15 Jun 2011 e-invoicing – time for a no cost option

Research published earlier this year by Basware indicates that costs of e-invoicing to suppliers is one of the dominant reasons for poor adoption of electronic invoicing. A huge 46% of respondents to Basware’s survey said a combination of cost to suppliers and supplier reluctance was the biggest challenges to automation. This is hardly surprising, for years the big e-invoicing networks have loaded the implementation and running costs on the suppliers and it is now limiting further growth. It’s time to take another look at the charges for e-invoicing generally and how it is distributed between buyers and suppliers.

Time to re-assess e-invoicing pricing models

e-invoicing is never going to be free (although the free social network flavoured solution offered by Tradeshift threatens to prove that assertion wrong) but, on the buyers side of the fence at least, the cost of implementing is lower than the cost of retaining archaic processes. Why then, given a more efficient and cheaper way of doing things, would an organization try to justify passing on all or part of the operational costs onto the supplier? I can only think of two reasons why a buying organisation could rationalize the imposition of a cost to the supplier:

1. Their business case doesn’t really stack up so they need a zero cost solution;
2. They want to take an opportunity to squeeze more money out of a supplier and haven’t yet realised that the cost will be passed back in some other form.

The benefits of e-invoicing are all on the buyer side. Sure you can build a benefits case for the supplier but let’s be brutally frank – no one is going to get excited about a business case based on offsetting the cost of an envelope. The saving are all in AP – the automation of the matching process; increased accuracy leading to few issues and the development of a more strategic AP team that only deals with exceptions can get on with value added activities like managing cash flow.

The e-invoicing networks that are maintaining their traditional pricing models are acting as a blocker. They’re cutting their nose off to spite their face and now is a good time for a rethink. They should alter the cost models to reflect the inequity in the buyer/supplier relationship and offer a no cost option to suppliers – regardless of volume and value of invoices.