e-invoicing and the unintended consequences of a mandate

e-invoicing and the unintended consequences of a mandate

Industry experts are increasingly calling for an e-invoicing mandate. In the USA as well as Europe, disappointing adoption rates over the last decade look rather embarrassing when compared to the dramatic success in Latin America where the use of electronic invoices for many businesses is not optional. But while a mandate could be seen as enforcing common sense, could there be some unintended consequences that will actually mean that mandating e-invoicing will be counter productive?

Purchasing Insight logoCarlos García Aguillón, Account Executive at Buzón e, writing in OB10’s blog explained the dilemma: “Most companies invest their efforts into simply meeting the e-Invoicing regulations but very few take full advantage of the mandate to improve their sell-to-cash or purchase-to-pay cycles. In my opinion, this is a missed opportunity.”

It’s worse than a missed opportunity. It could actually stifle efforts to promote best practice. If companies budget for bare minimum they could be left with a mixture of old world paper processes and mandated electronic processes that require so much manual intervention that the cost of doing business actually goes up.

It wouldn’t be the first time we’ve seen this. In the early years of the century the UK government mandated what they called e-government. e-government was all about using e-business technologies and techniques to drive the cost of government down and public sector bodies were charged with delivery of these efficiencies. One of the efficiencies that many delivered was “e-invoicing”and some government departments got their tick in the box for e-government. But they hadn’t implemented e-invoicing. They asked their suppliers to send them invoices electronically – via email. These “e-invoices” would then be printed, sometimes scanned, then processed manually. There was no savings delivered. In the worst cases, suppliers were printing invoices, scanning them, emailing the image for it to be printed at the other end. Departments had done the bare minimum to meet the requirements and as a result, they did more harm than good.

The Latin American experience can provide the rest of the world with some great lessons but we need to look a little further than the headline adoption numbers. Just because we see lots of take up, it doesn’t mean it’s being done for the right reasons or having the desired effect.

Pete Loughlin can be found on twitter @peteloughlin