Electronic invoicing is a rarity in the world of business for two reasons. First, it is one of the few instances where corporates and governments, whose interests often collide, can actually unite in praise of its benefits. Secondly, however, it seems that very few European corporates are willing to take advantage of the obvious efficiency gains that e-invoicing offers. Why the paradox?
Less than 10% of all invoices are sent electronically in the majority of EU member states. Some estimates suggest even lower. According to the Dutch bank ING, for example, of the 30 billion invoices sent in Europe each year only 5% are done so electronically. These are sobering figures by any account - but add to that the fact that a paper invoice can typically cost anywhere between €15-30 to process and the numbers start to become significant. Nevertheless, the majority of corporates feel ‘safe’ with their paper invoices.
Looking at the bigger picture, this reluctance to embrace change seems quite odd. With the European economy tipping back into recession, corporates are cutting costs wherever possible. Surely e-invoicing can play an important role in these efforts? Moreover, sending invoices electronically serves an environmental purpose too; corporates have the option of being less reliant on paper. But while green treasury is a trend on the rise, e-invoicing remains stubbornly unpopular.
European corporates face a problem. But it is certainly not one of lack of awareness. They know well that the shift to e-invoicing will lead to lower costs, higher visibility and certainty of reconciliation for their business operations. E-invoicing is indeed seen as the future. The real issue lies with the technical and legal barriers obstructing the smooth transition from paper invoicing to online. The real issue, in other words, is the tricky matter of getting from point A to B.
There are several stumbling blocks to contend with. Issues ranging from the incorporation of e-invoicing into existing ERP systems to persuading customers to make the switch will prove troublesome for European business. And then there is the question of proper data storage security and adequate management once the leap has been made. But most importantly is the lack of a standard platform for e-invoicing. There are currently over 400 service providers offering different e-invoicing solutions to their customers. This wide selection makes it difficult, if impossible, to establish a uniform platform. And it is the setting of common standards that is critical for wider scale adoption of e-invoicing.
A change is needed. E-invoicing is no ordinary 'market'. Competition has resulted in a melee of various invoicing platforms that have actually stultified its widespread adoption. There is a case for intervention. A concerted and co-ordinated effort on behalf of national and supranational governments is essential in developing better incentives leading to the creation of a uniform e-invoicing platform.
This change is already starting to happen. On the national level, Denmark, Finland and the Netherlands have all successfully implemented strategies to ensure the popular acceptance of e-invoicing. The EU is also taking concrete steps towards the establishment of a common standard. A new EU policy directive, set for early 2013, aims to 'pave the way to the broad scale adoption of e-invoicing at both national and EU level' by 2020.
This is still some way off, but is an important achievement for a union representing 27 sovereign states. Also, a number of sticky legal and technical barriers are set to be abolished. This will allow corporates and their customers to make the leap to e-invoicing in an easier and cheaper fashion. The European Commission estimates these reforms will lead to savings of more than €240 billion annually. To put this figure in context, that is larger than the GDP of Finland.
This figure represents an enormous potential saving for European business, and it is one the corporate world should fully support. The new directive hopes to create conditions to establish a common ground in the e-invoicing market that will be a benefit to all.