Brazil, Mexico, and Chile Still The Greatest Adopters Of E-Invoicing: An International Market Overview
It is no secret that paper-based invoicing is an expensive dinosaur that is long overdue for extinction. However, it still roams the economic globe, incurring huge costs to companies the world over. Paper-based invoicing is a time-consuming, expensive, and deeply flawed practice that is long due a complete overhaul, with e-billing and e-invoicing being the long sought after wide-spread solution.
Although it is certainly true that electronic invoicing is making significant disruptions, there is still a long way to go. In the coming years, enterprises will continue to receive invoices and bills both in electronic and paper-based forms. Managing the processing of these invoices is therefore of high importance to ensure that all ends of every deal are completed transparently, accurately, and with the incurrence of as little extra costs as possible.
In February this year, Billentis released a report that detailed a global overview of the international e-billing and e-invoicing market. We summarize the most important findings for you here. All images are taken from the report.
International E-Billing/E-Invoicing Market
E-invoicing is still very much the future, especially for the likes of the US, UK, and Europe. Although there is a higher adoption rate in these regions than there is in some parts of the developing world, governments have yet to truly get on board with e-invoicing, championing, and creating standards as, quite frankly, they should. By contrast, governments in some of the world’s fastest growing economies – Mexico, New Zealand, Norway, Brazil – are proactively encouraging the change, with over 50% of all B2B invoices having become electronic. It’s high time the rest of the West caught up.
Expected E-Bill/E-Invoice Volume (billions) for 2015 and Trend Radar
E-invoicing is on the rise, there is no doubt about that. The main reason being that organizations in the public and private sector are under pressure more than ever to reduce costs and to improve their cash management. There is an estimated growth of 17% in the B2B/B2G/G2B segments for 2015, and an estimated volume growth of 12% in B2C segment, according to the report.
Let’s take a closer look at how each region breaks down.
24% of all US consumer bills are sent electronically. Payments, Dynamic Discounting, procurement, and trade finance are the main drivers in the B2B segment, with the prediction for 2015 being a B2B e-invoicing volume increase of around 20%.
There is a preference for e-invoicing optimization methods in internal operations, such as Accounts Payable (AP) and Accounts Receivable (AR) management. There is also an increased focus on electronic interaction between established trading partners, though there is still a struggle to onboard third-party operators – especially compared to Europe and Latin America.
The processed B2B volume is expected to reach around 2.8 billion in the US in 2015, and the B2C volume is estimated to reach 4 billion. The number of e-invoicing network operators is likely to grow from 130 to 150.
The figures are much more promising in this region, as governments are due to implement or have already rolled out e-invoicing obligations in Argentina, Bolivia, Brazil, Chile, Costa Rica, Ecuador, Guatemala, Mexico, Peru, and Uruguay. Of these, Mexico, Chile, and Brazil are leading the market, with the 11 billion annual e-invoices in Brazil likely to grow again this year (if somewhat moderately), and the 5 billion in Mexico to increase by 20-25% in 2015.
Asia and Pacific
Here, the legislation is still lax in many countries with paper invoices dominating. However, there is significant relative growth rate in Russia, and there are mandates being put in place for certain countries – Kazakhstan, Singapore – for businesses to implement electronic invoicing. Strong growth rates may also be expected for Turkey. Vietnam intends to follow the Latin American model, pushing e-invoicing towards a mandatory control vehicle for the tax authorities.
Here, above average growth rates for B2B/B2G/G2B can be expected in all European countries, especially in Italy, Slovenia, and Spain who have obligations in place in 2015, Switzerland and Estonia in 2016, and France in 2017.
European Trends 2015
The B2B electronic invoice/bill volume in Europe is expected to reach around 4.6 billion this year, with the B2C volume estimated to reach 2.7 billion. The illustration below shows how the volume is shared.
E-invoicing Providers and Networks
The report also highlights the expected 2015 and 2016 trends in European e-invoicing providers and networks. There are at least 25 operators of e-invoicing in Europe which are each expected to process more than 20 million e-invoices/e-bills in 2015. For the vast majority of the remaining 620 or so operators, the annual e-invoicing volume still lies below 5 million. The volume dropped dramatically in 2014 and will probably decline again by 13-17% per annum in the coming years.
To protect themselves against the expected decline, there is increased importance for e-invoicing providers to add value to their services. B2B payments, Dynamic Discounting, supply chain financing, factoring, spend analytics, broad market coverage, and support for communications (processes and messages) are among the added value services that the report suggests.