Since not all of your potential partners will want to adopt the process at the same speed, start with a phased roll-out. Similarly, it is unlikely that all partners will eagerly embrace a standard one-size-fits-all methodology.This calls for analyzing, segmenting, and prioritizing the customer/supplier base by size, capability, and readiness to adopt. With this information, you can develop a tailored solution that balances your aspirations with those of your customers and suppliers.
The next step is to select and implement a technology solution to enable an e-invoicing pilot. While the first electronic invoice received or sent may be an achievement in itself, it won’t generate cost savings or efficiencies. These will come once a critical mass of partners has adopted the technology and the processes have been optimized for each segment.
Pursuing the Process
The basic steps to produce an e-invoice on the supplier side are:
- Prepare and generate the invoice in the Sales or Accounts Receivable system.
- Extract the invoice details in the Sales or Accounts Receivable system and write these to a file in an agreed format.
- Send the invoice file to an agreed file location to be collected by the customer or e-broker.
On the customer side, the basic steps to process an einvoice are:
- Collect the invoice file from the agreed file location and convert the records into the format required for the customer’s Accounts Payable system.
- Import the invoice details into the Accounts Payable system and perform an automated validation of invoice details.
- Invoices are now available for further processing (e.g., auto-matching with purchase order and receipts, and workflow approval).
By considering the needs of the supplier and the customer at each stage of the process, many of the traditional steps can be automated while others can be reduced to “control steps,” managed by simple algorithms, exception processing through workflow, or simple manual updates to record differences such as shipping quantity changes.
There’s also one other key element—aligning your employees to the process. Too often there’s a disconnect between the purchasing department’s sourcing people, who decide which suppliers to use and set up the commercial relationships with those suppliers, and the accounts payable team, which then feels the pain. Unless you consider the end-to-end procurement process, the opportunity for improvement will remain elusive.
The Benefits of E-Invoicing
Already companies that have adopted e-invoicing are identifying compelling benefits. Hewlett Packard sought to reduce the touch points, cost, cycle time, error rate, and environmental impact of their procurement function, and they selected vendor OB10 as a solution for the U.S. and Europe. Einvoicing increased data quality, reduced cost, and eliminated scanning for 81 percent of their U.S. invoices. It has since been rolled out to eight E.U. countries, and OB10 is now embedded in the standard terms and conditions for new suppliers, who also benefit from lower costs, reduced errors, and more reliable cycle times.