Electronic Invoicing is Dead – Long Live Electronic Invoicing

Electronic Invoicing is Dead – Long Live Electronic Invoicing

Posted by Pete Loughlin in Electronic Invoicing 17 Sep 2010

Purchase to Pay, P2P and Dynamic DiscountingThe case for electronic invoicing is compelling – why would an organization that has invests millions – sometimes tens of millions – of dollars on a finance system want to operate a paper based process in the 21st century? But it’s not as easy as that – especially for global organizations. The wide variety of legislation around the globe creates a Tower of Babel for those attempting to implement electronic invoicing on a large scale. But the situation is beginning to evolve in a very positive way – and absolutely not in a way I would have predicted a few years ago. The electronic invoice is about to die on its feet leaving the door wide open for the new pretender to the AP automation throne – the new electronic invoice.

Electronic Invoicing – How Did We Get Here?

Recall how electronic invoicing evolved. EDI in 1990’s never took off. The concept was great and simple. Don’t use paper. Instead exchange electronic messages between businesses. But it was proprietary and costly and even when it embraced the internet, the standards were archaic and a hassle to maintain. There were some good things about EDI. Guaranteed delivery and proof of authenticity made it easy for tax authorities to accept it and it was the tax authorities that provided the biggest hurdle for internet based electronic invoicing.

This is where OB10 found a niche. With its VISA heritage, OB10 recognized the importance of securing approval from the law makers in the countries of their clients and they were rapidly successful in developing an internet based – non standards based – pure electronic invoice offering by ensuring that the invoice would be legally acceptable. But something was happening in parallel that was in many ways a much easier sale.

The concept of electronic invoicing – like purchasing cards – was always a bit difficult to explain. I’ve never quite understood why and it was disappointing to see many organizations checking the electronic invoicing box by using soft copy invoices – either sent as pdf or scanning paper invoices.  This is superficial electronic invoicing. It completely misses the point. Or at least, it did.

The world has changed. While we’ve been concentrating on the internet and social media, the power and application of computers has continued to grow such that the fundamental assumptions that were safe ten years ago are no longer safe. We used to believe that for one computer to talk to another, they need to speak in computer language – pass non-human readable electronic messages to each other. That’s why the true electronic invoice was an electronic message – it met a strict and exact standard with predefined fields and structure. But today scanning and data capture technology is so sophisticated you can wave a screwed up, coffee stained, handwritten restaurant receipt at a good scanner and it will perform a 3 way match with you GRN and P.O. in an instant. OK, I exaggerate, but you get my drift. Today, there is simply no need to generate an electronic invoice message. All that’s needed is an image of a traditional paper invoice whether that’s scanned from a paper original or never rendered in paper in the first place.

Where does this put OB10 and Ariba? If computers today can interpret reliably pieces of paper, cXML invoices are pointless aren’t they? Why go to your suppliers and ask them to pay for the privilege of sending you electronic invoices in yet another different format?

The electronic invoice as we know it dead. Not because it’s pointless – but because there is simply no need to do the transformation from human readable to electronic. The future for e-invoicing is bright and it looks exactly like it did before e-invoicing.

  • invoice sample September 25, 2010 at 6:49 pm /

    Good article. I always use electronic invoice. It can save cost, save time and save the world also.

  • Ronald Duncan November 7, 2010 at 10:46 am /

    We implemented e-invoicing for the supermarkets back in the 90’s and it was very straightforward they said to EDI or stop trading with us. The suppliers all said yes we will do EDI and then asked what EDI was, we had about 100 on our shared system straight away.

    We moved into ecommerce back in 1999 and have been sending e-invoices to all our customers since day 1. There are lots of different formats and the customer gets what every format they want.

    I know the guys at OB10. I think we just have about 5 common customers. We have now been in dialogue about interoperablity for 5 years, with Ariba we just implemented the interop for for the first customer that asked without even discussing it.

    Personally we just want to interoperate with everyone in the market and standards do make this easier, we normally use either BASDA XML or cXML for interoperability.

    Ronald Duncan
    @UK PLC

  • Mikkel Hippe Brun December 14, 2010 at 3:57 pm /

    @Ronald I agree with you here. Scanning and OCR solutions introduces new problems with a high error rate. There is also a significant cost associated with scanning and OCR. Why try to optimize a process that can be eliminated entirely? Brazilian companies exchang more than 100 million XML-based invoices every month gaining significant cost savings. The e-invoice is not dead.

  • Hugh Chatfield November 17, 2011 at 3:04 pm /

    Last thing a company receiving 400,000 invoices per month needs is a picture of those invoices. Last thing a SME needs is to have to spend great gobs of $ to send in an invoice to get paid. Methinks the future is as Mikkel says – XML – in particular the Universal Business Language (UBL).

    As Tim McGrath said:
    “…the UBL Invoice is the only XML Invoice document standard that is sanctioned, stable, integrated within a suite of supply chain documents and is the nearest thing the world has to a purpose-built ebXML document format.” See http://ubl.xml.org/forum/einvoicing-–-the-european-saga

    Everyone can use whatever HW/SW they like internal to their organizations – but need to exchange their data, not in some proprietary form requiring installation and maintenance of their SW at the receiving end – but in a standard way that everyone can process and at little to no cost.

    Not a new concept – think of the ensuing chaos if every web document exchanged on the internet was some proprietary format rather than a standard html or xhtml. Imagine if every graphic or photo was in a myriad of proprietary formats. Imagine if every electrical plug was different technology, or if a phone call required you to know and handle some proprietary technology at the place you were calling. We do need standards – especially for interchange of information and services.

    But we don’t need pictures – we need to take advantage of the fact that the data in that picture came from electronic data in the senders space, and that in the receiver’s space significant advantages could be achieved if only they could access that electronic data. We have the technology! http://goUBL.com

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