E-invoicing – back to basics

E-invoicing – back to basics

Today we’re pleased to welcome a post from Richard Manson from CloudTrade.

E-invoicing means different things to different people.  For some it can be an enabler for supply chain finance and initiatives such as dynamic discounting. For others it provides visibility of spend and support for sourcing and rationalisation opportunities.

Complementary services and related marketing jargon have evolved hand in hand over the years but they mask the real reason why most organisations want to roll out e-invoicing:  Organisations have paper – loads of it. Most companies simply want to remove as much of it as possible from their processes to reduce operating costs and increase control and visibility.

So if the goal for most is to simply remove paper – and it’s an accepted fact that e-invoicing benefits all – why aren’t more people doing it?

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Unfortunately the market has been tainted by a history of (some) service providers over promising and under delivering.  You often hear providers claiming on one hand they “can move all your suppliers over to e-invoicing” but on the other, only offering solutions appropriate for the largest suppliers.

Sound familiar?  Supplier adoption rates have remained low and the paperless finance department has remained a dream.  There are three main reasons for this:

1)      E-invoicing solutions often demand that suppliers submit their invoices in XML or EDI format, which usually only the largest suppliers can do because of the changes needed to  infrastructure and the costs associated with this

2)      ‘Freemium’ portals which promised to remove these costs and thereby draw in the smaller suppliers simply don’t work for any except a micro business.  A  supplier that already uses an accounting package doesn’t want raise their invoice in one application, then do it all over again in another

3)      Suppliers also don’t want to pay for the privilege of sending their invoices to their own customer – a model many providers adopt.

For an e-invoicing solution to truly work and achieve high supplier adoption rates it needs to provide an easy way for suppliers to send their invoices – which doesn’t cause them any additional work or cost. It has to be simple to use and non-disruptive to their business:

  • Don’t ask them to change their applications or infrastructure to send XML or EDI
  • Don’t ask them to raise their invoice in their own accounting package and then do it again in a 3rd party portal
  • Don’t charge them!

If the ‘traditional’ e-invoicing models worked, we’d have a much higher adoption rate already. This in itself is sufficient evidence to point to the need for a different approach.  It’s not rocket science. The answers are staring us in the face. It’s simply a matter of getting back to basics and building on the win-win that we all know e-invoicing can deliver.

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