Member Article

E-invoicing ? What's your boiling point?

For some time I’ve argued that what you call something doesn’t necessarily matter – it’s whether you get out of it what you expect, and what you need that’s important. Take making a cup of tea for example – I can put a pan on the hob and wait for the water to boil, or I can flick a switch on a kettle. Both processes are boiling water – one is just e-boiling… which process I follow depends on time, resources and a large helping of common sense.

The same is true of e-invoicing. While it’s important to understand the technology (or at least, what it does in a basic sense) – the important thing is to look at your existing invoicing procedure and ask – where does it fall down, which elements should be kept and what can e-invoicing do to improve things? [cup of tea]

The best starting point for any e-invoicing project is the end. Organisations need to look at the intended outcome, and work backwards. Not many organisations can, or would want to rip out existing infrastructure, and of course, there’s little point overlaying an automation solution over bad practice - so prior to any implementation, organisations need to take a close look at their procedures and existing framework. It’s likely that the path to actually purchasing a new e-invoicing solution has been fairly tortuous and a long time coming – so when it does – why rush it? Marry yourself to the wrong solution in haste, and you’ll have the luxury of repenting at leisure..There isn’t a one-size-fits-all approach to invoice automation – and you’ve got to be sure that you’ve got the right one for you and your organisation.

So what about interoperability and gaining the buy-in of suppliers? Several of the major e-invoicing vendors grew up in a different world – one where Amazon was a just a place in South America and the B2B community didn’t, and couldn’t reflect the B2C relationship. They spent years developing - and in some cases patenting their tax compliant and secure solutions, meaning that if you wanted to continue to trade with a company – you had to buy in to their new system too. And why not - that’s the way to protect and grow business – right? Well, not necessarily. The new kids on the block represent the move towards something different – an open platform where organisations using multiple solutions can work and talk together. Two very different ways of doing business – and it’s not hard to see the case for interoperability as far as spreading the reach of e-invoicing (most estimates have the uptake hovering around the 35% mark) is concerned. Couple that with the growth of cloud technology - and the imminent tipping point for e-invoicing, so long predicted - starts to look a lot like reality. Again, ultimately, it will come back to what people want – and market forces will dictate the pace and direction of that change.

Recently there’s been evidence that the Government is finally starting to sit up and take notice of the business benefits of e-invoicing. In the words of MPs, Stephen Partland and Adam Afriyie in the Guardian; “In this age of austerity, e-invoicing is too good an opportunity to miss.” While I still believe that (unlike Denmark and Sweden) we are some way off mandating its use in the UK, the current drive is a move in the right direction.

And why is it important? Because e-invoicing can drive several layers of business benefits – faster processing time, auto-match rates which are simply impossible with manual processing, a reduction in fraud and error, together with key reports and metrics which can highlight the health or otherwise of the organisation. Finally, e-invoicing can help organisations manage their cash flows and deliver benefits down their supply chain, meaning that at least in theory – suppliers can get paid on time (or early) with any negotiated early settlement, or dynamic discounts. The trick for AP Managers or Heads of P2P is to understand and research the benefits to be had by moving to e-invoicing, and to effectively communicate those upward. While in many ways its simly a matter of common sense, it’s not every CFO who realises the full potential - some take that bit longer to bring to the boil.

This was posted in Bdaily's Members' News section by Ellen Leith .