How to write an RFI for e-invoicing – part 1 – Dos and don’ts
There is no single correct approach to writing a Request for Information (RFI). A good RFI should be appropriate to the unique set of circumstances of your organization but this is not to say that there aren’t some key pointers that you should follow. In this fisrt part of a two part piece we offer some ideas of how to approach the development of an RFI for e-invoicing.
Developing an e-invoicing RFI – “Dos and Don’ts”
1. Do take a step back
Don’t do anything until you know what you’re doing and more importantly, untill you know why you are doing it.
Is e-invoicing a mandatory requirement? Is it part of an AP automation program or a wider purchase to pay initiative? What are the success criteria? Is it headcount reduction? Reduced time to pay? Quantified discounts achieved? Is it about your organizations green agenda?
It is very rare, especially in a commercial organization, that the project is going to get sponsorship without some very specific and measurable benefits and these need to be clearly understood first.
2. Do analysis of your situation
Before you know what kind of approach to adopt, you need a detailed understanding of your accounts payable landscape. Knowing how many invoices you process and their average value doesn’t even scratch the surface. You need much more information including, but not limited to this list:
- Number of Invoices
- Number of invoices with P.O.
- Number of non-P.O. invoices – compliant and non-compliant*
- Number staff (FTEs) in AP
- Number of invoices by supplier
- Number of invoices by country
You also need:
- Geographical analysis of AP locations
- Detailed understanding of supplier data accuracy
- Thorough knowledge of purchase to pay process and levels of compliance to P2P policies
- Detailed awareness of levels of invoice accuracy and 1st time match rates
Why do you need all of this background information? It’s necessary because it will determine your approach.
Say for example you have 80% of you invoices all from a small number of suppliers all in a country where e-invoicing is established and easy. Your job is simple and you may be able to achieve your objectives by working with those few suppliers.
In contrast, suppose you have many suppliers dispersed globally and 80% of your invoices are from 90% of your suppliers. Tackling that supplier profile has a different set of challenges.
Apart from helping you to understand in quantifyable terms your AP landscape, it is important also to be able to share this analysis with prospective suppliers to help them understand what they need to do to help you achieve your business goals.
* A compliant non-P.O. invoice is an invoice with no associated P.O. which is compliant with your No P.O. No Pay policy i.e. it is not supposed to have a P.O. Examples of compliant non-P.O. invoices include utility bills tax invoices.
3. Don’t calculate your “cost of an invoice”.
Many e-invoicing vendors will sell to you by using a business case based on the reduced cost of a process. This is an easy way to sell to the uninitiated but it is ultimately unhelpful because you can only reduce cost by taking people out of the process. A high level simplistic business case won’t tell you how to do that.
See here for a detailed explanation of how to approach a business case for e-invoicing but for now, suffice to say, knowing your “cost of an invoice” isn’t going to help at the RFI stage.
4. Don’t use the vendors’ business case models and RFI templates
Most of the vendors’ sales collateral if good, solid stuff and it can be useful in understanding the market place but it is invariably biased towards their own solutions. Ariba and OB10 for example will suggest that great weight is attached to the size of supplier networks whereas Basware and Tradeshift will stress the importance of interoperability. Neither of these are wrong but you need to make up your own mind what is important. In other words, build your own business case and your own RFI based on your own needs.
Go here for part 2 – Preparing the RFI
Some other useful links include:
The Procurement Process
Building a business case for e-invoicing