The biggest single reason for not implementing electronic invoicing

The biggest single reason for not implementing electronic invoicing

Posted by Pete Loughlin in e-invoicing, Electronic Invoicing 07 May 2011

When is an e-invoice not an e-invoice? 10 years ago it was simple. It was clear that a “true” or “pure” electronic invoice was a structured computer-to-computer message. The supplier’s computer would send an invoice message in a format that the customer’s computer could read. An email with a Word document or an excel file attached was not an electronic invoice and worse, a pdf image of a paper invoice was nowhere near an e-invoice. These were superficial attempts to tick the e-invoicing box. They weren’t true electronic invoices. But in recent years the line between what is and what is not an e-invoice has become blurred and the “purity” of the “true” electronic invoice is becoming it’s own worst enemy.

Purchasing Insight logoIn recent years scanning and OCR technology has moved on in leaps and bounds. A pdf or Word attachment to an email that, if sent as an electronic invoice, would have been re-keyed just like a paper invoice, can now be processed automatically with acceptable levels of accuracy. Some companies are reporting in excess of 80% straight through processing by deploying OCR and intelligent data capture. By retaining some level of human intervention, straight through processing rates of 100% can be achieved.

“And that’s the point” say the purists. To get very high levels of accuracy with anything other than a true electronic invoice means retaining staff and “hand holding” the invoice. The purpose of AP automation is to reduce the number of FTEs in you AP process. Electronic images of invoices still require a manual process.

A mountain too high to climb

Herein lies the problem.  There are very few business scenarios where, by adopting a pure e-invoicing approach only, it is possible to get near 100% adoption. If you are in an industry where EDI has been the norm for many years, or if you have a small number of cooperative suppliers, a pure e-invoice approach alone may be successful.  But if, like most organizations, you have many suppliers, many of whom are unwilling to invest in technology designed to make your life easier, a pure e-invoicing plan will be seen as a mountain too high to climb and that in itself will be a the reason why an electronic invoicing programme will be abandoned – at least for the time being. It is simply too ambitious.

The hybrid approach to electronic invoicing

Of course pure electronic invoices are better than scanned images or emails. They’ll give me 100% straight through processing as opposed to the 70-80% that an OCR solution will give me. But I’d rather have 80% of something than 100% of nothing.

Adopting a hybrid approach that allows you to interpret scanned images as well as “pure” e-invoices as electronic invoices, allows the aspiration of 100% electronic invoicing to become attainable. Getting dogmatic about what is and is not an electronic invoice simply builds a reason not to do anything at all.

The hybrid approach is discussed in more detail here.

 

  • Hugh Chatfield May 7, 2011 at 4:29 pm /

    Yes – inertia of suppliers and buyers may be a problem. 100% adoption will come with time.

    It is interesting to take a look at the approach of Tradeshift – who have built on top of the Universal Business Language (UBL), a cloud based SaaS offering free invoicing.(the carrot) UBL is designed to plug into the back end of any existing system, providing only the transport of the business document from one business to another, along with new services such as social media functionality around each transaction.

    For the high end EDI class of system – you provide a translation back end from UBL into whatever your EDI system requires – for the very low end, a browser based system for generating and sending invoices is provided – and to send to someone who is not “on the system” – a PDF is generated and sent by email.

    For those who have already implemented a SCAN/OCR approach, adding a step in the process to first convert from paper to UBL, and then into your system would provide a gateway to new UBL services when you want to adopt them.

    http://goUBL.com

  • […] another thought provoking post over on Purchasing Insight that suggests we may need to settle for the 80% electronic invoicing model rather than what many of […]

  • John Vasili May 12, 2011 at 12:29 pm /

    We purchased our first scanner in 1988 and OCR in 1991 and binned the solution in 2005, why are organisations still looking at scanning & OCR in 2011? 100% electronic invoicing from the long tail of one time vendors?? Just imagine your self employed window cleaner ,consultant & SME vendors producing EDI , well this is currently being achieved via http://www.invapay.com .No vendor £$ investment required.
    No more scanning , PDF / XLS attachments, 100% PO visibility, full working capital management extended DPO & reduced vendor DSO. the 80% electronic invoicing model is no longer acceptable in 2011.

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