“e” is in the eye of the beholder

“e” is in the eye of the beholder

Posted by Pete Loughlin in e-invoicing, e-Procurement, e-Procurement Software, Electronic Invoicing, Intelligent Data Capture, Purchasing Process, Spend Analysis 02 Sep 2011

It’s fascinating. No one would argue that e-procurement wasn’t e-procurement because the final P.O. produced was an emailed pdf. But when it comes to e-invoicing, people get very precious about what is and isn’t an e-invoice. Why is that?

Purchasing Insight logoIn the days before e-procurement, the purchasing process could be a complete nightmare. Paper requisitions that required approval from multiple people in a real place of work would often end up as tattered and battered manuscripts that were barely legible. I once saw a requistion that had 12 signatures on it – some were duplicate. Yes, the approval process required the same person to sign the paper work more than once. e-procurement eliminated all of that. Yes the approvals are still required but there’s a great deal of automation involved and the cost of the process is much less. What’s more important though is that buyers are freed up to add value instead of administering a process, compliance is optimised and spend can be analysed and managed much more accurately.

More often than not, the supplier’s sales ordering process is no more efficient than it was in the paper world. A pdf purchase order still needs to be dealt with manually. Of course high volume suppliers can implement technologies like punchout but in the grand scheme of things, end to end automation is the exception rather than the rule. So if the transmission of a pdf P.O. is “e” why is a pdf invoice?

In a recent article in EEI Platform, huge growth in the adoption of e-invoicing in The Netherlands is reported:

“Freelancers and small companies focus on the use of PDF and email for e-invoicing. They experience e-invoicing as a way to replace the mailman with a low-cost alternative that allows to add a payment incentive, says 56%-68% of the respondents” it is reported.

Is this e-invoicing? Of course it isn’t. But on the other hand, if I’m a buyer and I use intelligent data capture to automate my accounts payable procsses – I’d welcome pdf invoices and I wouldn’t make a distinction between that and an EDI invoice. In terms of automation of AP, the two are the same.

And this is the point. It’s not the format of the invoice that determines it’s “e” qualities – it’s what you do with it that counts. “e” is a euphemism for automation. If I send pdf invoices, that’s not e-invoicing. It’s not helpful. It doesn’t automate anything. But neither is an EDI invoice if it’s sent to a buyer that doesn’t use EDI. There needs to be a level of collaboration so that the invoice process can be automated. That’s what makes it “e”. If I send a pdf invoice to a supplier that request me to do so in order that they can automate their AP process is that “e” – yes it is.

This isn’t a contradiction. The fact is that “e” is in the eye of the beholder. It is the optimisation and efficiency of processes that is important and we should spend less time worrying about nomenclature and put more energy in to the things that count.

  • Christian Lanng (CEO Tradeshift) September 2, 2011 at 9:54 am /

    Pete,

    I saw the article on EEI Platform and considered commenting there, but here goes.

    I agree that PDF is a great lowest denominator format, but it has some very poor qualities when it comes to storing data. We already support PDF invoicing in Tradeshift, but we would rather have people using our direct XML option where applicable.

    I have a hunch that the real problem in the discussion between PDF vs. E-invoicing is something nobody in the industry want to say, they don’t like PDF because it’s typically free to send and generate, ie. network providers loose money, but that also goes the other way, what if there was a free, easy to use network for exchanging real XML invoices, with all the value-add that comes from having real data, not just a picture?

    /Christian

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