John Larkin, Pagero Ireland Country Manager and media industry specialist explains why organisations should “bother” about e-invoicing, why an e-invoicing policy is important and outlines a step by step approach to e-invoice adoption.
E-invoicing a means to reduce costs and increase productivity
The current economic climate increases pressure on businesses, both public and private, to cut costs and increase efficiencies. Organisations are focused on lowering administrative costs while increasing accuracy, compliance and control.
By introducing an e-invoicing policy, organisations can reduce costs and increase productivity at the same time, as they can reduce time consuming manual work and pay more attention to control and business strategy.
A genuine e-invoice is an invoice that is issued, received and processed electronically. It is digital from its creation in the finance system by the issuer until it is received, processed and archived by the recipient in theirs.
Reasons to implement an e-invoice policy
There are many reasons why an organisation may consider e-invoicing, from a desire to incorporate an e-invoice policy to align with the green or cost saving strategies, to compliance with forthcoming legislative mandates when governments mandate their agencies to accept invoices electronically. Also, getting a request from a customer or supplier to send invoices electronically usually focuses the mind on e-invoice adoption.
Because, in today’s digital world, more and more organisations are seeking to digitally connect with customers and suppliers for the exchange of business documents such as orders, order responses and invoices and thereby establishing a truly digital and real time business relationship with their business partners.
“More and more organisations are seeking to establish a truly digital and real time business relationship with their business partners.”
Where to start
Fail to prepare … prepare to fail. Do your homework! Below are some important milestones on the way:
- Firstly, you need to examine the appropriateness of an e-invoicing policy for your organisation and review it in the context of your current business and ICT strategy.
- Next, determine the quantity of invoices and the number of suppliers or customers involved and the ability of your current ERP system to handle e-invoices.
- How much does it actually cost your organisation to process invoices? The cost can range from €5 to €17 per invoice depending on your industry. Consider how many hours are lost manually entering data in your finance system, seeking payment approvals and chasing missing invoices.
- Having carried out an initial review, a business case should then be prepared. Closely examine the likely costs and benefits to the organisation and include a full description of the current paper based process and identify current processes that can be either improved, outsourced or eliminated.
- Choose a pro-active project leader and cross-functional team to prepare a detailed project plan. The team should be made up of executives for an outbound e-invoice project from Sales, Finance, IT and Credit Control and for an inbound project, Purchasing, Finance, IT and Accounts Payable.
- The project plan should contain an analysis of the current business processes and environment. Based on this analysis a solution concept can be developed and an implementation plan outlined.
- Based on the analysis carried out on the company’s abilities and needs, a number of solution scenarios will evolve and the decision on Make or Buy elements of the solution and whether to take a step-by-step or Big Bang approach to implementation. Why re-invent the wheel? There are various solutions available in the market that can be implemented at a fraction of the cost of an own solution.
Success factors in e-invoice projects
Awareness and buy-in by senior management is essential to reach the goals set up in the e-invoicing policy, together with one very active project owner and roll-out champion.
Good internal and external communication to people affected is another critical factor for the project to succeed. It is also important to be realistic regarding the mid and long-term technical capabilities of the organisation, including workflow and archiving.
The technical capabilities of the trading partners involved must be taken into consideration as well.
“Fail to prepare … prepare to fail. Do your homework!”
Want to know more?
This article is an extract from an in-depth guide to e-invoice adoption, written by the article author. Want to dive into the details? Click the link below to download the entire guide!
Please also feel free to get in touch with the author for further discussion on how your company can benefit from an e-invoicing policy.