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Why do organisations make the switch to e-invoicing?




E-invoicing: The Business Challenges

Regardless of the size and type of business that a commercial enterprise operates, there are many (perceived) challenges that are constantly highlighted by business owners when they are asked about their attitude towards adopting an e-invoicing solution. Many of these challenges are easily overcome by the right e-invoicing solution.
 

The information outlined below highlights some of these business ‘challenges’ and indeed challenges the business owner to learn and to understand the real challenges that need to be overcome – the facts are clear – in order to successfully implement an e-invoicing solution, the main challenge for any business is within the business itself – that is the capability of business managers to work with their suppliers and customers to explain, implement and reap the undoubted benefits of e-invoicing.

 

1.   Understanding the commercial drivers

  • Improve operational efficiency
  • Optimise cash flow and working capital management
  • Reduce overall purchasing costs
  • Improve forecasting and planning capability
  • Reduce AP and AR overhead costs
  • Improve sustainability credentials
  • Improve supplier/customer (transaction) relationships and co-operation
  • Improve auditing and compliance costs

     

2.   Identifying the efficiency gaps

  • Does the business understand the ‘real’ costs of processing inbound and outbound transactions?
  • How efficient are the current (manual) AP/AR processes?
  • How does the business currently measure this efficiency?
  • What KPI’s are required to justify the switch to e-invoicing and measure the real business benefits?
  • Technological readiness? Is the business able to transact electronically?
  • How does the business verify its invoice receipts and co-ordinate 2-way and 3-way matching?
  • What is the real cost of the (invoice) fraud detection measures currently used by the business?

     

3.   Perceived Benefits/Issues

  • Understanding the actual versus the perceived benefits(costs) of e-invoicing
  • Lower costs per invoice transaction – How much lower?
  • Lower incidences of invoice errors- What is the current level of invoices received that are incorrect?
  • Lower overhead costs associated with AP/AR activities – What needs to be done with the excess overhead? Redeployed or redundant?
  • How transparent is the business procurement-payment process and the order to cash cycle process? Do I really know what my suppliers are doing?
  • My suppliers and customers are not doing this so really is there any point?
  • What if my suppliers resist the switch over to e-invoicing – Are there any benefits for them?
  • There is little time lost in manual processing of payment processes?
  • e-invoicing will significantly reduce invoice errors
  • Isn’t e-invoicing a major IT commitment?
  • Isn’t e-invoicing just another ‘Y2K’ fad – It will never catch on?

    

4.   Maturity and Readiness

  • How mature does my business need to be to switch over to e-invoicing? Is this not something for the ‘big boys’?
  • How does a business prepare for the switch over? How big is the commitment to training?
  • How are my suppliers set up to send e-invoices and how prepared are my customers to receive them?
  • How advanced do the business IT systems need to be to enable e-invoicing?
  • How mature are management to lead the required change effort?

    

5.   Supplier Efficiency

  • Getting suppliers on-board with
    the switch to e-invoicing is a key challenge for any business
  • The e-invoicing solution used must make it easier for suppliers to make the switch along with the business.
  • Do the systems currently being used e.g. email, postal and phone provide the business with sufficient traceability of every invoice?
  • How does a business record all transactions that are not electronic? How secure are those records?

   

6.   Interoperability

  • How open should the e-invoicing connection between the business and its suppliers be?
  • How can a business maintain flexibility of invoice formats with e-invoicing?
  • How does a business manage any queries that arise between it and its trading partners (suppliers and customers)?
  • Is there a common standard for e-invoicing between trading parties?

    

7.   Fraud and Verification

  • How is the business set up to deal with erroneous invoices right now? How much does this cost in terms of time/people and delayed receipts?
  • Can e-invoicing really assist in reducing fraudulent invoices? Doesn’t this require 2-way or 3-way matching? Can this be done automatically?
  • How far is the business willing to go to completely integrate the e-invoicing solution into the AP/AR systems?
  • Can e-invoicing identify ‘back-dated’ invoices?
  • What does the business do at the moment if a supplier goes bust? How does e-invoicing assist in the recovery process?

     

8.   Legislation and Regulation

  • What is the Government’s position on e-invoicing? Surely the Public Sector is years away from this type of thing?
  • Is there anything happening in Europe with regard to e-invoicing? How real is the possibility that the business will have to adopt e-invoicing?
  • Can an e-invoice be a legal document? What about the businesses email system – Can’t this just email the invoice anyhow?

     

9.   Costs

  • How low are the businesses distribution costs now? (Printing/Paper/Postal/Storage)
  • Can these costs be lowered with e-invoicing?
  • What does it cost the business in dealing with invoice disputes and queries now?
  • How long does it take for cost savings to really hit the bottom line?