Computer to computer invoicing is the future. Indeed, at the moment that is most certainly true, especially in the United Kingdom, the United States, and Europe. Governments in these areas have yet to truly get on board with championing the adoption of e-invoicing, but it will be coming. It has to. Some of the world’s fastest-rising economies – Mexico, New Zealand, Brazil – are proactively encouraging and adopting the change, with at least 50% of all B2B invoices having been switched to electronic. As the rest of the world continues to increase its adoption of e-invoicing, the West will simply have to follow suit, and it will be to their benefit.
The savings that a company can make by switching to e-invoicing can, quite frankly, be staggering. One American utilities company, over a period of 24 months, saved $78 million! These mind-blowing cost savings are achieved mainly from the reduction in manual work – re-typing invoice data into financial software systems, archiving, and routing physical mail. Add to this the savings created from fewer errors (and therefore assessment requirements from disputes and inquiries), and you can start to see where your money is being thrown away with traditional manual invoicing.
- Traceability and transparency of all business transactions are fully digitized, and the data generated is prime for analysis and scrutiny – spend, payment behaviour, buyer, and supplier behaviour.
- Every element of the transaction is captured and recorded, reducing the risk of leakage since exactly what was negotiated and contracted is invoiced and paid for.
- Better balance sheets record all negotiated discounts, and data collection of early payments, due dates, and outstanding amounts.
Every day you delay taking the e-invoicing decision you are potentially sacrificing productivity, unfathomable savings, and profit margins.
So why the mass hesitation?
It’s one of those catch-22 situations for a lot of mature companies (i.e., companies with more than 2000 employees) whose processes are already firmly established and working well. The decision to adopt such a massive change can be a tough one, since implementation can take up to six weeks to completely roll out. But these are the companies most ready and suited for an e-invoicing system, and it should be known that service providers are well aware of the scale of the operation and have implementation plans already drawn up and ready to be tailored to the individual business.
Despite the cost-savings potential, corporations all over the world are still struggling to realize the full potential of e-invoicing. The challenge comes in trying to get the percentages. E-invoicing is only really made possible when conducting with suppliers and clients who are already on board with the scheme.
Research recently conducted by the Swedish BEAst (standardisation body of the Swedish construction industry) found that only 30% of larger corporates achieved paper-to-electronic conversion ratios of more than 41%. They also found that the average costs of integrating suppliers into the e-invoicing chain amounted to EUR 5,0000 per supplier. So, if companies have a particularly extended ‘long tail’ supplier base, then the costs can very quickly mount.
A solid conversion strategy is needed to make sure that the full potential of e-invoicing is reached (over 70%). Your company needs to balance the benefits against the costs before making the switch. How much will it cost to get each supplier on board? What are the current costs of producing your paper/PDF invoices? What are the savings potential per e-invoice?
The long and the short of it is that e-invoicing is a much more efficient and economic method than manual invoicing, but the full benefits of the change will only be realized once there are more of us on board. This may take some time, but the sooner you’re involved, the more you’ll save. It’s an investment for the future of invoicing.