17 Sep 2010 Electronic Invoicing is Dead – Long Live Electronic Invoicing
The case for electronic invoicing is compelling – why would an organization that has invests millions – sometimes tens of millions – of dollars on a finance system want to operate a paper based process in the 21st century? But it’s not as easy as that – especially for global organizations. The wide variety of legislation around the globe creates a Tower of Babel for those attempting to implement electronic invoicing on a large scale. But the situation is beginning to evolve in a very positive way – and absolutely not in a way I would have predicted a few years ago. The electronic invoice is about to die on its feet leaving the door wide open for the new pretender to the AP automation throne – the new electronic invoice.
Electronic Invoicing – How Did We Get Here?
Recall how electronic invoicing evolved. EDI in 1990’s never took off. The concept was great and simple. Don’t use paper. Instead exchange electronic messages between businesses. But it was proprietary and costly and even when it embraced the internet, the standards were archaic and a hassle to maintain. There were some good things about EDI. Guaranteed delivery and proof of authenticity made it easy for tax authorities to accept it and it was the tax authorities that provided the biggest hurdle for internet based electronic invoicing.
This is where OB10 found a niche. With its VISA heritage, OB10 recognized the importance of securing approval from the law makers in the countries of their clients and they were rapidly successful in developing an internet based – non standards based – pure electronic invoice offering by ensuring that the invoice would be legally acceptable. But something was happening in parallel that was in many ways a much easier sale.
The concept of electronic invoicing – like purchasing cards – was always a bit difficult to explain. I’ve never quite understood why and it was disappointing to see many organizations checking the electronic invoicing box by using soft copy invoices – either sent as pdf or scanning paper invoices. This is superficial electronic invoicing. It completely misses the point. Or at least, it did.
The world has changed. While we’ve been concentrating on the internet and social media, the power and application of computers has continued to grow such that the fundamental assumptions that were safe ten years ago are no longer safe. We used to believe that for one computer to talk to another, they need to speak in computer language – pass non-human readable electronic messages to each other. That’s why the true electronic invoice was an electronic message – it met a strict and exact standard with predefined fields and structure. But today scanning and data capture technology is so sophisticated you can wave a screwed up, coffee stained, handwritten restaurant receipt at a good scanner and it will perform a 3 way match with you GRN and P.O. in an instant. OK, I exaggerate, but you get my drift. Today, there is simply no need to generate an electronic invoice message. All that’s needed is an image of a traditional paper invoice whether that’s scanned from a paper original or never rendered in paper in the first place.
Where does this put OB10 and Ariba? If computers today can interpret reliably pieces of paper, cXML invoices are pointless aren’t they? Why go to your suppliers and ask them to pay for the privilege of sending you electronic invoices in yet another different format?
The electronic invoice as we know it dead. Not because it’s pointless – but because there is simply no need to do the transformation from human readable to electronic. The future for e-invoicing is bright and it looks exactly like it did before e-invoicing.