07 May 2011 The biggest single reason for not implementing electronic invoicing
When is an e-invoice not an e-invoice? 10 years ago it was simple. It was clear that a “true” or “pure” electronic invoice was a structured computer-to-computer message. The supplier’s computer would send an invoice message in a format that the customer’s computer could read. An email with a Word document or an excel file attached was not an electronic invoice and worse, a pdf image of a paper invoice was nowhere near an e-invoice. These were superficial attempts to tick the e-invoicing box. They weren’t true electronic invoices. But in recent years the line between what is and what is not an e-invoice has become blurred and the “purity” of the “true” electronic invoice is becoming it’s own worst enemy.
In recent years scanning and OCR technology has moved on in leaps and bounds. A pdf or Word attachment to an email that, if sent as an electronic invoice, would have been re-keyed just like a paper invoice, can now be processed automatically with acceptable levels of accuracy. Some companies are reporting in excess of 80% straight through processing by deploying OCR and intelligent data capture. By retaining some level of human intervention, straight through processing rates of 100% can be achieved.
“And that’s the point” say the purists. To get very high levels of accuracy with anything other than a true electronic invoice means retaining staff and “hand holding” the invoice. The purpose of AP automation is to reduce the number of FTEs in you AP process. Electronic images of invoices still require a manual process.
A mountain too high to climb
Herein lies the problem. There are very few business scenarios where, by adopting a pure e-invoicing approach only, it is possible to get near 100% adoption. If you are in an industry where EDI has been the norm for many years, or if you have a small number of cooperative suppliers, a pure e-invoice approach alone may be successful. But if, like most organizations, you have many suppliers, many of whom are unwilling to invest in technology designed to make your life easier, a pure e-invoicing plan will be seen as a mountain too high to climb and that in itself will be a the reason why an electronic invoicing programme will be abandoned – at least for the time being. It is simply too ambitious.
The hybrid approach to electronic invoicing
Of course pure electronic invoices are better than scanned images or emails. They’ll give me 100% straight through processing as opposed to the 70-80% that an OCR solution will give me. But I’d rather have 80% of something than 100% of nothing.
Adopting a hybrid approach that allows you to interpret scanned images as well as “pure” e-invoices as electronic invoices, allows the aspiration of 100% electronic invoicing to become attainable. Getting dogmatic about what is and is not an electronic invoice simply builds a reason not to do anything at all.