More companies are expressing an interest in e-invoicing than ever before. But is adoption being held back by the practice of charging suppliers for the invoices that they send?
For some time now, e-invoicing has been billed as the next big leap forward in the sphere of working capital management. Now, after several false starts, it seems like business adoption is finally beginning to pick up some speed.
In mid-June, for example, a poll of European E-Invoicing Service Providers Association (EESPA) members found that the number of electronic invoices delivered to organisations in 2013 grew 19% on the previous year. The Institute of Financial Operations’ 2014 Order-to-Cash (O2C) Automation Study, published earlier this week made similar findings. According to the survey the number of US-based companies committed to begin e-invoicing within a year now stands at 5%, more than double what it was in 2013.
“It does feel like it is gathering momentum,” says Richard Manson, Commercial Director of e-invoicing provider CloudTrade. Two or three years ago when CloudTrade sent requests to suppliers asking that their invoices to a particular customer be sent electronically, only 10 – 20% would start transacting without being chased. But now Manson says that he is seeing at least double that – which increases to over 90% adoption once follow up communications has been made.”
“We are seeing more and more interest almost every month, and from different levels of organisations too,” he enthuses. Now CloudTrade are providing its services to businesses of all sizes: from buyers that only have a few thousand invoices a year, to companies that are doing more than 15,000 per month. “So it is not just the big boys who are doing this now – it is smaller organisations too.”
A false economy
However, given the obvious benefits that e-invoicing could bring there is still a sense that business uptake should be growing even quicker. According to Treasury Today’s 2013 European Benchmarking Study, 40% of companies surveyed reported that they still do not accept any number of their invoices in electronic form, and currently have no immediate plans to do so.
Why is that the case? Corporates that are not using e-invoicing will often cite concerns around the management of internal change or integration with in-house systems and internal systems, for instance. But by far the biggest obstacle, they say, remains their suppliers. That is because suppliers have not always been totally receptive to attempts made by their corporate customers to enrol them into e-invoicing programmes. And, for the corporate, there is little point in migrating to e-invoicing if it cannot be confident that enough of its suppliers will invoice in electronic form.
Of course, every e-invoicing provider has their own opinions on how to best address poor supplier uptake. Manson’s take on it is that suppliers might be more accommodating of e-invoicing if greater attention was paid to addressing the barriers that still stand in their way. They could be solutions that demand suppliers submit invoices in XML or EDI format, or force them to use portals that are not compatible with their accounting package. They could also be, as Manson details in a recent post made on the purchase-to-pay forum Purchasing Insight, providers that demand suppliers pay them for the privilege of sending their own invoices.
The latter certainly seems counterproductive from a corporate perspective. Not only will that translate into a very protracted on-boarding process, but it will also act as a weight on overall adoption across the company’s supplier base – both consequences that corporates should be very keen to avoid. “I think some organisations sometimes fall for the sales pitch,” Manson told Treasury Today. There are organisations that claim they can give you great value, offering the service at a low cost, he explains. “But in reality, if that organisation is only going to be doing electronic invoicing for a small number of suppliers, they may get it for a lower price but they are not getting the full benefits because they still have a majority of their invoices coming into them on paper.”