Electronic Invoicing – Top Ten Tips To Choosing a Partner

Electronic Invoicing – Top Ten Tips To Choosing a Partner

Posted by Pete Loughlin in Electronic Invoicing 21 Dec 2010

Purchase to Pay, P2P, Procurement Process, Purchasing Process and Dynamic DiscountingElectronic Invoicing – Choosing the Right Partner

Make no mistake – you’re not buying a solution – you’re buying into a partnership.

Electronic invoicing has some major challenges: technical challenges; legal and tax challenges and commercial challenges. The success of an e-invoicing project is highly dependent on the success of your partnership with your e-invoicing provider. You could be working with them for a long time so your selection needs to be made with your eyes open.

Here are ten of the most important selection criteria. In no particular order, they should help you to understand where to focus when selecting an electronic invoice partner.

1. Horses for Courses

If you only operate in Finland why look at big players with impressive global credentials when you have smaller specialist providers closer to home? If your organization only requires support in one language, why pay for support in twenty?

Remember that you are selecting a partner that meets the needs of your, unique organization. The “biggest and best” may be the “biggest and best” generally but consider if they are the best for your specific set of business requirements.

2. Legal and Tax Advice

Don’t listen to the vendor. Well, listen a little bit.

All electronic invoice providers will tell you that they are “accredited” in whatever country you want to operate in – unless of course they’re not. However “accreditation” is meaningless. It is not the e-invoice partner that requires the accreditation it is you! It is not the e-invoice partner that will go to prison if it all goes pear shaped.

The experience that a vendor can demonstrate in operating successfully in many tax authorities is highly valuable. It demonstrates their experience and ability to support other customers operate successfully in those regions but get your tax and legal advisers involved and don’t rely on the claims of the vendor.

3. Open or Closed

In the olden days of the 20th century you had one choice: EDI. One of the great things that the maturation of the internet brought about was openness and interoperability. No longer do you need to buy into long term relationships to support your EDI gateway and infrastructure.

The e-invoicing world is divided into two. The “closed” networks who tend to be the largest and the “open” networks who tend to be smaller but promise to interoperate with each other. “Open” or “Closed” is an over simplification really but “interoperable” and “non-interoperable” is quite a mouthful – you can see why the shortcut open and closed is easier – if not entirely accurate.

The choice between the two isn’t that straightforward and should not be made without detailed research and consideration. It depends on your circumstances, your geographical reach, your business objectives and your supplier profile.

4. The Business Case

Get the vendors to put their thumb print on it.

When you’re building the business case, ask the vendors to contribute. If they’re worth their salt they’ll do more than a ready reckoner business case and pass on some real knowledge based on real experience with other customers.

And there’s another benefit from this approach. Engaging closely with the vendors at an early stage allows you to work with them and get to know them. Talking detail on the numbers allows you – and the vendor – to gently negotiate before talking turkey.

5. Geographic Coverage

If your organization is based only in Mexico where there is a set of quite unique challenges for an e-invoice provider to deal with, your choice might be different compared to an organization based in hundred of countries around the globe. Less is more sometimes and a specialist in your local region may be better than a big global player.

6. Experience

Electronic Invoicing is relatively new. In Europe, less than 10% of invoices are electronic despite over a decade’s worth of effort by the industry to change that. And experience counts for a great deal. Credentials to demonstrate that an e-invoicing partner has real experience in tackling and overcoming the technical, legislative and commercial challenges of electronic invoicing are critical to your choice and the new kids on the block should be scrutinized with great care – or ignored entirely.

7. Staying Power

No one has a crystal ball but it’s important to understand what the future looks like for your partner. The question you need to ask is: “Will your partner will be about – in whatever form – for the life of your project?”

It’s not all about the headline financial figures neither is it about longevity. Just because a vendor has been about forever, doesn’t mean they’ve been focused on electronic invoicing as we know it today for a long time and great financial strength and stability is not necessarily a guarantee that they will be around next year. These factors are important of course but the question is more about commitment to the future than claims about the past.

8. Contractual Terms

Go into your negotiation with your eyes open. At the outset of a contract everything’s rosy but the contract terms aren’t there for the beginning – they are there for the end – when things go sour. You don’t want onerous termination penalties. You don’t want  your supplier relationships compromised. So don’t think of the contract terms as a description how things work in the happy times. Consider the scenario as it exists when the worst happens.

One more thing, it’s naive to think that a provider won’t lock you in or ask for a commitment to some extent. All providers need you to commit – be more suspicious of the vendor that is offering something for free.

9. Size isn’t important – are you kidding?

The more suppliers a partner can bring to the table the shorter your time to benefit. It’s as simple as that.

10. Cost – leave this until last

This may sound unusual but cost is the least important issue. If your business case stacks up you’ll clean up on cost savings. Why compromise the success of your project by compromising on the rest of your selection criteria? You get what you pay for – bargain basement software is priced like that for a reason. You need you partner to support you in getting suppliers on board. You need your partner to be around while you’re still around. Don’t assume you’ll get that for free.

  • Susie West December 22, 2010 at 2:05 pm /

    Hi Peter – I really liked this piece! Great tips! Just one thing – there’s no mention of the supplier onboarding piece, which all the large Service Providers focus a lot of attention on. Do you have a view on this? Thanks! Susie

  • Peregrine December 22, 2010 at 6:30 pm /

    Thank you Susie. I’m glad you like it.

    And you’re absolutely right of course. The amount of effort required for supplier onboarding should not be underestimated and expert support from your vendor will be critical. It is simply not an option to tackle this without help.

    Indeed, this aspect of suppler selection is so important, it will be the subject of a dedicated piece in the New Year.

    Pete

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