TALTIO program promotes the use of structured data
eInvoicing for construction company
1. Dublin Institute of Technology
DT 168 MSc in Construction Informatics
RECE 9405 Business in Construction
2. Electronic Invoicing
E-Invoicing is a real opportunity for companies to save a
significant amount of their time, resources and money
for dealing with sales and purchase invoices.
It is very likely that e-Invoicing can give a quick return
on investment for companies which decide to implement
e-invoicing in their business and within their supply
chain. Often the investments in e-invoicing can be
gained back within 6 months.
Some sources predicted that the optimisation of the
invoicing processing in Europe alone, especially
implementation of e-invoicing is likely to achieve the
saving of several dozens billion euro annually [4].
3. Business case
Construction contractor company was chosen for research related to
possible implementation of e-invoicing and overall improvements of existing
invoicing processes.
Company sales construction service offers different types of construction
machinery for hire (with and without company personnel) and occasionally
sells the crushed stone from former quarry owned by company.
Research of existing invoicing processing was based on my personal four
year work experience within this company.
Information for analysis was collected during visits to the company office by
checking company records, analyzing company electronic and other types
of correspondence as well as by personal interviews with company staff.
Information for one calendar month was collected for analysis. The number
of invoices dealt for this period was 58 (42 – purchase invoices and 16 –
sales invoices). This number is seriously down from period of 2008 – 2010
years, when monthly number of invoice could be reached above 2000
invoices during the most productive months. Purchase invoices always
have a vast share in entire invoicing turnover of company.
4. Analysis of existing processes
Analysis of existing processes of purchase and sales
invoice management was completed. This analysis
includes a detailed mapping of both purchase and sales
invoice management. At initial stage of invoice
processing for both types of invoices, the company has
a several different input streams for invoices. By the end
of invoices processing, all streams are forming the one
possible output, namely:
for purchase invoice: approval of invoice and remittance
advice by CEO and paying the invoice
for sale invoice: putting invoice into a PC database and
sending invoice to client
5. Estimation of time and cost spent on existing invoice processing
Estimation was completed for one month period
(March – April 2012). The results are as follows:
PURCHASE INVOICES
Number of invoices - 42
Average time of processing - 2 days 4 hours
Average cost of processing - €15.7
SALES INVOICES
Number of invoices - 16
Average time of processing - 1 day 5 hours
Average cost of processing - €12.8
6. Practical difficulties with moving from paper-based to
electronic invoicing in this business case
Absence of full-time working personnel in charge of
entire invoice management process
(three members of staff are involved from time to time in dealing with
invoices in main office)
Nature of business
(too many occasional business partners in supply chain, who are not
interested in integrating their invoice processing with company processing)
Types of customers & suppliers dealt with
(some customers still rely on old fashion approaches in their business
activity. They use fax, post, handwriting documents for invoice processing)
Business situation on construction market
(situation on major company market is pessimistic, that does not help the
management make a decision on implementation of new approaches and make
additional investments of human and financial resources into invoice
processing)
7. Recommendations for electronic enhancement
of invoice processing
Electronic Document Management (EDM) system may be successfully
implemented within company [8]. This new approach shall allow:
Scan and OCR (Optical Character Recognition) of printed documents
Register of documents
Storage of documents
Easy retrieving of documents
Simple and quick way to make the changes into documents
The software packages for invoice management will improve the invoice
processing significantly. The following software package can be used:
Invoice Management tool offered by Apptricity [1]
Intelligent WorkFlow tool offered by SmartMedia [7]
SliQ Invoice Application tool [6]
8. Recommended software applications
The software applications for invoice management may include the following
features and benefits:
On-promise and SaaS
Affordable, one-off cost, no monthly or yearly subscriptions
Accept input from multiple sources: OCR, spreadsheet, manual entry, e-mail
Advanced workflow and tracking
Automatic invoice & quote numbering
Use of own logo on invoices and quotes
Converting quotes into invoices automatically
Product invoices and service invoices
E-mail invoices to customers
Export invoices reports to Excel
Control customer accounts and cash flows
Direct electronic payment capability
Etc.
9. Other recommendations
Adoption of electronic signature procedures
for CEO and Financial Director
Use of separate e-mail address for dealing
with invoices (e.g. sales@.....com)
Wider use of electronic payment options
instead of existing bank counter approach
Use of main office mail address only for
correspondence related to invoicing
Improvement of communication between main
office and site offices for fast-tracking of
invoicing processes (OCR, placing invoices
into cloud computer facilities)
10. Estimation of operational and financial benefits from
implementation of proposed improvements
PURCHASE INVOICES
Number of invoices - 42
Average time of existing processing - 2 days 4 hours
Prospective time of processing - 4 hours
Average cost of processing - €15.7
Prospective cost of processing - €4
SALES INVOICES
Number of invoices - 16
Average time of processing - 1 day 5 hours
Prospective time of processing - 4 hours
Average cost of processing - €12.8
Prospective cost of processing - €4.8
11. Operational and financial benefits
Estimation of proposed operational and financial benefits
from implementation of proposed improvements can
achieve the significant achievements for both time and cost
involved in invoice process management within company
78% - time saving
72% - cost saving
These results taken from different publications show that in
comparison with paper-based processes, electronic
invoices handling processes make it possible to reduce time
spending and cost by 50-80% [3,4,5]
12. Summary
e-Commerce (e-Tendering, e-Procurement,
e-Invoicing, e-Auctions) is the fastest and the most
realistic approach for improving the current
economical situation in EU.
New advanced EU and national regulations and
initiatives are required for wider implementation of
e-Commerce in Ireland and beyond.
Such initiatives must target the entire supply chain
of construction industry. In this case the results
received from e-Commerce can be enormous for all
stakeholders of construction industry and society.
13. References & Bibliography
[1] Apptricity www.apptricity.com
[2] Billentis (2012). Available from: http://www.billentis.com/EBPP_EIPP_e.htm [Accessed
15/04/2012]
[3] CITA (2008). CITAX Project. Module 2 – Electronic Trading. Prepared by: Finbarr
McCarthy. Available from: www.cita.ie
[4] European Commission Informal Task Force on E-Invoicing. (2007).
European Electronic Invoicing Final Report. Available from: http://www.facturae.es/es-
ES/IniciativasInternacionales/EC%20Expert%20
Group/EEI_3_2_eInvoicingFinalReport.pdf [Accessed 16/04/2012]
[5] Koch, B. (2012). E-Invoicing/E-Billing. Opportunities in a Challenging Market Environment.
2012 Report
[6] SliQ www.sliqtools.co.uk
[7] SmartMedia www.smartmedia.com
[8] Sun, M., Howard, R. (2004). Understanding IT in Construction. London, Spon Press.