not be much easier than sending an e-mail.
In the UK it is very rare to find anyone that has converted the majority of their suppliers to e-invoicing via data transfer.
Simply put, invoices in the UK are, at best, semi-structured documents.
Even in France, where invoices must follow specific rules, data transfer still makes up a tiny percentage of invoices.
Is e-invoicing passing the buck?
Possibly, at least that is often the way it appears to people.
And perhaps this is the truth of why suppliers won’t adopt e-invoicing when asked.
On the one hand you are offering your suppliers a way to do business with you that is faster, smarter and safer.
On the other, you are asking them to;
- change their processes,
- carry out the job of uploading information and data,
- log into portals and manage the process themselves.
Just to get paid for the service or product that they have already created and supplied!
Now it doesn’t seem so appealing, right?
If you have the buying power of a big multinational organisation, or retail group, then you will likely find suppliers willing to do this.
For many of us this is not the reality.
The result? Few suppliers will proactively engage in an e-invoicing or supplier portal based process.
To put this into context for many of you reading this;
Try asking BT, British Gas, your local District Council and ask them to change the way they issue invoices, just for you, what result will you have?
Dynamic e-invoicing is the answer.
What we see happening is greater investment into technology to help offer flexibility to organisations.
No longer a “one size fits all” approach. This simply doesn’t work, and likely never will.
Offering supplier portals, email capture, PDF capture and paper capture gives flexibility for your suppliers
Flexibility to engage in the way that works best for both of you.
We recommend that you make every effort to move your suppliers to digital exchanges.
But consider who your suppliers are and what the benefit is to them, as well as to you.
If you look for a solution provider that supports this, you will get better results in the end.
Not a provider that tells you their way is best.
On the face of it, moving to dynamic e-invoicing should be a no-brainer. And that’s the truth about e-invoicing. Dynamic.
Reductions in cost, waste, environmental impact and time that are made by removing manual processes and paper should be enough for anyone.
What do you think the future of e-invoicing is?
Want to know more?