e-invoicing systems are failing to live up to businesses often unrealistically high expectations. Louise Naughton finds that interoperability coupled with a partnership approach to e-invoicing is key to adoption
Go deeper with GlobalData
Companies of all sizes are starting to see cost-saving opportunities in e-invoicing. However, often their investment in technology is being made alongside unreasonably high expectations, as the systems fail to deliver quite the level of efficiency that is expected.
Financial processing efficiency is considered the holy grail among accounts payable and purchasing departments, the constant search for which puts considerable pressure on e-invoicing systems to deliver. And, naturally, the systems with their interoperability issues, set-up headaches and technical glitches are not quite living up to expectations.
A recent report, E-invoicing: A Global View by purchase-to-pay solutions provider Basware, said that 72 percent of respondents view improving operational efficiency as a key financial priority for 2011.
The concept of e-invoicing appears to be well established across the commercial landscape, says the report.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataHowever, this manifests in many cases as a reliance on PDF-based payment processes and significant amounts of paper and manual resources to create a base-line level of automation.
Furthermore, taking manual processes into an automated framework that relies heavily on compliance from a supplier base is a journey with many milestones. Companies are not automating all payment processes all of the time even if that is the desired outcome.
The long view
Longer-term change with a view of longer-term benefit is cited as a focus for many businesses and financial automation is seen as a tool for achieving this.
Ninety-three percent of respondents believe invoice processing can somewhat or significantly be improved in their businesses. A further 50 percent say e-invoicing can help them improve operational efficiency to a great extent and 47 percent say it can create some improvement. 19 percent expect a great improvement in optimising cashflow and working capital management, with an additional 74 percent expecting some improvement in this area as a result of e-invoicing processes.
Paper payment processes are a drain on a companys time, resources and profits. This view is highlighted by a finding that 64 percent of those surveyed by Basware claim they lose time because of manual processes related to payment processing and few businesses are able to escape this problem entirely.
41 percent of companies surveyed do not send e-invoices at all and 18 percent do not receive them. Only 9 percent describe high levels of e-invoicing where at least four in every five invoices (or 80 percent) are received electronically. 56 percent say they have less than 20 percent of their invoices received electronically fewer than one in five.
While businesses on the whole understand the potential benefits invoice automation can bring only 14 percent of respondents admit to not knowing – the success or failure of an e-invoicing initiative often depends on cooperation between companies and their suppliers.
Barriers to change
Perceived costs to suppliers and suppliers reluctance to participate in automated systems are cited as the key barrier to e-invoicing by 46 percent of respondents, with 36 percent considering lack of supplier activation capabilities to be a challenge. Basware claims these two factors work in tandem with supplier reluctance being understandable in the absence of systems that make it easy for them to participate.
Open networks are viewed upon as an important tool in helping organisations achieve invoice automation goals. They allow companies and suppliers to work together via a single platform to trade electronically via a single platform. A limitation of such networks is that companies have to use the same e-invoicing format as their suppliers in order for them to trade via the network a condition Basware believes to be a hindrance to global e-commerce.
In order to take this burden away from companies and increase invoice automation adoption, Basware introduced an open network with a difference. Its offering allows companies to free themselves from the shackles of e-invoicing formatting differences and trade with suppliers regardless of invoice type. Baswares network gives the company a unique and enviable market position.
Basware survey respondents recognise the benefits of open networks with 66 percent associating them with increased flexibility and 61 percent with efficiency and cost savings. 26 percent consider the lack of such networks as a significant challenge, leading them to be restricted by networks that support only limited document formats.
The number of active suppliers and buyers in Baswares open network doubled to 320,000 in the last year.
In the first quarter of the year we saw an over 50 percent increase in the transaction volumes in the Basware open network, said Esa Tihilä, SVP for connectivity services at Basware.
As it expands and grows, more businesses globally will be able to reap the benefits of e-invoicing and we will see these figures continue to rise.
By making it easier for suppliers to submit e-invoices, it is claimed customers that use the Basware network can benefit from complete control over cash flow, better working capital management and improved supplier relationships that shifting to fully electronic processes provides.
Although Baswares open network operates on a global scale, its interoperability partnerships are mainly located within Europe. The company is looking to expand into non-European countries, such as the US, by targeting small regional players and industry specific operators.
Basware says a roadmap for invoice automation is critical element to successful e-invoicing adoption as an organisation must recognise what levels of change are required to meet a commercial need. There also needs to be a realisation that the automation processes happen in stages with key departments starting the process and the rest of the company absorbing the effects of the systemic change and adapting accordingly.
Creating a process whereby suppliers can easily reflect and accommodate changes is a high recommendation from Basware. Companies should invest time in engaging with key suppliers and take a partnership approach to e-invoicing.
