21 Aug 2013 e-invoicing – the supplier engagement plan
This is the first in a short series of articles by Jo Harris, Director of Programme Management at OB10. They are extracts from The Supplier Enablement Handbook, a best practice guide for e-invoicing and we’re especially pleased to feature them in Purchasing Insight.
The deepest and broadest hands-on experience of implementing electronic invoicing comes from the e-invoicing vendors themselves and as more and more organizations take on board the benefits of automating finance processes, sharing some of the lessons learned is extremely welcome.
e-invoicing – the supplier engagement plan
Before you start talking to your suppliers about e-invoicing, you must have a detailed plan in place to support your enrollment campaigns. Internal stakeholder support, clear messaging and a thorough understanding of your supplier-base demographics will mark the difference between an easily dismissed email and a set of strategic communications.
A supplier enrollment project is no different than any other change management exercise. It is often the thoroughness of the up-front decision-making process – in terms of quantifying the business case, involving the functional groups impacted, and gaining senior level buy-in – that ultimately has the greatest impact on the project’s success.
If you have done your due diligence, then the critical ingredients will be in place from the start:
- Supportive internal stakeholders
- Strong alignment and shared goals between Finance and Procurement
- Clear business value that can be articulated internally and externally
Planning the campaign
Once you have your organization’s commitment to rolling out e-invoicing, then it’s time to start the campaign-planning process. It’s no coincidence that people use the term ‘campaign’ to characterize the activity associated with a supplier enrollment project. Whether you’re running for political office or launching a new product or service, there are two principal ingredients for success:
1. Create a compelling message.
2. Deliver that message to your target audience in the most effective and efficient manner possible
Like the campaign manager or marketer, your job is not always a straightforward exercise. In a supplier campaign, you have many constituents and the message will vary depending on the audience.
Analyzing your supplier base
The era of mass marketing ended in the 20th century. Marketers now talk about segmentation as the key to success in any marketing campaign. Similarly, there is no one-size-fits-all model in supplier enrolment; you must do your up-front analysis before you can develop a campaign.
Your analysis will inform each component of your outreach effort, such as:
- Which channels to use for each group of suppliers
- How to stage the phases of the campaign
- Which suppliers should be in scope and out of scope
- Which benefits to articulate to which segment
- The frequency and tone of the messaging
Fortunately, there is empirical history to draw upon and modeling tools that can help you predict how suppliers will respond to each form of communication. We have, for instance, developed sophisticated models that, by inputting 20 or 30 variables, allow us to convert the maximum number of suppliers at each stage of a campaign.
Developing the message
Since you are reading this guide, you’ve probably already developed your business case for e-invoicing in terms of streamlining your processes, eliminating cost, and reducing approval cycles to better manage cash.
It is unlikely, however, that many of your suppliers will have done the same level of due diligence when they are approached about adopting e-Invoicing.
First, it is important for your suppliers to understand why e-Invoicing is important to you. All your communications should clearly state that electronic invoicing is your preferred method of receiving invoices to pay bills on time. Communications should be signed by a senior executive (preferably the CFO and/or CPO) to underscore the importance of the initiative.
Give a deadline for when you expect suppliers to conform to the new process. There should be an implied consequence if suppliers do not participate. While many companies are starting to impose mandates, most take this step later in their projects when the process has been worked out and embraced by the organization. Nevertheless, there are subtle ways of communicating the importance of this initiative to your company. For example, highlighting that paper invoices will be treated as a non-standard form of submission and will not be processed as quickly.
Second, e-invoicing offers tremendous value to suppliers so ensure you make the benefits clear in all of your external communications. Embracing any new technology can be challenging. But having made the transition and experienced the difference the new process makes, a return to the old ways is not even discussed. e-Invoicing is no exception.
At OB10, we conduct an annual supplier survey, and the results are predictable. At the outset, many suppliers are skeptical that e-invoicing will improve their processes, however, after six months of invoicing customers electronically, close to 80% say they have more efficient collections and improved payment performance, two things that are critical to business performance.
In the next two posts, Jo will share specific advice on how to engage with two distinct groups of suppliers: those that send a high volume of invoices or have more complex organisations and those that are smaller or that do occasional projects with their customers.
This is an extract from The Supplier Engagement Handbook, an e-book from OB10. You can download the entire e-book by completing the following form.