When is free really free?

When is free really free?

There’s been a good debate on linkedin over the past few days full of insightful and educated opinions on every side of the e-invoicing discussion.

It was started by Christian Lanng from Tradeshift asking what free really means but it spawned into a wide debate about e-invoicing generally and the relative merits of PDF, EDI, XML and of course, scanning which some of the the purists believe, is not the answer to the “e-invoicing problem” because it requires manual intervention.

Purchasing Insight logoScanning isn’t the answer to the e-invoicing problem but it is one of the components of a solution to the paper problem. It depends on circumstances but for some organisations who may have already invested in a scanning and workflow infrastructure, an incremental investment in intelligent data capture (look at Brainware, Readsoft, Kofax and others), could be a significant step forward on the journey toward 100% e-invoicing (or as near to 100% as you can get).

There is a growing number of businesses that are using scanning and data capture and actually, a significant  proportion require manual intervention – but it is minimal and they are achieving levels of productivity in AP of over 70K invoices per FTE.

80% of something is better than 100% of nothing!

In the real world the debate isn’t about which is best – EDI/XML invoices clearly beat scanning or PDF – the debate is about achieving best bang for your buck. Of course scanning won’t give me 100% accuracy but I can apply it to 100% of my invoices, and actually, in 2011 if my master data is half decent, I can aspire to 80% straight through processing on scanned invoices. In contrast, e-invoicing will give me 100% accuracy, but if I’ve got a widely dispersed supplier base so what? If I have thousands of suppliers all over the world sending me less than 10 invoices per year – e-invoicing is a non-starter. I’d rather have the 80% of something than 100% of nothing!

And talking of best bang for your buck, Christian’s original question was ‘what does free really mean?’ There are many cost components to e-invoicing: transaction and other third party fees, infrastructure costs, project management and legal costs but all are insignificant compared to the benefit of reducing the time to implementation. That’s much more important than “free”.