Highlights from the Billentis E-Invoicing Report
What’s the state of e-invoicing around the globe? The short answer is that momentum continues to build, but the pace varies from region to region and sector to sector. Advisory firm Billentis has just shared its insights into the world of e-invoicing in a recently released report: The E-Invoicing Journey 2019-2025.
The report shows that while e-invoicing is enjoying healthy growth worldwide, there is still much work to be done. According to Billentis, it is estimated that there will be 550 billion invoices by the end of 2019, but only a tenth of these, or 55 billion, will be paperless. And the number of invoices is only expected to grow. The firm estimates that by 2035 the number of global invoices will quadruple.
Along with the growing number of invoices worldwide is the need to find better, more visible and efficient ways of handling them. The comprehensive Billentis report delves into the state of e-invoicing in different regions around the world and different sectors – from government and the public sector to business. Here are just a couple of insights from the report:
- Regional differences. There are different drivers spurring adoption in different regions around the world. Governments in many countries, including Europe and Latin America, are regulating e-invoicing to increase compliance with tax regulations and their tax coffers. This is particularly important for European and other countries with value added taxes (VAT) that account for a considerable amount of their revenue. Latin American governments, which are leading the way in e-invoicing adoption, are mandating electronic invoicing to reduce unreported taxes. And this has been very effective. Colombia, for example, has able to reduce tax evasion by 50 percent by requiring invoices as well as other documents to be reported electronically.
By contrast, in the United States and Canada, businesses rather than governments have been the primary drivers of e-invoicing. These organizations are looking to improve their purchase-to-pay and order-to-cash processes as well as gain efficiencies and other benefits. Multinational U.S. companies, however, must also be able to adhere to e-invoicing regulations in the markets where they do business. Because government is not driving the process, and there are not the types of regulations, penalties or incentives that other countries offer, adoption is slower in North America than some other regions.
- Obstacles to adoption. There are several challenges organizations face when trying to transition to e-invoicing. In the U.S., for example, many companies that want to automate, and recognize the benefits it offers, are stymied by budgetary constraints. Another key challenge is the lack of standardization. Given that there are over 200 invoice network providers in the U.S., establishing an interoperable network for e-invoicing – not only in the U.S., but globally – would go a long way in breaking down barriers to adoption.
- Government initiatives. There have been initiatives to compel e-invoicing through regulations or, in the case of the U.S., to encourage adoption. In the EU for example, directives have mandated e-invoicing standards, infrastructure and capabilities for the public sector and B2G. The main impetus behind e-invoicing in the U.S. has been from the private sector where the business case to adopt technology to automate invoice processing can be made. The U.S. government recognizes similar benefits to automate, where the U.S. Office of Management and Budget has issued guidelines to federal government agencies to adopt e-invoices processing technologies.
As a side note, in a recent blog discussing initiatives the U.S. government is taking to promote e-invoicing, we interviewed Todd Albers, Senior Payments Consultant, The Federal Reserve Bank of Minneapolis. He said, “The Federal Reserve Bank established The Business Payments Coalition, a working committee of key industry players – including Dooap – to promote e-invoicing, along with electronic B2B payments and remittance data. The e-Invoice Work Group, which is a subgroup of this coalition, provides guidance and education to facilitate e-invoicing adoption in the market.”
These are just a few insights from the comprehensive Billentis report. It's clear that adoption will continue to grow given the visibility, efficiencies, accuracy and other benefits that e-invoicing offers to businesses – as well as the visibility it gives governments to enforce tax compliance. The report also credits advanced technologies – such as Robotic Process Automation (RPA), machine learning and analytics – for propelling the industry forward. We recommend that you read the report to hear about all of these developments as well as gain insight into what forward-thinking organizations are doing to capture key value.
When it comes to invoices, it’s all about the data.
The type of data, the format and the way that the data is captured are all things to consider as you transform your invoices from paper to digital and prepare for automation.
Our guidebook The Road to AP Automation No. 2 – The Invoice explains how you can digitize and improve the quality of your invoices as you get ready to automate. Download the free e-book here!