When it comes to cost savings and efficiencies, e-invoicing is a sure bet. By automating the manual process of sending and receiving invoices, AP and AR departments are freed from many repetitive and error-prone tasks, and can process invoices – and potentially pay their suppliers – much more quickly and efficiently than ever before.
True e-invoicing delivers invoice data in a structured format so it can be automatically integrated into an AP system, completely eliminating the need for manual data entry. With e-invoicing, AP professionals no longer have to worry about missing or lost invoices that languish on someone’s desk, buried under piles of paper and accumulating late fees along with the dust. And there are also the strategic benefits of freeing up AP staff from manual, time-consuming work to focus on other priorities.
In addition to the AP department, e-invoicing benefits the larger corporate finance and accounting ecosystem, helping to meet its demand for greater visibility and near real-time financial accountability. With invoices getting in the system quicker and more accurately, companies can conduct faster, more accurate closes and have quicker insight into their spend and cash flow.
Why the delay?
With all these great benefits – and cost savings as well – why isn’t everyone doing it? Why hasn’t e-invoicing taken hold in the U.S. more quickly? Part of the reason might just be inertia. We’re all used to doing things the way that we always do them. While it’s human nature to be somewhat averse to change, the good news is that e-invoicing is easy, intuitive and seamlessly fits into the invoice automation workflow. It’s not only internal resistance that companies have to deal with, but external resistance as well. Suppliers may be reluctant to send their invoices electronically, but as their larger buyers require it and they begin to experience the benefits themselves, their reticence can be overcome.
Some U.S. companies might be waiting for the government to take the lead, as it has in many countries around the world. Government regulations and tax enforcement in the EU and Latin America, for example, have been an impetus for more widespread e-invoicing adoption. While, the U.S. has been slower to enforce e-invoicing, there may be a shift underway. The 2015 memo from the Federal Government’s Office of Budget and Management (OBM) directing all government agencies to only accept e-invoices from their suppliers by the end of FY 2018 hasn’t spurred much action to date – although it is certainly a step in the right direction.
“While the government initiative is moving more slowly than anticipated, it doesn’t mean that we have to be at a standstill until it is implemented. Companies are losing out on valuable cost savings and efficiency."
Many businesses in the U.S. and elsewhere have made great strides in e-invoicing without a government mandate; in fact, e-invoicing adoption in the U.S. so far has been mostly driven by tech- and financially-savvy companies that want to reap the efficiency and cost savings that it provides. And given that larger companies have the greatest number of invoices, they are the ones that have the greatest incentive for e-invoicing and have been leading the way.
Create a groundswell movement
So, what should you do in the absence of strict regulations and a set infrastructure? As Nike says, “Just do it.” By implementing e-invoicing in your organization, you can begin to reap the benefits immediately. You can begin incrementally, for example, by starting with your largest suppliers, and slowly introducing e-invoicing and all of its benefits across your supply chain.
Like any popular movement, the e-invoicing revolution depends on the momentum of the masses – the more businesses and other organizations involved, the better. Industry and government organizations, such as The Business Payments Coalition (BPC) from the Federal Reserve Bank, are making great strides in this area. The Coalition brings organizations and individuals together on a voluntary basis to address the challenges that are impeding the adoption of electronic payment methods and to focus on increasing B2B payment efficiency throughout the end-to-end procure-to-pay and order-to-cash processes. As a critical first step, the BPC has launched the e-invoicing work group, which will focus on defining the requirements for a framework to reduce the technology barriers to e-invoicing and enable broader adoption.
Businesses that have made the leap to e-invoicing have found that it simply makes good business sense. The cost savings and improved efficiency, combined with financial transparency, flexibility in managing payments, and better communication provide immediate as well as longer-term strategic benefits. The key is to take that first step – without waiting for government guidance or set standards. Exploring and implementing e-invoicing in your company and working together with industry organizations will go a long way in creating the momentum to move things forward and ensure that your business – and other U.S. businesses – can effectively compete in today’s fast-moving global economy.