Pulling the long tail of e-invoicing

28th November 2013

It is getting easier for businesses of all shapes and sizes to adopt electronic invoicing – which is good news for CFOs. FSN writer Lesley Meall reports.

 

 

 

Software and services have delivered significant benefits to finance professionals and the finance function, but areas remain where the potential to automate and streamline processes is under-exploited – and purchase-to-pay (P2P) is one of them. It’s not because businesses are blind to the benefits, which can include better control of finances and visibility of cash flow, among others. Yet when P2P specialist Basware and the Institute of Financial Operations recently looked at global adoption of electronic invoicing (e-invoicing) they found that while 70 per cent of organisations with more than 1,000 employees can process e-invoices, the number drops to 42 per cent in smaller businesses, and just 15 per cent send most invoices this way. 

It can be difficult for adopters of e-invoicing to take some suppliers with them on the journey – particularly those in the long tail of the supply chain. “Getting these suppliers on board can be the biggest challenge for many businesses,” says Amanda Grant, market development director with m-hance, a business systems and managed services provider. Many suppliers do not want to disrupt their existing systems and processes. So, despite many scenarios where e-invoicing means the automated ‘straight-through-processing’ of electronic data interchange (EDI) or the extensible mark-up language (XML), more often than not e-invoicing means emailing invoices as PDF attachments. 

“If you email an invoice as a PDF that needs to be printed out and input into a separate system, it’s not e-invoicing,” says Sami Nikula, product marketing manager, Basware. But this is becoming less of an issue for businesses thanks to services that make it easier for businesses to send and receive payments electronically, such as online trading networks and cloud-based scanning and conversion services. The global cargo handling specialist Cargotec managed its transition to fully automated e-invoicing with the support of Basware. Cargotec uses its invoice automation solution for its shared services centre and an external scan and capture service for incoming invoices; it even used Basware to set up its pilot supplier activation project for 250 of Cargotec’s biggest supplier. 

Basware ran a “polite but firm” email campaign to tell suppliers of Cargotec’s plan to move to e-invoicing, stop accepting paper invoices and encourage suppliers to make the transition. It’s worth noting that even among the largest suppliers this was most successful among those in the top tier. The activation project also actively encouraged cooperation between finance and procurement at Cargotec: finance owned the e-invoicing project, but its success depended on support and commitment from procurement. After establishing a best practice approach with Basware, Cargotec has gone on to run its own customer activation and is gradually pulling in more suppliers. “We expect to move closer and closer to our goal of 100 per cent e-invoicing” says Erol Engin, accounts payable manager at Cargotec. 

AD Construction Group (a regional building and maintenance contractor) took a different approach. As a user of the Infrastructure 365 integrated accounts, costing and management system from m-hance, AD Construction began its journey from manual invoicing and processes to e-invoicing and automation by switching on an additional module (for purchase processing) and using the m-hance e-invoicing network based on Cloud Trade (which processes e-invoices for Intellect and Microsoft Dynamics customers of m-hance). “We encouraged suppliers to use the system by making it as easy as possible for them,” says Peter Conlan, finance director, AD Construction Group. 

Cloud Trade provides online conversion service for e-invoices. So trading partners of AD Construction can send e-invoices (as CSV files, PDFs, Word files etc) to an email address managed by Cloud Trade, which analyses, validates and converts these into the required structure (such as XML and EDI) and then delivers them electronically to the construction company. “Each morning, one of our staff looks at the information to see if there are any queries, then she presses a button to accept the transactions and they go straight into the invoice register,” says Conlan. This has helped the business to increase productivity and cut costs and having more up-to-date information has enabled it to negotiate better discounts from suppliers. 

Like ABB, AD Construction did not manage to take all of its suppliers with it on the e-invoicing journey – despite making the transition as simple as possible. “Cloud Trade even provides a template so customers can just fill in the fields and send it to the invoice address, but some suppliers still didn’t want to know,” says Conlan. Even though some companies are determined to produce post paper invoices, AD Construction now receives about 80 per cent of its invoices electronically – and it’s happy to pay for the privilege. “The conversion facility does cost and we pay on a per invoice basis,” says Conlan, “but that cost is nothing by comparison with the cost of doing it manually.”

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