When is free really free?

When is free really free?

Posted by Pete Loughlin in e-invoicing 22 Jun 2011

There’s been a good debate on linkedin over the past few days full of insightful and educated opinions on every side of the e-invoicing discussion.

It was started by Christian Lanng from Tradeshift asking what free really means but it spawned into a wide debate about e-invoicing generally and the relative merits of PDF, EDI, XML and of course, scanning which some of the the purists believe, is not the answer to the “e-invoicing problem” because it requires manual intervention.

Purchasing Insight logoScanning isn’t the answer to the e-invoicing problem but it is one of the components of a solution to the paper problem. It depends on circumstances but for some organisations who may have already invested in a scanning and workflow infrastructure, an incremental investment in intelligent data capture (look at Brainware, Readsoft, Kofax and others), could be a significant step forward on the journey toward 100% e-invoicing (or as near to 100% as you can get).

There is a growing number of businesses that are using scanning and data capture and actually, a significant  proportion require manual intervention – but it is minimal and they are achieving levels of productivity in AP of over 70K invoices per FTE.

80% of something is better than 100% of nothing!

In the real world the debate isn’t about which is best – EDI/XML invoices clearly beat scanning or PDF – the debate is about achieving best bang for your buck. Of course scanning won’t give me 100% accuracy but I can apply it to 100% of my invoices, and actually, in 2011 if my master data is half decent, I can aspire to 80% straight through processing on scanned invoices. In contrast, e-invoicing will give me 100% accuracy, but if I’ve got a widely dispersed supplier base so what? If I have thousands of suppliers all over the world sending me less than 10 invoices per year – e-invoicing is a non-starter. I’d rather have the 80% of something than 100% of nothing!

And talking of best bang for your buck, Christian’s original question was ‘what does free really mean?’ There are many cost components to e-invoicing: transaction and other third party fees, infrastructure costs, project management and legal costs but all are insignificant compared to the benefit of reducing the time to implementation. That’s much more important than “free”.

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  • Friso de Jong June 24, 2011 at 10:32 am /

    The discussion on LinkedIN can be found here: http://linkd.in/j5ISmr. Join the debate.

  • Bryan Lindenskjold June 24, 2011 at 12:17 pm /

    Discussions on electronic invoices are always interesting but outdated! If a customer has decided to order a product, it must be assumed by defination that the customer also have planned to pay if the goods are delivered? Since the process of receiving an invoice is almost 5 times as costly as sending one, why not put some focus on eliminate this process completely?

  • John Vasili June 24, 2011 at 12:45 pm /

    Simply solved by using http://www.invapay.com 100% e-invoices from even the smallest vendor,.

  • Christian Lanng June 24, 2011 at 1:27 pm /

    Hi Pete,

    Thanks for linking to LinkedIn discussion, it really seems that FREE is the f-word in this industry 😉

    Just one point where I think we disagree a little bit, if you have hundred of thousand or millions of suppliers who only send a small amount of invoices scanning is certainly a solution, but we have actually succeeded in several such projects. In our perspective it’s about lowering the barriers enough, that ANYONE can literally onboard in less than 3 minutes and when they do get a tool that is easy to use. Free is only aspect of these barriers, it’s an important one, but so is convenience (we have an Android and soon iPhone app for instance).

    I have personally been responsible for one of the largest scanning projects in the world and have never seen scanning automation above 3-40% without errors, where we have run several projects that captured 6-70% of the smallest suppliers on Tradeshift.

    So not a non-starter, but you have to approach it right

    /Christian

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