• Is the World on the Brink of Binning Paper Invoices?  
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Is the World on the Brink of Binning Paper Invoices?

In a new report published by Billentis this month, author Bruno Koch uses a well-worn phrase to explain the slow adoption of e-invoicing since Electronic Data Interchange (EDI) systems were first introduced over 40 years ago: Old habits die hard.

Summarizing global trends in B2B e-invoicing today, the report concludes that “employees are still strongly focused on paper processes, regardless of the fact that tax-compliant electronic, original invoices are available.” Elsewhere, a 2014 article from Information Week claimed “the technology to process these invoices has remained relatively untouched by the digital revolution.”

When e-invoicing was first touted as a catalyst for paperless offices back in the ‘60s, the costs and complexities involved in adopting EDI technology meant only a limited number of big businesses got on board. By the ‘90s, however, affordable web applications allowing users to upload invoices in PDF and XML formats broke down traditional barriers to e-invoicing and paved the way for a new mode of working.

E-invoicing market

The big picture: E-invoicing adoption around the globe. Source: Bruno Koch, Billentis

 

And yet, even in 2016, the benefits of e-invoicing technology are still undermined by a reluctance to break from the past. In Germany, for example, an estimated 69% of companies still create physical copies of e-invoices, while in Latin America – where e-invoicing is mandatory in some countries – as many as 70% of invoice issuers still print and post paper invoices in conjunction with electronic versions.

Such habitual leanings towards the paper trail suggest a wholesale change in mindset is needed before businesses can fully embrace the benefits of e-invoicing. Interestingly, global trends in government legislation suggest we could be on the verge of that change taking place.

First though, it’s worth considering just some of the advantages of e-invoicing. Chief among those advantages is financial gain. The US government recently mandated that all Business to Government (B2G) invoices must be electronic by 2018, and estimates it will save as much as $260 million per year in processing costs when the legislation kicks in. Elsewhere, despite the noted tendency to issue electronic and paper invoices in tandem, the requirement for B2B e-invoicing in parts of Latin America saw Brazil save $78 million in admin costs over a two-year period.

But e-invoicing isn’t just cheaper, it’s also faster. One report suggests e-invoicing cuts the time to process an average invoice from 17 days down to three. Such a claim is easy to believe given the time saved by not only eliminating the postal process, but also by taking advantage of the high degree of automation e-invoicing enables.

As mentioned – and hinted at by the examples above – adoption of e-invoicing is experiencing a major shot in the arm. On the face of it, it may seem surprising that the driving force behind this transition is government rather than business. But a closer look at the numbers shows why mandating e-invoicing is an opportunity too good for the authorities to miss.

The estimated savings through mandatory B2G e-invoicing in the US are mirrored in Europe, where countries such as Norway and Denmark have already made e-invoicing compulsory for public sector suppliers. Every country in the EU will have to follow in their footsteps by 2018, with the European Commission itself quoting a figure of around $45 billion in savings as a result.

An upward trend: Estimated e-invoicing volumes (in billions) worldwide in 2015 vs. 2016.

An upward trend: Estimated e-invoicing volumes (in billions) worldwide in 2015 vs. 2016.

And although most of the initiatives mentioned above relate specifically to B2G e-invoicing, they remain relevant to the bigger picture. Because while such mandated solutions don’t automatically solve invoicing woes in the B2B sector – such as variances in international invoicing standards – they do set an example worth emulating. E-invoicing grew by an around 20% in both the US and Europe last year, giving credence to the PYMNTS claim that “Countries with the strongest adoption rates have spurred adoption through mandates,” and that “the potential for real cost and time savings are encouraging more businesses and countries to make the move.”

In other words, with the true value of e-invoicing now writ large in the global landscape thanks to government initiatives, the old habits that have made paperless offices such an impossible dream for so long are now, finally, a step closer to being broken.

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