Attitudes Towards Electronic Invoicing In Finland

Electronic Invoicing in Finland - attitudes towards electronic invoicing by financial managers in small- to mid-sized companies Anna Rofhök-Björni Master’s of Science Thesis in Accounting Swedish School of Economics and Business Administration 2006

II SWEDISH SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION Department: Accounting Type of work: Master of Science Thesis Author: Anna Rofhök-Björni Date: 25.01.2006 Title: Electronic Invoicing in Finland - attitudes towards electronic invoicing by financial managers in small- to mid-sized companies Abstract: Electronic invoicing is a fairly new phenomenon that is facing a surge in popularity in Finland at the moment. There has not been a lot of research made previously on electronic invoicing and attitudes towards using it by potential users. This thesis aims to fill this gap. The research objective is to ascertain what the attitudes are towards electronic invoicing by financial managers employed by SMEs in Finland. A questionnaire has been sent to financial managers with questions about electronic invoicing. The response rate was good. The result of the study showed that the attitudes towards electronic invoicing are positive. There were some concerns regarding the cost and safety of using electronic invoicing but the majority of the respondents believe that using electronic invoicing would be beneficial. Keywords: electronic invoicing, XML, ebXML, eInvoice, Finvoice, electronic commerce, TEAPPSXML, PostiXML, EDIFACT

III Table of Contents 1 Introduction ______________________________________________________ 1 1.1 Background ________________________________________________________ 1 1.2 Research objective __________________________________________________ 1 1.3 Structure of the thesis________________________________________________ 1 2 Electronic Invoicing in Finland ______________________________________ 3 2.1 Introduction________________________________________________________ 3 2.2 The invoice_________________________________________________________ 3 2.3 Electronic invoicing _________________________________________________ 4 2.4 Techniques and standards ___________________________________________ 10 2.5 Electronic invoicing in Finland _______________________________________ 13 2.6 Laws and regulations _______________________________________________ 18 2.7 Summary _________________________________________________________ 19 3 Theories and prior research ________________________________________ 20 3.1 Introduction_______________________________________________________ 20 3.2 Theories of adoption of new information technology _____________________ 20 3.3 Previous research-findings on factors affecting attitudes towards adoption __ 23 3.4 Summary _________________________________________________________ 28 4 Research model and Methodology ___________________________________ 29 4.1 Introduction_______________________________________________________ 29 4.2 Research model and hypotheses ______________________________________ 29 4.3 Data collection _____________________________________________________ 34 4.4 The results ________________________________________________________ 37 5 Discussion ______________________________________________________ 62 5.1 The research and its limitations ______________________________________ 62 5.2 The results and their implications _____________________________________ 62

IV 5.3 Suggestions for further study_________________________________________ 66 5.4 Conclusion ________________________________________________________ 66 6 Bibliography_____________________________________________________ 67 7 Appendix _______________________________________________________ 71 7.1 Appendix 1________________________________________________________ 71 7.2 Appendix 2________________________________________________________ 77 List of Tables Table 2.1 Costs of paper invoices versus electronic invoices (Elma Electronic Trading, 2006) ...............10 Table 4.1 Current electronic invoicing status ............................................................................................38 Table 4.2 Preferred electronic-invoicing solution......................................................................................39 Table 4.3 Electronic invoicing is hard to understand ................................................................................39 Table 4.4 There is a risk of error increase when using electronic invoicing .............................................40 Table 4.5 Electronic invoicing is tiresome to learn....................................................................................40 Table 4.6 It would be difficult to check accuracy when using electronic invoicing ...................................41 Table 4.7 Technically safe..........................................................................................................................41 Table 4.8 There are financial restrictions in our company to acquire electronic invoicing ......................42 Table 4.9 ERP Systems in use in our company...........................................................................................43 Table 4.10 Regression analysis 1 ...............................................................................................................45 Table 4.11 Regression analysis 2 ...............................................................................................................47 Table 4.12 Regression analysis 3 ...............................................................................................................50 Table 4.13 Regression analysis 4 ...............................................................................................................52 Table 4.14 Regression analysis 5 ...............................................................................................................55 Table 4.15 Summary of hypotheses ............................................................................................................59 Table 4.16 Correlation Matrix ...................................................................................................................60 Table 4.17 Questions for correlation matrix in table 4.14 .........................................................................60 List of Figures Figure 2.1 Elma for RosettaNet (Elma Electronic Trading, 2006) ______________________________12 Figure 2.2 eInvoice model (e-invoice consortium, 2005)_____________________________________14 Figure 3.1 The Technology Acceptance Model (TAM) (Gullkvist, 2005) _________________________21 Figure 3.2 The Theory of Reasoned Action (TRA) (Gullkvist, 2005) ____________________________22 Figure 4.1 Research model ____________________________________________________________30 Figure 4.2 Technically safe ___________________________________________________________41 Figure 4.3 Normality Probability Plot Regression No1 ______________________________________45

V Figure 4.4 Normality Probability Plot Regression No 2 ______________________________________48 Figure 4.5 Normality Probability Plot Regression No 3 ______________________________________50 Figure 4.6 Normality Probability Plot Regression No 4 ______________________________________53 Figure 4.7 Normality Probability Plot Regression No 5 ______________________________________56 Table 4.17 Questions for correlation matrix in table 4.14 ____________________________________60 Figure 4.8 Correlations in research model ________________________________________________61 Figure 5.1 The significant factors in the research model_____________________________________63 Acknowledgements I would like to thank everybody who has helped me during the time I have been writing this thesis. I want to thank Thomas Lönnquist at eCraft Oy Ab who gave me the idea to write about electronic invoicing as well as Johan Andersson at Iversum who has sent me lots of information. Additionally, I would like to thank Janneke von Wendt and Tove Gordin-Lydman who translated the questionnaire from English to Finnish. Also, Oana Velcu, thank you so much for helping me out with all the technical stuff as well as giving me information on how to analyse my results. I would also like to thank Heli Salmi who agreed to meet with me and discuss electronic invoicing in Finland. And of course, Professor Anders Tallberg who has given advice on how to write the thesis and how not to. Last but not least, I want to thank my husband Janne for putting up with me and my writing – it took longer than I planned. Thanks for your support!!

1 1 Introduction 1.1 Background In Finland, the Finns can use information networks for almost any everyday activity. Dealings with governmental departments, bank transactions and purchasing flight or concert tickets can be handled online. Eighty percent of the population in Finland is familiar with the Internet and almost fifty percent of them use the Internet daily. Finland has been ranked three times as one of the most developed IT economies by World Economic Forum (WEF) in the beginning of the 21st century. Additionally, Finland has many times been cited as a good “test laboratory” for innovations and services because the Finnish people are technically oriented and interested in trying new products. Exploring electronic invoicing and financial managers’ views on its use and adoption in Finland will therefore give an interesting picture of the future of electronic invoicing (ICT Cluster Finland Review 2005). There has been a lot of research made regarding attitudes towards and adoption of electronic commerce by SMEs (Small and Middle-sized Enterprises) which has shown that SMEs are reluctant to adopt e-commerce (Grandon & Mykyton, 2004). Considering these findings, it is of interest to establish financial managers’ thoughts regarding electronic invoicing. 1.2 Research objective Electronic invoicing is currently a much discussed topic because of the time and cost reductions it can offer. Many different solutions and techniques have been introduced and tested. Even though there are numerous studies on attitudes towards information technology and electronic commerce and their adoption, there is no current research available on the attitudes towards electronic invoicing. The main purpose of this thesis is to fill this gap. The objective is to identify the attitudes towards electronic invoicing and its adoption among financial managers and accountants working for SMEs in Finland. This study will as a consequence increase our knowledge of attitudes towards new technology in general and electronic invoicing in particular. 1.3 Structure of the thesis The first chapter of the thesis serves as an introduction to the topic of electronic invoicing.

2 The second chapter will discuss electronic invoicing in Finland. A general description of the traditional invoice will be offered and discussed before continuing with the electronic invoice. There will be definitions and introductions of what kinds of electronic invoicing there are. Subsequently, benefits that can be won by using electronic invoicing are discussed. Chapter two continues by discussing techniques and standards that are used to make electronic invoices and also the most common solutions available on the Finnish market. The chapter will end by briefly introducing laws and regulations that need to be considered. Chapter three discusses theories on new information technology adoption and previous research in this area. In this chapter various factors influencing adoption decisions and attitudes are identified. Next part of the thesis, chapter four outlines the research methodology, the research itself and the results. The last part, chapter five will discuss the findings and their limitations and implications.

3 2 Electronic Invoicing in Finland 2.1 Introduction Electronic invoicing is facing a surge in popularity at the moment and especially in Finland suppliers of electronic invoicing and new solutions are increasing. In this section I will establish what an electronic invoice is, what options are available, the techniques and standards and finally some solutions on the market in Finland and the laws and regulations. 2.2 The invoice To understand the electronic invoice, it is useful to be aware of what an invoice is. The commercial invoice is according to the CEN/ISSS e-Invoicing Focus Group (2005) the most important document exchanged between business partners. It is not only of commercial value but it is also an accounting document and it has legal implications for both the sender and the receiver of the invoice. According to Verohallinto (2005), an invoice is verification or a message in either paper or electronic format that fulfils the regulations of VAT (Value Added Tax) laws. In Finland, the invoice forms the basis for the VAT declaration and reclamation as well as the statistics declaration for intra community trade and the export and import declaration for extra community trade (CEN/ISSS e-invoicing focus Group, 2005). The invoice is made by the seller for a sale made to document the transaction and it subsequently supports accounting and auditing functions. In Finland, a typical invoice includes the following items: • Date of invoice • Number of invoice • The issuer’s VAT-number • Issuer’s and recipient’s name and address • The amount and kind of goods or services • Date of delivery, date of performance or date of payment (if it is a prepayment) • The tax-base for every taxable item, price per unit excluding VAT as well as price reductions and discounts. • Taxbase • Amount of VAT to be paid (Verohallinto, 2005)

4 2.3 Electronic invoicing 2.3.1 Definitions According to the e-invoice consortium (2005), an electronic invoice is a modern, reliable, cost-efficient and practically paperless method of handling and processing invoices for goods, services and other expenses. Electronic invoicing is suitable for both large and small firms and companies as well as private customers and both large and small volumes of invoices can be sent. It is an especially efficient method of invoicing when there are many recipients. The recipient is sent the invoicing data and an invoice image for circulation, approval and archiving in electronic format (Elma Electronic Trading, 2005). The electronic invoice can be graphically displayed on the computer screen similarly to a traditional invoice. Consequently, archiving, distribution and approval procedures are improved. Business customers can receive the electronic invoice straight into their financial information system (e-invoice consortium, 2005). Private customers can receive invoices in their internet bank. Private customers will not be dealt with in depth as this thesis will mainly concentrate on B2B (Business to Business) invoicing solutions. 2.3.2 Invoicing electronically To be able to receive electronic invoices there has to be at least an internet connection, a workstation, and an agreement with an internet bank or similar where the invoices will arrive. Sending is usually done through the company’s invoicing system but it can be done through the Internet as well (Tieke, 2005). Most financial administration services can send electronic invoices through the Internet without anything but a browser. The invoices are divided into electronic invoices, EDIFACT invoices or eKirje invoices to be printed in paper format and subsequently sent forward to the recipients. The recipient can also receive the invoices electronically straight into the financial information system provided that the account entries are already marked on the invoice. All the recipient has to do is to approve the invoice for payment. Sales and purchase invoices can for example be accessed and transmitted while performing other bank-transactions (Vahtera Pauli, 2005).

5 2.3.2.1 Scanning of invoices The most basic method of electronic invoicing is scanning. The invoice is issued by the sender in paper format and subsequently scanned so that the receiver can process them electronically. The receiver or a third party usually performs the scanning. In this case, the invoices do not use any electronic messaging. The receiver has good control of the internal handling of invoices, the processing system and the status right through the processing as well as the archiving (CEN/ISSS e-Invoicing Focus Group, 2005). However, the benefits from electronic invoicing compared to paper invoices are non-existent if the financial information system does not use a system which can handle the electronic invoice. Consequently, scanning of invoices is only using a small part of the possibilities that electronic invoices can offer (Vahtera, 2002). 2.3.2.2 Insular electronic invoice The next type of electronic invoice is the insular electronic invoice. This is when the receiver wishes to receive invoices electronically in his/her system but where the preceding messages have not been electronic. This may help to streamline the receiver’s internal processing of invoices but the processing will nevertheless involve many manual actions such as verification and matching of the invoice against orders, and cut-and-paste operations to make the invoice information possible to manage in the ERP system. These invoices could be in text format (HTML, Word, Excel and the like) or graphical format (for example PDF or TIFF) (CEN/ISSS e-Invoicing Focus Group, 2005). 2.3.2.3 Electronic invoicing on Web forms This option involves a web site where the invoices are entered. An example would be a large, powerful buyer who wants to receive electronic invoices but buys irregularly or not very often from small suppliers. The supplier is then referred to a web site, usually one that is accessed through user id and password and he/she can enter the invoice manually there. The web site might also offer additional services such as storing of invoices and printed or electronic copies of the invoices entered. If the web site is also the point of access for orders to the supplier, his/her amount of invoicing data to be inserted may be considerably reduced. The buyer has full authority on the format of the invoices so that they can be processed automatically when received. The buyer or a third party runs the web site and is

6 in control of how the invoices are stored and the security surrounding the invoices. The web site could be in the supplier’s control if the situation is reversed and the supplier is influential and can persuade the buyers to collect invoices from there. In this scenario the supplier controls the invoice format and procedures. Using a web site for electronic invoicing could however cause duplication of data entry for the receiver (CEN/ISSS e- Invoicing Focus Group, 2005). 2.3.2.4 Electronic invoicing through a consolidator Many companies find using a consolidator convenient. A third party such as a bank or an ASP (Application Service Provider) operator is used to overcome differences in networks, communication protocols and message formatting standards by converting the invoice data between the sender and the receiver. The invoices are electronic throughout the process and even though the invoices are formatted differently, they are structured and intended for automatic processing. Consequently, a company only has to have one format of invoices instead of matching formats for every recipient (CEN/ISSS e-Invoicing Focus Group, 2005). The consolidator is responsible for the sender’s invoice traffic, the format of the invoice and the transfer to the recipient. The electronic invoices to be sent are gathered from the sender by the consolidator. Credit invoices can be sent separately or included. The consolidator subsequently checks the sender and its right to send electronic invoices and distributes the electronic invoice to the recipient according to the recipient’s identifier. If the recipient cannot be identified or if the data is erroneous, an error message is received. If the recipient uses a service provider, it is his/her responsibility to collect his/her electronic invoices. If the service provider is a bank for example, electronic invoices could be accessed when collecting bank statements or paying invoices (e-invoice consortium, 2005) 2.3.2.5 Electronic Invoicing under trading partner framework agreement In this scenario, the business partners have an agreement for a period of time stating the conditions for trade. The business process is agreed upon as well as products and prices. A Price List transaction may be used to change products and prices during the period. A Call- off/Order transaction is used for individual deliveries followed by an order response. When

7 the sale is fulfilled an invoice is used to request payment (CEN/ISSS e-Invoicing Focus Group, 2005). 2.3.2.6 Direct Electronic Invoices An electronic invoice can also be collected directly from the electronic invoice provider or straight from the sender. Software-specific direct connections have been developed for key accounting and workflow applications in association with software providers and ASP- operators (e-invoice consortium, 2005). 2.3.3 Benefits to issuers and recipients The potential benefits have caused a fast growing interest in electronic invoicing. According to Luo et al. (2000), the most obvious benefits for using electronic invoicing are the reductions in time and cost when processing invoices. It has been estimated that around 200 million business-to-business (B2B) invoices and 150 million business-to-customer (B2C) invoices are sent in Finland yearly. On average, when including both issuer’s and recipient’s costs the handling of a B2B invoice is around EUR30. Eighty percent of this amount constitutes the handling of a received invoice (e-Finland Forum, 2004). The process of receiving an invoice payment in Finland is largely automated using reference numbers, with the introduction of electronic invoicing, the recipient’s accounting and payment of invoices could be automated as well. The cost reduction could be up to as much as 80-90% (Vahtera, 2005). In addition, the automation of the invoice processing reduces the risk of incorrect entries. Electronic invoices are also more environmentally friendly because of its paperless system (Rautajoki, 2003). According to the e-invoicing focus group, the introduction of electronic invoicing will furthermore aid tax administrators to implement new tools and procedures for controlling purposes that are less intrusive on the trading partners. It has also been said to offer better competitiveness to the economy as a whole if the number of users is large enough (ICT Cluster Finland Review 2005). The sender of electronic invoices can reap the following benefits: Fast invoicing Lowering of costs of material Better customer service and cost-savings for customers

8 Less manual work process - enhanced efficiency and reduced human error risk Possibility for electronic storage Possibility for outsourcing The receiver of electronic invoices can reap the following benefits: No manual invoice entry Automation of VAT services Fast circulation of invoices Easier filing Less errors in data entry and handling Automation of accounting Reduced cost of invoice handling (Tieke, 2005, Elma Electronic Trading, 2006) Typically, large companies have more bureaucracy when processing an invoice. Different companies have different processes for handling invoices and different invoices have different handling requirements. Pauli Vahtera and Heli Salmi have made a calculation (see table 2.1), where two companies with different needs are compared on the time it takes to handle an incoming paper invoice as well as the time and cost-savings when using electronic invoicing. Company A Paper Electronic (based on Internet and EDI in Effective Accounting Invoice by Salmi-Vahtera): Handling phase Time (min) Time (min) Opening the mail 1 Date stamping the invoice 1 Copying the original 1 Organising copy in a folder according to alphabetical 1 order Checking and posting the invoice 2 Entry into the purchase ledger 2 Checking 1 1 Approval 2 1 Posting the invoice to the data system 1,5

9 Approval of payment 0,5 Archiving the invoice (in numerical order) 1 In-house mailing (9 copies of the invoice) 10 Error handling (10% of invoices) 2 1 TOTAL (min) 26 3 Hourly rate 34 EUR Minute rate 0,6 EUR Cost / invoice EUR 14,57 1,68 Savings / invoice 12,89 EUR Savings as a percent 88,5 % Paper Electronic Company B Invoice (based on Paperiton kirjanpito [Paper-free Bookkeeping] by Vahtera-Salmi): Handling phase Time (min) Time (min) Purchase invoice from the post Supplier number, receipt stamp and receipt number 0,5 marked onto the invoice Entry into the ledger 1 Entry into the order processing system Finding the despatch note for the invoice; the despatch note is clipped to the invoice, the invoice is placed in a post box, someone takes it to the purchase team Approval in the team 0,5 The invoice returns to bookkeeping 10 A copy of the invoice is taken The despatch note is stapled to the copy 0,5

10 The copy and the despatch note are placed into a 0,5 folder in receipt order The original invoice is approved Approval 0,5 0,5 The chief accountant checks the invoice posting 0,5 The invoice is taken from the ledger and posted 0,5 The invoice is archived in receipt number order 0,5 TOTAL (min) 14 1,5 Hourly rate 34 EUR Minute rate 0,6 EUR Cost / invoice EUR 7,8 0,8 Savings / invoice 7,0 EUR Savings as a percent 89,3% Table 2.1 Costs of paper invoices versus electronic invoices (Elma Electronic Trading, 2006) 2.4 Techniques and standards 2.4.1 Introduction There are many different techniques and standards available on the international market for electronic invoicing. As this thesis’ focus is on the Finnish market I will concentrate on the techniques and standards used in Finland. The main ones are the eInvoice, the Finvoice, TEAPPSXML, PostiXML, VaLo and EDIFACT but there are others. The eInvoice was developed by an organisation which was formed to facilitate the development of electronic invoicing in Finland , the e-invoicing consortium. The e- invoicing consortium agreed on technical data content as well as the information to be included in the electronic invoice supported (the eInvoice). The eInvoice standard has two possibilities: XML or ASCII. The Finvoice was introduced by the Finnish Bank Association and was developed according to ebXML. In addition to these, TietoEnator has its own product TEAPPSXML which is compatible with both the eInvoice standard and the

11 Finvoice. Having many standards on the market is not a problem as the service providers transform the electronic invoices to the format required. In Finland, large corporations still use EDIFACT but according to Vahtera this will diminish as the other alternatives are stronger and less expensive (Vahtera, 2005). 2.4.2 EDIFACT & ANSI EDIFACT (Electronic Data Interchange for Administartions, Commerce and Transport) and ANSI (American National Standards Institute) are traditional standards of EDI. These standards set fields for documents such as purchase orders, invoices and payments (Hasselbring & Weigand, 2001). 2.4.3 XML (eXtensible Markup Language) XML is a mark-up language and is used to create self-descriptive data. It is a meta- language. XML is independent of any application or platform and both humans and machines can read its syntax. (Hasselbring & Weigand, 2001) It has been widely used to describe data and creating mark-up languages (Deitel et al, 2003). 2.4.4 RosettaNet Rosetta Net a consortium that develops an electronic business framework for business processes definition. It is a non-profit organisation and it is creating open standards so that supply-chain partners can coordinate business processes more efficiently. To accomplish this goal, RosettaNet has developed dictionaries and frameworks that assist organisations in implementing business-process standards. The core properties of RosettaNet is the definition of terms called PIPs (Partner Interface Processes). PIPs are XML specifications and describe processes and business documents shared in the supply chain (Deitel et al, 2003). The RosettaNet framework is for example used by Elma Electronic Trading in their Elma for RosettaNet.

12 Figure 2.1 Elma for RosettaNet (Elma Electronic Trading, 2006) 2.4.5 EbXML (Electronic Business XML) This technical framework was developed jointly by OASIS (Organization for the Advancement of Structured Information Standards) and UN/CEFACT (United Nations Centre for Trade Facilitation and Electronic Business) to standardise XML business specifications and make it possible for XML to be used consistently for electronic business data exchange. EbXML provides a technical framework through which companies regardless of size and industry can communicate and exchange data using XML or EDI syntax. EbXML draws on extensive experience with EDI syntax and semantics and on current initiatives for converting EDI to XML (ebXML forum, 2005). In Finland, the Finvoice was developed using ebXML. 2.4.6 Biztalk BizTalk is a tool developed by Microsoft for communication between different systems. With BizTalk, data can be marked up as XML and subsequently transferred between different applications regardless of different platforms or programming languages. BizTalk actually includes three things; the BizTalk Server, the BizTalk Framework and the BizTalk Schema Library. The server parses and translates every message and the framework is a schema structuring the messages to be sent (Deitel et al 2003). Biztalk has been used in

13 Finland for electronic invoicing solutions by ASP operators. 2.5 Electronic invoicing in Finland 2.5.1 Introduction As Finland is one of the forerunners in electronic banking, there is considerable expertise in the electronic business area and the internet banking and payment infrastructure is greatly developed. In addition, there has been a great deal of collaboration between banks, ASPs and others and this has resulted in a development of functional and cost-efficient procedures, standards, models and instructions for electronic invoicing. As a consequence, Finland has proven to be a good market for solutions for electronic invoicing to be developed in (Vahtera, 2002). 2.5.2 Solutions available Electronic invoicing has been used in Finland over 30 years already. The first electronic invoices were sent between large corporations according to internal standards. In the 1970s, the KOTVA-standard was introduced and many large businesses traded invoices. At the end of the 80s, the international EDIFACT standard was established which is still used by big firms today (Vahtera, 2002). In 1998, payment of electronic invoices through the internet was commenced. International credit card-companies have their own electronic invoices and also other large international corporations have their own systems which are based on internal standards, EDIFACT and US ANSI standard. Invoices in pdf-format or email invoices have also been used as electronic invoices. The Post’s eKirje can be printed but is electronic in the seller’s accounting system (Vahtera, 2002). Tietoyhteiskynnan kehittämiskeskus (Tieke, 2005) has developed a website where electronic invoice users can register when they are able to receive and send electronic invoices (Tieke, 2005). The biggest players on the Finnish market are according to Heli Salmi, Elma Electronic Trading, Nordea, TietoEnator and BasWare. In this section, I will describe some of the most common solutions available on the Finnish market. 2.5.2.1 The eInvoicing Consortium The e-Invoice consortium was initiated in 1999 and the eInvoice solution was developed (Elma Electronic Trading, 2006). Providers of electronic invoicing and banks in Finland

14 agreed upon a common standard so that electronic invoices could be sent and received in a secure manner in a common trunk network. Consequently, invoicing between sellers and buyers is made in a uniform way even though they are using different providers. The eInvoicing consortium is focused on securing the eInvoice and making it reliable. The providers install the connections the customer needs to be able to send and receive electronic invoices. This can be done in collaboration with the financial administration software providers or ASP operators or independently. The banks and the providers then handle the set-up, maintenance, support and backup of the network connections as well as format conversions that might be necessary to let the customers use the method of receiving and sending e-invoices best suitable (e-invoice consortium, 2005).The parties in the consortium transmit the data to the receiver according to the technical address in the invoice. Standards for the invoice data has been developed by the consortium (Elma Electronic Trading, 2006). Figure 2.2 eInvoice model (e-invoice consortium, 2005)

15 The eInvoicing model is based on EDI (Electronic Data Interchange). EDI includes the electronic transfer, from computer to computer, of commercial and administrative data with the use of an agreed standard. In other words, EDI can mean both EDIFACT messages as well as XML messages. Electronic invoicing is based on agreements between the parties involved: • the invoice issuer and the service provider or bank • agreements between the parties in the consortium • the invoice receiver and the service provider or bank. ¨ Verification of origin is established by the use of VPN (Virtual Private Network) protocol. The VPN protocol secures the origin, integrity and confidentiality of the message. In FTP- connections the FTP (File Transfer Protocol) user is identified with a user id and a password. Banks demand MAC (Message Authentication Code) digest in their connections. The verification of integrity is verified with start and end segments. In international transactions the transmission can be secured by: • The invoice sender and the receiver make an EDI-agreement where the security methods are established • Verification of origin is established by using VPN protocol • The verification of integrity can be secured by a digest, which is included in the data. In all cases the integrity of the data can and will be verified with start and end segments (Elma Electronic Trading, 2006). 2.5.2.2 Elma E-Invoice Elma is part of the eInvoicing consortium and offers several solutions to their customers depending on the customers’ situation. Elma offers the Elma eInvoice, the Elma eInvoice Basic and Elma eInvoice.com. The Elma eInvoice is suitable for large and mid-sized organisations and the Elma eInvoice Basic and the Elma eInvoice.com are more fitted to small and medium-sized companies. All of the products support several standards, message descriptions and operational models available on the market. In addition, all Elma e-invoice products are based on the standards and operating procedures identified by the eInvoice consortium. Customers can therefore choose the method of receiving and sending electronic

16 invoices that suits them best. Elma’s products support, among others, the following formats: PDF, TIFF, eInvoiceXML, eInvoice ASCII, TEAPPSXML (TietoEnator), EPL (Finland Post Ltd), and EDIFACT. The Elma eInvoice is made to look like a regular, printed invoice. According to Elma Electronic Trading, this aids checking, circulation and archiving of the electronic invoice. It can easily be linked to the organisation’s invoicing system. The recipient can receive the invoice in whatever format required, whether it is another Elma eInvoice, an EDI invoice or in paper format (printed by the Elma Invoice service). Invoice payment information is automatically integrated into the recipient’s system. The invoices can be accessed and viewed from the organisation’s ERP system. It can be printed, saved on a workstation or forwarded by e-mail. If the recipient uses the eInvoice Repository Connection (eRC) the Elma eInvoice can be received directly into the financial information system. The eRC uses the Elma data warehouse technology and an FTP (File Transfer Protocol) application interface to make this possible. The recipient’s software supplier is then responsible for transferring the data and integrating the invoices. With the eRC Plus, the recipient can also receive electronic invoices from other operators and banks who are part of the eInvoice consortium. EDI invoices are transferred automatically using the ElmaEDI connection from the sender’s ERP system to the receiver’s system. Orders and order confirmations often forms the basis for EDI invoices according to the SCM (Supply Chain Management) - model. EDI invoices are mainly for companies sending many invoices. For customers wanting invoices in paper format, the Elma Invoice service can be used. The issuer sends the invoice files electronically to Elma and the Elma Invoice service prints the invoices and sends them to the customer. A customer can furthermore receive scanned paper invoices by using the Elma eCom Connection. Paper purchase invoices are then converted into electronic format such as PDF or TIFF files. In addition to the connections in Elma’s products, Elma eInvoices can be received through several ASP operators. The operators then transmit the invoice data between themselves and the operators are responsible for their service. Each operator can use different ways to send the invoice data. The Elma eInvoice can be transmitted through the Internet as well as

17 through fixed connections. Currently, the Elma eInvoice supports the following distribution channels: Finland Post Ltd, TietoEnator, Elisa Solutions Ltd, Proha Oyj, ProCountor.Com, WM-data Novo, and BasWare Business Transactions. Elma eInvoice Basic uses the same technology and distribution channels as the eInvoice but has limited customisation. The Elma eInvoice.com is a service where companies can send and receive invoices electronically without installing a new application to their own system. An internet browser is all that is needed. The invoices are subsequently sent straight to the recipient’s system. For security, the invoice traffic is encrypted using SSL (Secure Socket Layer), MAC (Message Authentication Code) and PATU (Banking standard for secure customer connections). Automatic watchdog technologies are used to control the buffers for the invoices and the servers are placed safely and securely and under constant supervision (Elma Electronic Trading, 2006). 2.5.2.3 Finvoice The European Committee for Banking Standards (ECBS) introduced in July 2003 a standard for electronic invoicing called the electronic Payment Initiator (ePI). The ePI was created to be used both domestically as well as internationally. In Finland, the ePI standard, SOAP (Simple Object Access Protocol) and ebXML-compliant descriptions were employed to develop a format for electronic invoices called Finvoice (ebxml forum, 2005). The Finvoice was created by Finnish banks and uses XML syntax. The Finvoice can as such, be presented in a browser in a form similar to a paper invoice as well as be understood by an application. Consequently, the Finvoice can be printed as a paper invoice and processed traditionally if the need arises (The Finnish Bankers‘ Association, 2005). A Finvoice consists of three things; a transmission frame consisting the information necessary for forwarding the invoice, a specification of the information needed for approval and accounting purposes and payment information. As mentioned earlier, the Finvoice can be opened for viewing and printing using a normal browser but it can also be processed fully automatically (The Finnish Bankers‘ Association, 2005).

18 2.6 Laws and regulations According to Directive 2001/115/EC, all Member States must accept documents or messages in paper or electronic format as invoices if they meet the conditions outlined in Directive 2001/115/EC. It is also stated in the Directive that Member States can require special conditions, procedures or measures according to the national requirements. This can cause conflicts in cross-border trading. In such cases, the VAT rules of the issuer’s Member State will apply (e-Invoicing Focus Group, 2005). Directive 2001/115/EC entails requirements on electronic invoices regarding the guarantee of integrity of content and authenticity of origin for VAT purposes. As stated earlier, an electronic invoice should be accepted as long as the authenticity of the origin and the integrity of the contents are guaranteed. The authenticity of the origin is to know for a fact, the identity of the sender of the electronic invoice. The integrity of the contents means that any changes that have occurred during transport or storage can be detected. This should be accomplished through: - an Advanced Electronic Signature (AES). - or an electronic data interchange (EDI). - or any other electronic means subject to acceptance by the Member State in question. The conditions will if necessary be adjusted according to any future technological developments in this field by 31.12.2008 the latest. In addition to these conditions the following need to be considered: - some Member countries might require a summary document in paper format of the invoices issued. - some Member countries might require prior notification but only until the end of 2005. - signed invoices should not be required. - regarding cross border invoicing, the terms and conditions of the agreement and of the acceptance procedures are to be according to the regulations of the State in which the goods or services are supplied. - regarding non EU countries, the Member State where the taxable person is registered can require specific conditions for electronic invoices issued from a country with which there is no legal agreement regarding invoices if the goods and/or services are supplied in the Member State. According to the e-Invoicing Focus Group (2005), the Directive furthermore states that

19 copies of all invoices whether received or issued are to be stored. The authenticity of the origin, the integrity of the content and the invoices’ readability have to be guaranteed throughout the period of storage. The content may not be changed and it has to be legible throughout the period. If the invoices are stored in message format then the required directory and code sets required for conversion to clear format must also be stored. The place of storage is optional as long as the invoices or the information stored are available without unnecessary delay to the authorities. Invoices are required to be stored for fiscal administration for a period of six years (CEN/ISSS e-Invoicing Focus Group, 2005). In Finland, electronic storage of invoices is allowed according to the Finnish accounting laws as long as they can be retrieved easily (kirjanpitolautakunnan yleisohjeet, 2000). The Finnish Ministry of Finance has proposed modifications in the national VAT legislation based on the EU directive. These modifications were accepted by the Parliament in February 2003. There will be no specific requirements for electronic invoicing in Finland. The proposal declared that there have not been any taxation difficulties in electronic invoicing and legislation should not include too strict requirements (Elma Electronic Trading, 2006). 2.7 Summary As presented in this section, there are a number of options available for companies interested in using electronic invoicing with the two main ones being electronic invoicing using a consolidator and making a solutions especially fitted to serve the company in question. The benefits of using electronic invoicing are several but the most important ones are the savings a company can make in time and cost. In addition, entry errors are reduced. The main products on the Finnish market are the eInvoice, the Finvoice, TEAPPSXML, and EDIFACT. The eInvoice standard uses XML or ASCII, the Finvoice was developed using ebXML and the TEAPPSXML is compatible with both the Finvoice and the eInvoice. In Finland there are no laws especially for electronic invoicing.

20 3 Theories and prior research 3.1 Introduction The vast availability of new information technology, as well as the nature of the “global village”, have changed the way organizations work. For example, adoption decisions have now become more difficult for management to make (Dasgupta et al 1999). Adoption of information technology has been greatly studied in recent years and has been defined as the decision to invest in, or to accept, a new technology (Dasgupta et al, 2002) and is characterised by the making of the adoption decision and the investment following the decision (Dasgupta et al 1999). As there is no set framework made for studying the attitudes towards adoption of electronic invoicing I have decided to use a selection of theories on IT adoption as a basis for my research. In this section I will present these theories and what has been discovered to determine attitudes towards new information technology and its adoption and how I will apply them in my study on attitudes towards electronic invoicing and its adoption. 3.2 Theories of adoption of new information technology 3.2.1 Introduction Adoption of new information technology has been widely researched and there are several theories that have been used to study this subject, for example the Theory of Reasoned Action, the Technology Acceptance Model, the Motivational Model, the Theory of Planned Behaviour, the Innovation Diffusion Theory and the Social Cognitive Theory (Venkatesh et al 2003). A selection of these will be introduced below. 3.2.2 Technology Acceptance Model The Technology Acceptance Model (TAM) was proposed by Davis in1989 as a tool to predict acceptance of information technology. It has since then been widely used and validated. The model states that adoption of information technology is dependent on the perceived ease of use and the perceived usefulness of the technology by the user. More recent research has extended the model to include factors such as perceived system quality, performance and prior use. Social norms and prior performance showed to have an

21 influence on technology adoption. The TAM has mainly been used to predict adoption of new technology by individuals but not by organisations (Dasgupta 2002). Many other theories on information technology adoption are based on the TAM and previous research often refers to the model. For example, Pavlou (2003) states that internet technology acceptance can be partially explained with the TAM. Perceived usefuln ss e Attitude Behav ioural Actual External variables Toward intentio to use n systemu se using Perceived ease of use Technology Acceptance Model (TAM) Figure 3.1 The Technology Acceptance Model (TAM) (Gullkvist, 2005) 3.2.3 The Theory of Reasoned Action and the Theory of Planned Behavior The Theory of Reasoned Action, TRA and the Theory of Planned Behavior, TPB, are both well-known theories of intention and have been used with success in many different settings. These two theories suggest that behaviour can be predicted according to the intentions of the person in question. The intentions are in turn influenced by the person’s attitude (favorable or unfavorable evaluation) and subjective norm (perceived social pressure to perform) towards the behavior (Grandon and Mykytyn 2004). The TRA involves using an individual’s attitude and his/her subjective norm towards the behavior to predict intentions (Riemenschneider and McKinney, 2001-2002). The TRA has been used to gain understanding of behavior and has been applied in many behavioral science disciplines. The TRA has for example been used by Davis, Bagozzi and Warshaw to examine user acceptance of computer technology and their conclusion was that

22 individuals’ use of computers can be predicted based on their intentions. (Riemenschneider and McKinney, 1999, Grandon and Mykytyn, 2004). The TPB builds on the TRA and has the addition of perceived behavioral control. (PBC). PBC involves the influence of past experiences as well as anticipated barriers. The theory with attitude, subjective norm and PCB is documented using belief-based measures and direct measures (Grandon and Mykytyn 2004). This theory has been validated in many different settings and situations and has proven to be useful in predicting managerial behavior in regards to adoption of new information technology (Riemenschneider and McKinney, 1999, Grandon and Mykytyn 2004). Belief an s d Evaluation Attitude toward Behav iour Behav ioural Actual Intention Behaviour Subjective Norm Theory of Reasoned Normativ Belief an e s d Action (TRA) M otivation to comply Figure 3.2 The Theory of Reasoned Action (TRA) (Gullkvist, 2005) 3.2.4 Technology-Organization-Environment framework The technology-organization-environment (TOE) framework uses three aspects of a firm’s context as influences on adoption and implementation of an innovation: technological, organizational and environmental context. The technological context involves the internal and external technologies that are relevant to the firm. The organizational context involves the size of the firm, centralization, formalization and complexity of managerial structure, the quality of its human resources

23 and the availability of internal slack resources. The environmental context entails the environment in which the firm is doing business i.e. industry, competitors, resources, and government (Zhu et al 2004). The TOE framework has been confirmed by many researchers such as Swanson, Kuan and Chau and Iacovou. Iacovou et al (1995) discusses adoption of EDI by small firms. The TOE-framework is used and different adopters and non-adopters are identified. 3.2.5 The theory of diffusion of innovation The theory of Innovation Diffusion is increasing in popularity as a reference theory for studying information technologies. It provides tools to assess adoption and identifies factors that facilitate or inhibit technology adoption and implementation. It has many similarities to the TAM. For example, diffusion theory involves relative advantage and complexity, which can be seen as the same as TAM’s perceived usefulness and perceived ease of use. Fichman (1992) explains that factors facilitating or hindering adoption of technology that can be identified by diffusion innovation theory include characteristics of the technology, characteristics of adopters, how adopters hear about the technology and how they are persuaded to adopt (Fichman 1992). 3.3 Previous research-findings on factors affecting attitudes towards adoption 3.3.1 Introduction In this section, previous research findings will be presented. Previous research in this area has shown the following to be motivations for IT adoption • sustaining competitive advantage • improvement of efficiency • protecting market share • assisting in innovative activities • increasing productivity and profitability (Wang et al (2004))

24 In addition to these motivations, many other factors have been introduced and validated or discarded. I have decided to include personal factors, organizational factors, environmental factors, technological factors and economical factors as these are the most prevalent in previous research. 3.3.2 Personal factors Personal factors include attitude, perceived benefits, perceived ease of use and perceived usefulness. These are included in the theories introduced in the previous section such as the TAM and the TRA. Chau (2003) uses the TAM when studying acceptance of internet banking but extends it by adding the variable attitude. In Chau’s study, perceived ease of use showed to be the most significant determinant of acceptance. He therefore goes on to conclude that perceived ease of use will be of importance for any new technology in the early days of adoption. McCloskey (2003-2004) also found in her study that perceived ease of use and perceived usefulness were determinants of acceptance. In addition, Gullkvist (2005) learned in her study of the electronic paper in Finland that perceived usefulness and perceived ease of use were important factors affecting attitudes toward the electronic paper. Pavlou (2003) proposes an e-commerce acceptance model that draws on the TRA. He states that perceived trust and risk are important variables when predicting B2C e-commerce acceptance. He found that perceived usefulness was a determinant of acceptance but the importance of trust is due to the high level of uncertainty concerning on line transactions. The adopters of web-based e-commerce in Riemenschneider and McKinney’s study (2001- 2002) had stronger beliefs as to the advantages to be gained than non-adopters (Riemenschneider and McKinney 2001-2002). This was also found in the research made by Wang et al (2004) where higher perceived benefits led to a greater motivation to adopt. Iacovou et al (1995) discovered in their study of EDI adoption in small firms that there was low awareness of the benefits of EDI before adoption. As a consequence, the relationship between perceived benefits and adoption of EDI was moderate (Iacovou et al, 1995). 3.3.3 Organisational factors Organizational factors include culture, ownership, management skill and support among others. Dasgupta et al (1999) discovered that if an organization has a high performance-

25 oriented culture the level of computerization tends to be higher. This type of culture emphasizes people, team, detail, outcome orientation and innovativeness. Companies sustaining a stability-oriented culture were believed to be less likely to adopt new information technology as they tend to resist change but the study could not find any support for this theory. The conclusion was that even change-resisting firms need to adopt some amount of new technology to stay competitive. Foreign or domestic ownership did not show to be significant either (Dasgupta et al 1999). Chong (2000) identifies managerial factors such as lack of managerial and or technical skill that influence adoption or non-adoption. In addition, lack of managerial support has been found to influence adoption. This has been verified by Wang et al (2004) where strong support from top managers was shown to have positive influence on IT adoption. Availability of qualified personnel is another important factor discussed by Bertschek and Fryges (2002). Dasgupta et al (1999) also found that greater involvement of Information Systems staff in the decision making regarding adoption had a negative influence on adoption. However, Gullkvist (2005) discovered that managerial support as well as IT support did not have a big effect on the attitudes of accountants and auditors and states that these factors affect actual usage and not attitudes. 3.3.4 Firm Size Firm size is one of the most frequently studied factors on adoption and has been validated in many different settings as a determinant of adoption of new information technology. Riemenschneider and McKinney (2001-2002) found in their study of belief differences in small business adopters and non-adopters of web-based e-commerce using the TPB, that large firms were more likely to adopt e-commerce than small firms. This was also evident in Bertschek and Fryges‘(2002) study of German companies regarding B2B e-commerce adoption. Firm size is a factor that determines adoption, the larger the firm the more likely adoption is. Dasgupta et al (1999) discovered the same thing. The degree of computerization was found to be larger in larger firms. Iacovou et al (1995) looked at the relationship between firm size and adoption of EDI and stated that adopters tend to be larger firms (in terms of sales volume) than non-adopters. This is a result of the resources that are available to the firm. Size measured as number of employees on the other hand does not seem to have an impact (Iacovou et al 1995). Kelley and Helper (1999) state, that a business’ likeliness to adopt new technology is a function of its organizational capabilities

26 in relation to its size and its history with similar technologies. Larger firms are more likely to adopt new technology due to the fact that large firms have more liquidity and can therefore more easily afford it. If the firm in addition has experience of similar technology adoption the uncertainty is reduced. Then management has some idea of the disruption it will cause and how to minimize it. This will reduce the cost of adoption and therefore it is more likely to happen. Wang et al (2004) contradicted Zhu’s (Zhu et al, 2002) claim that large firms are more likely to adopt commerce. Wang et al claimed that any firm, large or small can adopt commerce and do business on the Internet. But their study contradicted this claim and proved yet again that size does matter. 3.3.5 Technology characteristics Technological factors such as the perceived relative advantage, compatibility, trialability, complexity, observability have also been noted in Chong‘s study (2000). Wang et al (2004) provide a new categorizing method for IT adoption using internal and external factors. Internal factors include firm size, system support readiness and a clear IT strategy. Accessibility, alliance services and personalization were also found to be important in Chau‘s study of internet banking. Unexpectedly, task familiarity proved to have low importance (Chau, 2003). Gullkvist (2005) found that trust in the technique was an important variable determining perceived usefulness and perceived ease of use. 3.3.6 Environmental factors Kelley and Helper (1999) claimed that if the firm is practicing in an environment where the industry mix is diverse it is more likely that management hears of new technologies and the benefits and therefore it is more likely that they adopt the technology. In addition, in such an environment the new technology and the people needed to implement it are more available. Smaller firms are especially influenced by their geographical and network positions. In addition, Bertschek and Fryges (2002) found that international pressure is also important as well as the industry the company is in. If other firms are adopting the technology they have to follow. This was the most significant factor in their study. In Chong’s study (2000), external factors such as fluctuating interest rates, reliability of supply, competition, and critical mass were noted as important. If critical mass is limited

27 there might be a lack of infrastructure, suitable platforms and compatible technological standards. In addition, national infrastructure and government support is also important. 3.3.7 Competitive effects Dasgupta et al (1999) found in their study that firms facing heavy competition were more likely to adopt new information technology than others. Wang et al (2004) found that the network position in a supply chain is significant; the closer to the core the higher the likeliness of adoption. Other competitive factors they found were stable business network linkage, inter-firm collaboration and mutual IT adoption along the supply chain. Zhu et al (2004) uses the Technology-Organization-Environment Framework to investigate factors which may influence the value of e-business. They found among other things that competitive pressure is a factor driving firms to adopt e-business. Iacovou et al found in their study that the main reason for small firms to adopt EDI was external pressure especially from trading partners (Iacovou et al, 1995). 3.3.8 Economic factors Computer hardware and software prices also showed to influence adoption decisions (Dasgupta et al 1999). Adopting new information technology not only requires investments in hardware and software but also employee training and system integration (Zhu et al, 2004). Transaction costs per invoicing need also be considered. According to Heli Salmi, who is coordinator of expert services at Elma Electronic Trading, cost was more of an issue earlier. Nowadays, it is important that the cost per invoice is lower than postage fees. This is also dependent of the size of the firm. 3.3.9 Paperless Accounting Benita Gullkvist has made a study called the Electronic Paper in Accounting – Studies in Attitudes and Consequences among Accounting Professionals (2005). Her main research question was how accounting professionals in Finland view electronic accounting systems. She used both surveys and interviews among accountants and auditors employed in accounting agencies to accomplish this aim. Gullkvist has based her study on theories such as the Technology Acceptance Model and the Theory of Reasoned Action among others. She found that perceptions of the usefulness and ease of use of the system were important

28 factors determining attitudes towards paperless accounting. In addition, she found experience, institution conformity (work routines, accounting norms, and the organization), technical factors, economic factors, social norms and attitudes towards using to be important. She could however, not find support for organizational factors such as management support (Gullkvist, 2005). 3.4 Summary Many theories have been developed about attitudes towards and implementation of new information technology. In this section, I have introduced a selection of these; the Technology Acceptance Model (TAM), the Theory of Reasoned Action (TRA), the Theory of Planned Behaviour (TPB), the theory of diffusion of innovation and the Technology- Organisation-Environment (TOE) framework. The theories that will be mostly used in my research are the TAM and the TRA with some aspects of the TOE framework as well. There has also been an overview of previous research findings. Many factors have been verified as having an effect on attitudes towards new technology and adoption decisions and a collection of these have been introduced in this section. I have included personal factors, organizational factors, environmental factors, technological factors and economical factors as these are the most prevalent in previous research. My research has furthermore been influenced greatly by Benita Gullkvist’s study (2005) called Electronic Paper in Accounting. Studies in Attitudes and Consequences among Accounting Professionals and this study has also been introduced in this section.

29 4 Research model and Methodology 4.1 Introduction As attitudes towards electronic invoicing and its adoption in Finland have not been studied previously, the aim of this research is to fill this gap. To accomplish this, a questionnaire was sent to SMEs in Finland dealing in B2B activities. In the study, Benita Gullkvist’s research (2005) was used as a roadmap. She studied the attitudes towards electronic accounting among accountants and auditors and her questionnaire served as a model to mine. The theories mentioned previously such as the TAM and the TRA were also used to develop the questionnaire to investigate the attitudes toward electronic invoicing and its adoption in Finland. In this section I will develop the research model and the hypotheses to be tested. 4.2 Research model and hypotheses Using Gullkvist’s (2005) model as inspiration, my research model is similarly based on the TRA-model and the TAM-model. These models have been validated in the past and have proven useful in similar circumstances as indeed in Gullkvist’s study. Figure 4.1 has been developed using Gullkvist’s research model. Since the purpose of the study is to find out about attitudes, the focus is as in Gullkvist model, instead of on actual usage, on intention to use. Also, since electronic accounting and electronic invoicing are quite novel, it might not be possible to measure what affects actual usage. There are a few differences between Gullkvist’s model and mine. The intention to use is influenced by the attitudes towards usage and perceived usefulness in both models. In my model however, intention to use is also affected by perceived ease of use. In Gullkvist’s model, intention to use is influenced by a variable called social pressure which involves attitudes among co-workers and the like. I have changed this factor to environmental factors which involve customers, suppliers and competition as I felt this was more appropriate since I am studying the attitudes of financial managers in SMEs. Attitude towards usage is in my model, similar to Gullkvist’s model, affected by perceived usefulness and perceived ease of use, but also by organisational factors and technical factors. Technical factors are also affecting perceived ease of use in my model whereas in Gullkvist’s model they only affect perceived usefulness. Gullkvist also has an additional factor in her study called

30 accounting practices which I excluded since my study is about electronic invoicing. Personal factors Perceived usefulness Organisational factors Attitude Towards usage Intention to use Technical factors Perceived ease of use Economical factors Environmental factors Figure 4.1 Research model Personal factors In this segment, personal factors of the respondent such as age, sex, work experience as well as experience of electronic invoicing are studied, to see if they affect the attitudes towards electronic invoicing. Gullkvist (2005) discusses the likelihood of demographic variables affecting attitudes towards electronic accounting. She points out that previous research have found that older people and people with longer work experience are more prone to feel negatively towards new technology. On the other hand, there is research that point out that previous experience with the technique in question is associated with positive attitudes (Gullkvist, 2005). Hypothesis 1: Previous experience of electronic invoicing or similar techniques affects perception of electronic invoicing.

31 Hypothesis 2: Age and previous work-experience influence perceptions of electronic invoicing. Organizational factors In this segment, factors such as availability of IT personnel, support from management and the firm’s business activities are studied. Dasgupta et al (1999) investigated the possibility that the availability of IT personnel to train employees and to facilitate the adoption process have been influential on decisions to adopt a new product, but found that this had little significance. Iacovou et al, (1995) found that most respondents were concerned with the lack of know-how. I would like to see if the same holds true in this situation. In addition, individuals seldom have the right to decide on investment decisions or new information technology usage in the company and as a consequence the perception of management support could influence attitudes (Fichman, 1992). Gullkvist (2005) found in her study that implementing electronic accounting would not only introduce new technology but to receive all potential benefits, processes were to be changed as well. I would like to see whether the perceptions of a change in processes affect the attitudes towards electronic invoicing. Hypothesis 3 Having qualified IT personnel in the company affects perceptions of electronic invoicing. Hypothesis 4 If there is a perception that management would support adoption, financial managers are more positive towards electronic invoicing. Hypothesis 5 If there is a perception that changes in processes will be big, managers are less likely to want to use electronic invoicing Hypothesis 6 Most firms have not implemented electronic invoicing but will within 5 years Hypothesis 7 Adoption depends on the business activities of the firm

32 Environmental factors Outside pressure such as opinions and actions of supplier and customers are studied in this section. Especially for small firms, it has been found that the actions of suppliers and competition affect adoption decisions made by SMEs, as small firm are more susceptible to outside pressure (Iacovou et al, 1995). Market share is also examined. When a company is faced with a great deal of competition one of the options to achieve cost efficiencies may be to invest in new information technology (Dasgupta et al, 1999). As a consequence, if there is little competition, there is less need to invest in new information technology. Hypothesis 8 Pressure from suppliers and/or customers can determine intention to use electronic invoicing Hypothesis 9 The larger the market share the less important electronic invoicing will be. Technological factors Safety and implementation issues are studied in this part. Kelley and Helper (1999) found that if a company has implemented similar technology before, it was more positively inclined towards new technology. As SMEs aren’t likely to have invested in similar technology before I wanted to see if recent ERP system adoption would affect attitudes towards electronic invoicing. Trust in the safety of the technique has been found to determine perceived usefulness and perceived ease of use (Gullkvist, 2005). According to Heli Salmi, the technical safety of electronic invoicing is perceived as good nowadays and I would like to see if this holds true. In addition, I wanted to see if electronic invoicing is perceived to be easy to learn. Hypothesis 10 If other technology adoption has been made recently, the company is more likely to have a positive attitude towards electronic invoicing.

33 Hypothesis 11 Electronic invoicing is perceived as technically safe. Hypothesis 12 Electronic invoicing is perceived as easy to learn Economical factors In this part, economical issues are studied. Previous studies have shown that economical reasons have an affect on the intention to adopt new information technology (Iacovou et al 1995). As SMEs often have less available financial resources than large corporations, the costs associated with investing new information technology can be perceived as too high. Hypothesis 13 Economical reasons are often cited as reasons for not implementing. Usefulness and ease of use The perceived usefulness and ease of use is examined in this section. Perceived usefulness and perceived ease of use have been found to be important determinant of acceptance of new technology (Chau, 2003, McCloskey, 2003-2004) as well as affecting attitudes towards electronic accounting (Gullkvist, 2005). Therefore, I anticipate that if electronic invoicing is perceived as useful and easy to use the attitudes will be positive. Hypothesis 14: If electronic invoicing is perceived as useful, the attitude towards electronic invoicing is positive. Hypothesis 15: If electronic invoicing is perceived as easy to use, the attitude towards using it is positive. Hypothesis 16: If electronic invoicing is perceived as useful, the intention to use is positive. Hypothesis 17: If electronic invoicing is perceived as easy to use, the intention to use is positive.

34 Attitudes and intention to use The attitudes of the respondents are examined here to see whether the intention to use is positive. Gullkvist’s (2005) results showed that attitudes towards using hade an affect on the respondents’ intention to use. Hypothesis 18: If the attitude towards electronic invoicing is positive, the intention to use is positive. 4.3 Data collection 4.3.1 The method To test the hypotheses, the best method was decided to be conducting a survey. A questionnaire was formulated and sent to 200 SMEs in Finland by email. The email contained a cover letter including a link to a web-page where the questionnaire was located. The respondents were given two weeks to reply. When the first week had gone, a reminder was sent. 4.3.2 Questionnaire design The questionnaire was based on the literature review in general and Gullkvist’s study in particular. It was designed as a web-page and contained 52 questions. The questions were either multiple choice or open text. The questions were formulated so that both adopters and non-adopters of electronic invoicing could answer. As it was considered more likely that respondents would prefer to answer in their mother-tongue, the questionnaire was translated into Finnish to increase the response rate. Both the Finnish version and the original English version can be found in the appendix. The beginning of the questionnaire contained questions regarding the respondent such as sex, age and work experience. Next, questions regarding the company were raised. These included queries about number of employees, number of employees in the finance department, market share and industry. After this, questions about the amount of import export and purchase and sales invoices the company handles yearly. In addition, the respondents were required to convey how many employees were occupied processing invoices and if the company has domestic or foreign owners. After this, questions regarding

35 the electronic invoicing status and preferences were raised as well as queries into what kind of ERP system is in use, when it was implemented and whether there was any automation of the supply chain. The next part of the survey included questions where the respondents were asked to express their agreement or disagreement to posed statements on a five-point Likert scale. Number 1 is set as strongly disagree and number 5 is set as strongly agree. In this section, questions regarding experience, organizational support, attitudes and opinions are posed. The final part of the questionnaire invites the respondents to predict when all invoicing will be electronic in Finland and internationally. The last questions involve the respondent giving an opinion on the benefits and risks with electronic invoicing as well as the biggest reasons, in their opinion, for not implementing electronic invoicing. 4.3.3 The Population The objective of the study was to ascertain the opinions of financial managers and accountants in small- to middle-sized companies in Finland. The target-group was therefore individuals working with accounting and finance in small- to middle-sized companies in Finland. The companies were selected randomly from Hanken’s voitto database according to turnover (>1 million <100 million euro per year). Two hundred companies were deemed to form a sufficient sample of the population for the study and were picked from the list drawn from the database. All the companies in the sample conduct B2B activities. Since the questionnaire was sent via email, email-addresses for the respondents were to be found. This was accomplished by searching companies’ websites. This means that companies that do not have a website were not included in the study neither were those not posting the email address of the financial manager/accountant on the web. There is therefore a possibility that the results are somewhat atypical but was deemed necessary since many small companies outsource their accounting and invoicing. 4.3.4 The response rate I received 43 replies out of 200 questionnaires sent, which constitutes a response rate of 21,5 percent. This amount of respondents is deemed to be sufficient to make statistical

36 analyses (Nyberg 1999) and is close to the response rate (26 percent) that Gullkvist (2005) reached in her study of the electronic paper among accountants and auditors. 4.3.5 Descriptive statistics Out of the 43 replies, 90, 7 percent were made by women (39 replies) and 9,3 percent (4 replies) by men..According to Gullkvist (2005) who had similar results, there is however, a tendency that accounting professionals are female and therefore these results are not surprising. Out of 43 respondents, 42 conveyed their age. Out of the 42, the oldest was born in 1944 and the youngest in 1974. The average year of birth of the respondents was 1958. This means that the sample is a bit older than Gullkvist’s sample where the respondents had a mean age of 40 years old (Gullkvist, 2005). Gullkvist commented on the fact that older people can be more resistant to changes and new processes and they are therefore not enthusiastic towards the idea of electronic accounting. Years of experience among the respondents varied from four to forty-five with an average of twenty-two years. The experience of this sample group is therefore longer than in Gullkvist’s study where the average was fourteen years. This corresponds to the fact that the average age also was higher. The respondents were, as previously mentioned, employed by SMEs, the smallest company employing five people and the largest forty-five people. The average amount of employees was twenty-two people. In the finance department an average of two people were employed. The largest number of personnel employed to do finance and accounting was five and the smallest number was one. Out of the respondents only forty-two answered the question about how many employees were processing invoices. The number ranged from 0.25 to four people, with an average of one person. The yearly amount of purchase and sales invoices was given by forty-one respondents. The amount of purchase invoices ranged from fifty-one to 5000 with an average of 1746 and sales invoices ranged from 100 to 14000 with an average of 2130. Thirty-five respondents gave the amount of import and export the company is involved in. The average amount of import was twenty-seven percent of purchases with the lowest

37 amount being zero and the highest 100. The corresponding figure for export was sixteen percent on average and a low of zero and a high of ninety. Only fourteen people wanted or could rate the amount of market share the company has. The smallest percentage of market share was one and the highest sixty. The average showed thirty-two percent. Ninety-three percent (40 companies) were wholly domestically owned while two companies (4,7 percent) were owned by foreign interests and one company was a mixture of both. Sixteen companies (37 percent) were from metal-related industries while the others were from various industries. A note should be made however, that the sample could have been affected by the fact that the questionnaire was sent out electronically. People that are more interested or have a more positive attitude towards new techniques could have been more prone to participate in the survey as opposed to those who feel negatively about new techniques. 4.4 The results 4.4.1 Introduction To establish whether the hypothesis made in the earlier section have any relevance, a statistical analysis were performed. All the statistical analyses were made using the statistics program SPSS. The analyses made were t-tests, to compare the means between two groups and regression analyses, to see if there were any connections between different variables. The descriptive analyses were also made using SPSS. 4.4.2 Descriptive analyses In order to ascertain how common it is for SMEs to have electronic invoicing or if they intend to implement it in the future, the respondents were asked to select the option that suited them the best. As can be seen from table 4.1, only three companies, or seven percent are currently using electronic invoicing, but 32,6 percent or fourteen respondents answered that they will adopt electronic invoicing within one year’s time and 30,2 percent or thirteen respondents answered that they will adopt electronic invoicing within three years. Only five respondents or 11,6 percent said that they will not adopt electronic invoicing at all. This indicates that most of the respondents have a positive attitude towards electronic invoicing and it supports hypothesis 6. On average, the respondents also believe that electronic

38 invoicing will be used by everyone in Finland within 10 years and internationally within 15 years. Hypothesis 6: Most firms have not implemented electronic invoicing but will within 5 years. Option Frequency Percent Are using 3 7,0 5 11,6 Will not employ 14 32,6 Planning to employ within one year 13 30,2 Planning to employ within 3 years 8 18,6 Planning to employ within 5 years Total 43 100,0 Table 4.1 Current electronic invoicing status The respondents were asked to select which electronic invoicing solution they were using or if they were not currently using one which one was their preference. Two of the respondents using electronic invoicing, stated that they are using a bank as a consolidator and the third one is using EDI. The respondents’ replies can be viewed in table 4.2. The majority would prefer using banks as consolidators. As many as 51, 2 percent had chosen this option. Seven respondents or 16, 3 percent each chose custom-made direct invoicing and through another service provider as consolidator.

39 Options Frequency Percent No answer 5 11,6 EDI 2 4,7 Custom-made direct invoicing 7 16,3 Trough a bank as consolidator 22 51,2 Through other consolidator 7 16,3 43 100,0 Total Table 4.2 Preferred electronic-invoicing solution Table 4.3 outlines the replies to the statement that electronic invoicing is hard to understand. Most, or 44,2 percent, selected the option that they did not agree at all. Only 3 respondents selected options 4 (somewhat agree) and 5 (Fully agree). Frequency Percent 1 19 44,2 2 9 20,9 3 12 27,9 4 2 4,7 5 1 2,3 Total 43 100,0 Table 4.3 Electronic invoicing is hard to understand In the statement that electronic invoicing causes the risk of error to increase most were unsure. 39,5 percent or 17 respondents selected option number 3 which is non-committal. However, as can be seen in table 4.4, only 6 respondents had selected an option agreeing with the statement.

40 Frequency Percent 1 10 23,3 2 10 23,3 3 17 39,5 4 3 7,0 5 3 7,0 Total 43 100,0 Table 4.4 There is a risk of error increase when using electronic invoicing Similar results were found in the statement that electronic invoicing would be tiresome to learn. Table 4.5 shows that 27,9 percent selected the non-committal option while most, or 37,2 percent said they totally disagreed. This confirm hypothesis 12. Hypothesis 12: Electronic invoicing is perceived as easy to learn Frequency Percent 1 16 37,2 2 10 23,3 3 12 27,9 4 3 7,0 5 2 4,7 Total 43 100,0 Table 4.5 Electronic invoicing is tiresome to learn The majority of respondents appear quite uncertain on the statement that it is difficult to check the accuracy when using electronic invoicing. Table 4.6 shows that the tendency is however leaning towards disagreeing with the statement.

41 Frequency Percent No answer 1 2,3 1 8 18,6 2 12 27,9 3 14 32,6 4 4 9,3 5 4 9,3 Total 43 100,0 Table 4.6 It would be difficult to check accuracy when using electronic invoicing To the question whether electronic invoicing is technically safe and trustworthy, the majority were non-committal (37, 2 percent) while 27, 9 percent agreed somewhat and 23, 3 percent fully agreed. This confirms hypothesis no. 11 that electronic invoicing is perceived to be technically safe. Hypothesis 11: Electronic invoicing is perceived as technically safe. 20 15 10 Count 5 0 1 3 4 5 Figure 4.2 Technically safe Frequency Percent 1 1 2,3 2 4 9,3 3 16 37,2 4 12 27,9 5 10 23,3 Total 43 100,0 Table 4.7 Technically safe

42 Two respondents chose not to answer the question about whether there were any financial restrictions in the company to implement electronic invoicing. The replies can be seen from table 4.8. Nineteen respondents (44, 2 percent) disagreed to the statement that there were no restrictions whereas fourteen respondents (32, 6 percent) agreed. This corresponds to the hypothesis that economical reasons are often cited as reasons for not implementing. In the last section of the questionnaire where the respondents could write freely on the most important reasons for not adopting electronic invoicing the following statements could be found: “Modifications to the existing software would be expensive” “Invoicing costs, sending attachments, software prices and maintenance costs” “Economic reasons – the investment is too large for an SME” This suggests that even though the benefits are there, economic factors are considered more important. Hypothesis 13: Economical reasons are often cited as reasons for not implementing. Frequency Percent No answer 2 4,7 1 9 20,9 2 10 23,3 3 8 18,6 4 10 23,3 5 4 9,3 Total 43 100,0 Table 4.8 There are financial restrictions in our company to acquire electronic invoicing There were many different ERP (Enterprise Resource Planning) systems in use and 13 people chose not to respond to the question about what ERP system they were using. The most prevalent software was Sonet with 14 percent, followed by Nova which was used by 11, 6 percent. Table 4.3 outlines the replies.

43 Frequency Percent No answer 13 30,2 Sonet 6 14 Nova 5 11,6 Oscar 3 7 Liinos 2 4.7 Control 9000 2 4,7 Econet 2 4,7 Visio 2 4,7 Other 7 16,1 Nothing 1 2,3 Total 43 100 Table 4.9 ERP Systems in use in our company A t-test was made to examine whether those who had implemented the ERP systems recently i.e. in 2001 or after were more likely to implement electronic invoicing than those with not so recent experience of IT implementation. There were, however no difference of significance identified. In addition, a test was also made to ascertain whether the attitudes were different. There were no significant differences in opinion except in the question about liking to work with electronic invoicing. Those who had implemented a new ERP system in the year 2001 or later were more positive towards electronic invoicing. The mean was 3,82 whereas the other group showed a mean of 3,00. The Sig (2-tailed) was 0,074. This gives a weakly significant result to hypothesis 10. Hypothesis 10: If other technology adoption has been made recently the company is more likely to have a positive attitude towards electronic invoicing. T-tests were also made testing if companies handling a larger amount of invoices were more likely to adopt electronic invoicing but this was not the case. Importing and exporting did not seem to effect the implementation decision either. As previously mentioned, since so many of the respondents were part of the metal industry, a t-test was performed to see if there were any differences in opinions between the metal

44 industry and the other industries regarding e-invoicing implementation but none were discovered. Therefore, it was concluded that hypothesis 7 had no significance, at least not for the metal industry compared to others. Hypothesis 7: Adoption depends on the business activities of the firm 4.4.3 Multiple regression analysis To establish whether the other hypothesis were valid and to find out more about what is affecting attitudes towards electronic invoicing, a series of multiple regression analyses were performed. By performing multiple regression analyses it can be ascertained whether a combination of factors are contributing to a positive or negative attitude towards electronic invoicing. Regression model 1 In this model, variables for experience, an organizational factor such as availability of IT- personnel, a technical factor such as trust in the technique, size in terms of employees and age are used as independent variables. The model examines whether these variables can explain how the respondents perceive the usefulness of electronic invoicing. Y1 = a + X1 + X2 + X3 + X4 + X5 Where Y1 = Useful in work (Question 11c) -> perceived usefulness X1 = previous experience of electronic invoicing (Question 1a) X2 = trust that electronic invoicing is technically safe (Question 9) X3 = available IT –personnel (Question 2) X4 = Employees (Question 2 in company information section) X5 = Year of birth (Question 3 in personal information)

45 Dependent variable: Standardized t-value Sig perceived usefulness Coefficients Beta Constant -1,280 0,209 Previous experience 0,277 1,974 0,056 Technically safe 0,576 4,223 0,000 Available IT personnel -0,299 -1,882 0,068 Size in terms of -0,060 -0,430 0,669 employees Year of birth 0,168 1,296 0,203 R Square = 0,445 R Square Adjusted = 0,368 F = 5,779 Sig = 0,001 Durbin-Watson = 1,809 Table 4.10 Regression analysis 1 In the Pearson’s correlation test, the experience variable, the technological variable and the age variable all correlate positively with the dependent variable of useful in work (,238 ,546 and ,320). However, the other two independent variables size and available IT personnel show very low values (-,023 and -.071 respectively) indicating that there is no relationship between these independent variables and the dependent variable. There is no excessive correlation between the independent variables (none is above ,7) and both the Tolerance and the VIF values in the coefficients table indicate that there is no multicollinearity between the variables. As can be noted from figure 4.3, there is normality. The points are positioned in a somewhat straight diagonal line. This is a sign that there are no deviations from normality. Norm Probability Plot al 1,0 ,8 E e d C mP b ro ,5 xp cte u ,3 0,0 0,0 ,3 ,5 ,8 1,0 Observ Cum Prob ed Figure 4.3 Normality Probability Plot Regression No1

46 Table 4.10 shows that the R Square of the regression is ,445 indicating that 44,5 percent of perceived usefulness is explained by the independent variables. The adjusted R Square is lower (,368) but is still quite good. The ANOVA result is 0.001 indicating that this regression model has statistical significance. Subsequently the independent variables will be examined. Table 4.10 outlines the results obtained and it can be noted that the variable technically safe has the highest Beta value (0,576). This means that technically safe contributes the most to predicting perceived usefulness. Availability of IT personnel is the second highest (-,299) followed by experience (,277) and Year of Birth (,168). Size in terms of employees contributes the least to perceived usefulness (-,060). The only variables making any significant unique contribution to predicting perceived usefulness are technically safe, previous experience and availability of IT personnel. They give a Sig. value of ,000, 0,056 and ,068. The other variables show no unique contribution. Hypothesis 11, 1 and 3 were hereby supported. Technically safe, previous experience of electronic invoicing and the availability of IT staff have effect on perceived usefulness. Interestingly, the result for the availability of IT staff is negative. Hypothesis 11: Electronic invoicing is perceived as technically safe. Hypothesis 1: Previous experience of electronic invoicing or similar techniques affects perception of electronic invoicing. Hypothesis 3: Having qualified IT personnel in the company affects the perceptions of electronic invoicing. Hypothesis 2 was refuted. Age did not show to have any significance in predicting perceived usefulness of electronic invoicing. Hypothesis 2: Age and previous work-experience influences perceptions of electronic invoicing. Regression model 2 In the second model, variables affecting attitudes towards electronic invoicing are

47 examined. The dependent variable is I like/would like to use electronic invoicing and is set against an organizational factor such as the perception of management approval of adoption of electronic invoicing, a technical factor such as trust in the technique, the variable perception of usefulness and also the perception of ease of use. Y1 = a + X1 + X2 + X3 + X4 Where Y1 = I like/would like to work with electronic invoicing (Question 22) -> attitude towards electronic invoicing X1 = perception of management approval of adoption of electronic invoicing (Question 3) X2 = trust that electronic invoicing is technically safe (Question 9) X3 = Useful in work (Question 12) X4 = Ease of use (Question 13) Dependent variable: I Standardized t-value Sig would like to work with Coefficients Beta electronic invoicing Constant -0,547 0,588 Technically safe 0,367 3,000 0,005 Management approval 0,193 1,801 0,080 Useful in work 0,177 1,411 0,166 Ease of use 0,295 2,285 0,028 R Square = 0,685 R Square Adjusted = 0,652 F = 20,704 Sig = 0,000 Durbin-Watson = 2,060 Table 4.11 Regression analysis 2 In the Pearson’s correlation test, technically safe, management approval, useful in work and ease of use all correlate positively with the dependent variable of like to work with electronic invoicing (,722, 552 ,623 and ,690) and the correlation between the independent variables is not too high. In addition, both the Tolerance and the VIF values in the coefficients table indicate that there is no multicollinearity between the variables.

48 As can be noted from figure 4.4, there is normality. The points are positioned in a rather straight diagonal line. This is a sign that there are no deviations from normality. Normal Probability Plot 1,0 ,8 Expected Cum Prob ,5 ,3 0,0 0,0 ,3 ,5 ,8 1,0 Observed Cum Prob Figure 4.4 Normality Probability Plot Regression No 2 Table 4.11 shows that the R Square of the regression is ,685 indicating that 68,5 percent of I like to work with electronic invoicing is explained by the independent variables. The adjusted R Square is lower (,652) but the result is still significant. The ANOVA result is 0.000 indicating statistical significance of the regression. Next, the independent variables, in this case technically safe, management approval, usefulness in work and ease of use will be analysed. It can be seen from table 4.11 that the Beta value for technically safe is the highest of the four (,367) indicating that this variable contributed the most to the prediction of I like to work with electronic invoicing. Ease of use is also showing strong contribution (,295). The other two showed considerably lower values, (management approval ,193 and useful in work ,177) with management approval having a slightly higher value than useful in work. All of the variables, except for useful in work are however, making a statistically significant unique contribution to the prediction of the dependent variable. As the Sig. value for technically safe was ,005 this variable made a very strong unique contribution. Ease of use also made a contribution with a Sig. value of ,028. Management approval made a weaker contribution (,080) and useful in work did not show a unique contribution at all (0,166). This regression model gives support to the hypotheses that management approval and perception of ease of use affect attitudes towards

49 electronic invoicing but not that perception of usefulness affects attitudes towards electronic invoicing. Hypothesis 4: If there is a perception that management would support adoption, managers are more positive towards electronic invoicing. Hypothesis 15: If electronic invoicing is perceived as easy to use, the attitude towards using it is positive. However, hypothesis 14 was not supported by this regression. Useful in work did not affect the attitude towards electronic invoicing in the extent that was expected from the research model. Hypothesis 14: If electronic invoicing is perceived as useful, the attitude towards electronic invoicing is positive. Regression model 3 In the third model, variables affecting intention to use electronic invoicing are examined. The dependent variable is I would use electronic invoicing if I could and is set against personal factors such as the perception of the changes in processes electronic invoicing would cause and its ease of use, and environmental factors such as supplier and customer usage and whether important customers have requested adoption of electronic invoicing. . Y1 = a + X1 + X2 + X3 + X4 + X5 Where Y1 = I would use if I could (Question 14) -> intention to use electronic invoicing X1 = perception of change of processes if electronic invoicing is adopted (Question 8) X2 = Ease of use (Question 13) X3 = Supplier usage (Question 6) X4 = Customer usage (Question 5) X5 = Important customer has requested (Question 7)

50 Dependent variable: I Standardized t-value Sig would use if I could Coefficients Beta Constant 1,728 0,092 Change in processes -0,045 -0,344 0,733 Ease of use 0,503 3,917 0,000 Supplier usage -0,279 -2,055 0,047 Customer usage 0,018 0,113 0,911 Important customer 0,306 1,922 0,062 request R Square = 0,420 R Square Adjusted = 0,342 F = 5,364 Sig = 0,001 Durbin-Watson = 1,867 Table 4.12 Regression analysis 3 The Pearson’s correlation test show that the independent variables have some correlation to the dependent variable even though change of processes show a very low value (-0,61). Ease of use show the highest correlation (,549), important customer request gives the second highest value (,325 ) and supplier usage and customer usage were quite similar (,142 and ,125 respectively). None of the variables had too high correlations between each other. The Tolerance and the VIF results are also an indication that there is no multicollinearity. The regression is showing normality. This can be seen from figure 4.5 where the line is quite diagonal and straight. Normal P-P Plot of Regression Standardized Residual Dependent Variable: would use if I could 1,0 0,8 Expected Cum Prob 0,6 0,4 0,2 0,0 0,0 0,2 0,4 0,6 0,8 1,0 Observed Cum Prob Figure 4.5 Normality Probability Plot Regression No 3

51 The R Square of this regression is ,420 (see table 4.12) signifying that 42 percent of I would use electronic invoicing if I could is explained by the independent variables. This is a good result but not spectacular. The adjusted R Square is ,342. The Anova result is 0,001 indicating that the results are statistically significant. Next we’ll have a look at the analysis of the independent variables. It can be seen from table 4.12, that easy to use gives the highest Beta value (,503) signifying the fact that this variable is the most important in predicting I would use if I could. Important customer request comes second (,306), supplier usage third (,279), change in processes fourth (0,045) and the weakest contribution comes from customer usage (,018). Only two of the variables make a unique contribution to the prediction of I would like to use. Ease of use gave a Sig. value of 0.000 demonstrating a strong contribution and supplier usage gave a Sig. value of 0,047. Consequently, this confirms hypothesis 17 as well as parts of hypothesis 8. Hypothesis 17: If electronic invoicing is perceived as easy to use, the intention to use is positive. Hypothesis 8: Pressure from suppliers and/or customers can determine intention to use electronic invoicing If suppliers are using electronic invoicing seems to have greater influence than usage by customers. As these companies are quite small it might be more likely that the suppliers are using electronic invoicing than the customers. However, changes in processes did not show any significance in the prediction of I would like to use electronic invoicing and therefore I conclude that this hypothesis is wrong. Hypothesis 5: If there is a perception that changes in processes will be big, managers are less likely to want to use electronic invoicing Regression model 4 In the fourth model, I wanted to continue to examine other variables that could affect the intention to use electronic invoicing in the future. The dependent variable is again “would use if I could” and the independent variables are perception of financial restrictions of the

52 company, perception of the usefulness of electronic invoicing in work, the age of the respondents, the approval of the finance department i.e. the people working with and affected by electronic invoicing and attitude. Y1 = a + X1 + X2 + X3 + X4 + X5 Where Y1 = I would use if I could (Question 14) -> intention to use electronic invoicing X1 = perception of financial restrictions (Question 10) X2 = perception of finance department approval of implementation (Question 4) X3 = Useful in work (Question 12) X4 = Year of Birth (Question 2 in personal information) X5= Attitude (Question 22 -> I would like to work with electronic invoicing) Dependent variable: I Standardized t-value Sig would use if I could Coefficients Beta Constant -0,196 0,846 Financial restrictions 0,345 3,051 0,004 Finance department 0,399 2,681 0,011 approval Useful in work 0,433 3,271 0,002 Year of Birth 0,004 0,032 0,975 Attitude -0,151 -0,935 0,356 R Square = 0,637 R Square Adjusted = 0,586 F = 12,614 Sig = 0,000 Durbin-Watson = 2,114 Table 4.13 Regression analysis 4 Firstly, the Pearson’s was performed to check that there is some correlation between the independent variables and I would use if I could. The test showed that all variables have correlation even though Year of birth was quite low (,290). Out of the other variables useful in work gave the highest value (,642) followed by Finance department approval (,622), financial restrictions (,531). and attitude (,524) The correlation between the independent variables is not too high. The Tolerance and the VIF results also show that there is no multicollinearity.

53 The regression is showing normality. This can be seen from figure 4.6. The line is quite diagonal and straight indicating that there are no deviations from normality. Normal Probability Plot 1,0 ,8 Expected Cum Prob ,5 ,3 0,0 0,0 ,3 ,5 ,8 1,0 Observed Cum Prob Figure 4.6 Normality Probability Plot Regression No 4 The R Square of this regression is ,637 (see table 4.13) signifying that 63,7 percent of I would use electronic invoicing if I could is explained by the independent variables. This is quite a high number and the adjusted R Square is slightly lower at ,586 but still a significant result. The Anova result is 0,000 demonstrating that the results are statistically significant. Now that we have established that the combination of these independent variables have an affect on the dependent variable of I would use electronic invoicing if I could, the independent variables will be analysed separately. It can be seen from table 4.12, that useful in work gives the highest Beta value (, 433) signifying the fact that this variable is the most important in predicting I would use if I could. Financial department approval is the next important variable (,399), followed by financial restrictions (,345). Attitude showed a lower contribution (-,151) and year of birth showed a very weak contribution (,021). All independent variables except attitude and year of birth showed to be uniquely contributing to predicting I would use if I could. Useful in work gave a Sig. value of 0.002 demonstrating a strong contribution and financial restrictions gave a Sig. value of 0,004. Financial department approval gave a Sig. value much lower than the other two but still significant; 0,011. The Sig. value of attitude was ,356 and year of birth was ,854.

54 This regression gives support to hypothesis 13. The perception of the financial restrictions of the firm regarding the cost of implementation is affecting the intention to use electronic invoicing. Hypothesis 13: Economical reasons are often cited as reasons for not implementing. Hypothesis 16 is also confirmed by this regression. Useful in work proved to contribute strongly to prediction of intention to use. Hypothesis 16: If electronic invoicing is perceived as useful, the intention to use is positive. However, year of birth did not show any significance in the prediction of I would use electronic invoicing if I could and therefore I conclude that age is irrelevant to predicting the intention to use electronic invoicing. Hypothesis 2: Age and previous work-experience influence perceptions of electronic invoicing. Attitude did not either show any significance to intention to work and therefore hypothesis 18 was not supported. Hypothesis 18: If the attitude towards electronic invoicing is positive, the intention to use is positive. Regression model 5 In the fifth and last model, I wanted to examine variables that could affect perception of easy to use. The dependent variable is “easy to use” and the independent variables are technically safe, experience with electronic invoicing, employees, management support and the availability of IT personnel in the firm Y1 = a + X1 + X2 + X3 + X4 + X5 Where Y1 = Easy to use (Question 13)

55 X1 = Technically safe (Question 9) X2 = Experience with electronic invoicing (Question 1a) X3 = Employees (Question 2 in company information section) X4 = Management support (Question 2 in personal information) X5= Available IT personnel (Question 2) Dependent variable: Easy Standardized t-value Sig to use Coefficients Beta Constant 0,730 0,470 Technically safe 0,461 2,979 0,005 Experience with e- 0,272 1,877 0,068 invoicing Employees 0,108 0,728 0,471 Management support 0,160 1,039 0,306 Available IT personnel -0,126 -0,797 0,430 R Square = 0,397 R Square Adjusted = 0,315 F = 4,870 Sig = 0,002 Durbin-Watson = 1,956 Table 4.14 Regression analysis 5 Firstly, the Pearson’s was performed to check that there is some correlation between the independent variables and the perception of easy to use. All the variables in this regression were correlated to Easy to use. Technically safe has the highest correlation (,552), Management support comes next (,391) followed by Experienced with e-invoicing (,332) and the availability of IT personnel (,242). Employees has the lowest correlation of ,197. The variables are not showing too high correlation too each other. There is no multicollinearity according to the tolerance and VIF results. The regression is showing normality. This can be seen from figure 4.7. The line is diagonal and straight demonstrating that there are no deviations from normality.

56 Normal Probability Plot 1,0 ,8 Expected Cum Prob ,5 ,3 0,0 0,0 ,3 ,5 ,8 1,0 Observed Cum Prob Figure 4.7 Normality Probability Plot Regression No 5 The R Square of this regression is ,397 (see table 4.14) indicating that 39,7 percent of Easy to use is explained by the independent variables. This is not as high number as many of the previous regressions and the adjusted R Square is slightly lower at ,315 but the result is still significant. The Anova result is 0,002 demonstrating that the results are statistically significant. The analyses of the independent variables show that the highest Beta value (,461) is produced by technically safe, followed by experienced with electronic invoicing (, 272) indicating that these two are the most important variables making electronic invoicing perceived to be easy to use. As can be seen from table 4.14, the other variables did not contribute as much and did not have a unique contribution to predicting easy to use. 4.4.4 Summary of findings In this section the results are summarized and demonstrated in tables and figures to increase the overview of the research. Table 4.15 gives a summary of the hypotheses and whether they were supported or not. As can be seen, ten of the hypotheses were verified, one was partly supported, one could not be tested and the rest were not supported.

57 Hypothesis Hypothesis Significant Comments No support 1 Previous experience of Yes electronic invoicing or similar techniques affects perception of electronic invoicing. 2 Age and previous work- No experience influence perceptions of electronic invoicing. 3 Having qualified IT personnel Yes in the company affects perceptions of electronic invoicing 4 If there is a perception that Yes management would support adoption, managers are more positive towards electronic invoicing. 5 If there is a perception that No changes in processes will be big, managers are less likely to want to use electronic invoicing 6 Most firms have not Yes implemented electronic invoicing but will within 5 years 7 Adoption depends on the No There were no significant

58 business activities of the firm differences in adoption plans between firms in the metal industry and others. 8 Pressure from suppliers and/or Partly The supplier part was customers can determine confirmed but there were intention to use electronic no indication that invoicing pressure from customers had any influence. 9 The larger the market share the Could not be Only fourteen less important electronic tested – respondents had replied invoicing will be. sample too to the question about small market share. 10 If other technology adoption Yes has been made recently the company is more likely to have a positive attitude towards electronic invoicing. 11 Electronic invoicing is Yes perceived as technically safe. 12 Electronic invoicing is Yes perceived as easy to learn 13 Economical reasons are often Yes cited as reasons for not implementing. 14 If electronic invoicing is No perceived as useful, the attitude towards electronic invoicing is positive.

59 15 If electronic invoicing is Yes perceived as easy to use, the attitude towards using it is positive. 16 If electronic invoicing is Yes perceived as useful, the intention to use is positive. 17 If electronic invoicing is Yes perceived as easy to use, the intention to use is positive. 18 If the attitude towards No electronic invoicing is positive, the intention to use is positive. Table 4.15 Summary of hypotheses The results from the regression analyses were quite high; some had Adjusted R square around 65 percent. This is similar to the results that Gullkvist obtained in her study (2005). She also found that many of the independent variables studied significantly affected the dependent variable used. Similarly to my study, she also found that there were high correlations between the variables in the study. As the correlations in the regression analyses were quite high, I have included a correlation matrix (see table 4.16) where the correlations between the questions in the survey can be overviewed. Only correlations at the 5% risk level have been included.

60 Correlation Matrix 1a 3. 4. 9. 10. 11a. 11b. 11c. 12. 13. 14. 15. 17. 18. 19. 21. 22. 23. 24. 1 a. 0,348* 0,338* 0,332* -0,362* 3. 0,748** 0,514** 0,319* 0,307* 0,391** 0,361* 0,552** -0,533** 4. 0,748** 0,663** 0,341* 0,538** 0,455** 0,513** 0,621** 0,620** 0,449** -0,388* 0,386* -0,473** 0,710** -0,576** 9. 0,514** 0,663** 0,339* 0,442** 0,389* 0,526** 0,552** 0,456** 0,505** -0,533** -0,337* 0,412** -0,543** 0,722** -0,433** -0,542** 10. 0,319*' 0,339* 0,362* 0,398** 0,336* 0,531** -0,385* 0,341* -0,457** 11a. 0,348*' 0,341*' 0,362* 0,865** 0,912** 0,727** 0,497** 0,431** 0,607** -0,410** 0,486** -0,330* 0,413** -0,422** 11b. 0,538**' 0,442** 0,865** 0,890** 0,816** 0,537** 0,562** 0,678** -0,515** 0,552** -0,353* 0,544** -0,401** -0,350* 11c. 0,338*' 0,455**' 0,389* 0,398** 0,912** 0,890** 0,788** 0,506** 0,488** 0,705** -0,516** 0,444** -0,436** 0,562** -0,412** -0,450** 12. 0,307*' 0,513**' 0,526** 0,727** 0,816** 0,788** 0,659** 0,641** 0,721** -0,411** -0,303* 0,573** -0,383* 0,623** -0,414** -0,452** 13. 0,332*' 0,391**' 0,621**' 0,552** 0,336* 0,497** 0,537** *0,506** 0,659** 0,549** 0,514** -0,397** -0,631** 0,561** -0,599** 0,690** -0,455** -0,650** 14. 0,361*' 0,620**' 0,456** 0,531** 0,431** 0,562** 0,488** 0,641** 0,549** -0,339* -0,400** 0,526** -0,470** 15. 0,449**' 0,505** 0,607** 0,678** 0,705** 0,721** *0,514** -0,384* -0,330* 0,590** -0,416** 0,570** -0,380* -0,468** 17. -0,388*' -0,533** -0,410** -0,515** -0,516** -0,411** -0,397** -0,339* -0,384* 0,608** -0,448** 0,550** 0,467** 18. -0,337* -0,303* -0,631** -0,330* -0,312* 0,429** -0,496** 0,340* 0,557** 19. 0,386*' 0,412** 0,486** 0,552** 0,444** 0,573** 0,561** 0,590** -0,312* 0,519** -0,560** -0,351* 21. -0,473**' -0,543** -0,385* -0,330* -0,353* -0,436** -0,383* -0,599** -0,400** -0,416** 0,608** 0,429** -0,566** 0,543** 0,659** 22. 0,552**' 0,710**' 0,722** 0,341* 0,413** 0,544** 0,562** 0,623** 0,690** 0,526** 0,570** 0,448** -0,496** 0,519** -0,566** -0,507** -0,684** 23. -0,362*' -0,433** -0,422** -0,401** -0,412** -0,414** -0,455** -0,380* 0,550** 0,340* -0,560** 0,543** -0,507** 0,332* 24. - -0,576**' -0,542** -0,457** -0350* -0,450** -0,452** -0,650** -0,470** -0,468** 0,467** 0,557** -0,351* 0,659** -0,684** 0,332* 0,533**' Table 4.16 Correlation Matrix **Correlation is significant at the 0,01 level (2-tailed) * Correlation is significant at the 0,05 level (2-tailed) 1 a.Experienced using e-invoice 11b. E-invoicing would increase productivity 17. Difficult to check accuracy with e-invoicing 3. Management support of acquiring e-invoicing 11c. E-invoicing would increase efficiency 18. Tiresome to learn how to use e-invoicing 4. Finance dpt approval of acquiring e-invoicing 12. E-invoicing would be useful in work 19. E-invoicing would lead to error reduction 9. E-invoicing is technologically safe 13. E-invoicing would be easy to use 21. E-invoicing offers benefits but prefer paper invoicing 10. No Financial restriction to acquire e-invoicing 14. Would use e-invoicing if possible 22. Would like to work with e-invoicing 11a. E-invoicing would increase quality 15. E-invoicing would offer time and cost savings 23. There is risk of error increase with e-invoicing 24. E-invoicing would be hard to understand Table 4.17 Questions for correlation matrix in table 4.14

61 As can be seen from table 4.13, the number of significant correlations is quite high. As pointed out previously, this was also noted in Gullkvist’s study (Gullkvist, 2005). In figure 4.8, the most significant figures of correlations between the factors have been included. This figure is drawn according to the research model presented in figure 4.1. Most factors correlate to each other but this has not led to any multicollinarity in the regression analyses. Correlations >0,300 **Correlation is significant at the 0,01 level (2-tailed) Personal factors * Correlation is significant at the 0,05 level (2-tailed) Perceived 0,641** usefulness 0,623** Organisational 0,513** factors 0,710** 0,514** Attitude 0,526** 0,526** 0,332* 0,659** Towards Intention to use 0,722** usage Technical factors 0,690** Perceived 0,549** 0,552** ease of use 0,375* Economical 0,336* factors 0,531** 0,345* Environmental 0,345* factors Figure 4.8 Correlations in research model As can be seen from figure 4.8, even though the regression analyses did not show that perceived usefulness had an affect on attitude towards usage, the two variables are still correlated. This is similar to Attitude towards usage and Intention to use. It can also be seen that perceived ease of use and perceived usefulness are correlated. The effect they have on each other was not tested in the regressions however.

62 5 Discussion In this section I will discuss the research, the results and their limitations. 5.1 The research and its limitations The research was aimed to investigate the opinions of financial managers employed by SMEs in Finland. A questionnaire was sent out to 200 companies and 43 replies were received. The response rate was good. However, the replies came from very small companies and therefore the research does not cover the population intended which was SMEs in Finland. According to the replies, none of the companies employed more than 45 people. As a result, there was no information obtained regarding how financial managers and accountants employed by larger firms feel about electronic invoicing. As stated previously, the respondents could be more inclined to have a positive attitude towards electronic invoicing as they were found working for companies having websites i.e. they could be more used to working electronically. Also, the survey was sent out by email and this could have prompted respondents who are positively set towards working using electronic tools to answer whereas respondents preferring working with paper where discouraged. In addition, there were only three of the respondents who were using electronic invoicing presently which had an effect on what analyses could be made. It would have been interesting to ascertain from a bigger sample of actual users what their opinions regarding electronic invoicing was and what influenced the adoption decision. This could also be an effect of the size of the companies. Previous research has shown that size is a big determinant when it comes to adoption of new technology. 5.2 The results and their implications The result of the statistical analysis did not introduce any surprising findings. I will however, in this section discuss the results and how they relate to previous research findings. The findings on what factors affect perceived usefulness, perceived ease of use, attitudes and intention to use can be viewed in figure 5.1.

63 Personal factors Perceived usefulness Organisational factors Attitude Towards usage Intention to use Technical factors Perceived ease of use Economical factors Environmental factors Figure 5.1 The significant factors in the research model The personal factors studied were age, previous experience, sex, attitudes, perceived benefits, perceived ease of use and perceived usefulness. Age and previous work experience are related to each other but neither of the two showed any signs of affecting how the respondents felt about electronic invoicing. As mentioned earlier, Gullkvist discussed resistance to changes and new processes by older people, but this was not confirmed in my research. In addition, change in processes did not have any affect on intention to use. Perceived ease of use and perceived usefulness have been cited in many studies as the most significant determinants of acceptance (Chau, 2003, McCloskey 2003-2004). Gullkvist (2005) found that they were important factors in affecting attitudes as well and in my study, I could also see that the perceived usefulness and the perceived ease of use had an effect on whether the respondents view electronic favorably and intended to use it in the future. However, perceived usefulness did not affect the attitude towards electronic invoicing even though it had an affect on intention to use. Similar to Gullkvist’s (2005) study, I found that trust in the technique was an important determinant of perceived usefulness. I also found that trust in the technique was an important factor on how easy electronic invoicing was perceived to use. Pavlou (2003) also states that perceived trust and risk are other important determinants of acceptance regarding

64 e-commerce acceptance because of uncertainty with online transactions. In this study, the respondents viewed electronic invoicing as technically safe and as such had trust in it. However, when asked to name the biggest risks in using electronic invoicing many respondents cited uncertainty and data security as the major risks. There were also a few statements that there were no risks involved. This is a selection of the biggest risks according to the respondents: - Data security and transaction disturbances - Technical failure of computers, email or electronic invoicing - Errors and uncertainty - Untrained, careless users or operators - Finding correct electronic invoicing address and receiving payment on time - Losing information - Mismatch with ERP system and the expense Previous research has shown that adopters of e-commerce viewed the advantages gained more positively than non-adopters (Riemenschneider and McKinney, 2001-2002, Wang et al, 2004). The respondents in this study quoted the following to be the biggest benefits that could be gained: - Facilitates and increases speed of invoicing and payment cycle - Reduces amount of paper, paperwork and filing - Reduces postage and enveloping - Increases efficiency, reduces workload and saves time - Increases accuracy and customer satisfaction, - Reduces amount of false and lost invoices - Cost efficient Lack of management support has been one of the organizational factors that have shown to have a strong affect on adoption of new information technology. The same was found in this study where the focus was on attitudes. Even though management support was not the strongest factor it was still significant. The perception of management approval of electronic invoicing showed to have some significance when predicting how much the respondent wanted to work with electronic invoicing. This is different from the results in Gullkvist’s study (2005) where management support did not show an effect on usefulness

65 and perceived ease of use. Bertschek and Fryges (2002) discussed the importance of the availability of qualified IT personnel and in my study this could also be seen. The size of the firm and how it affects adoption decisions have been studied greatly in the past. Dasgupta et al (1999), for example, found that the level of computerisation was larger in larger firms. Iacovou et al (1995) also found that adopters of EDI tend to be larger firms. The size is however measured in sales volume and is probably a result of the larger resources the firm has available. Iacovou et al (1995) also found that size measured by number of staff does not affect adoption. In this study, I tested to see if firm size in terms of number of employees had an effect on how useful the respondents felt electronic invoicing to be but size did not have any significant effect. Competitive factors have proven previously to affect adoption of new technology but this study did not find as much support for competitive factors having an affect on attitudes towards electronic invoicing as anticipated. Iacovou et al (1995) found in their study that adoption of EDI by small firms was influenced by external pressure especially from trading partners and the results in this study somewhat agreed with this. Usage by suppliers showed to have an affect on intention to use in the future but customer usage had not. Requests from important customers did show to have some importance in conjunction with ease of use, supplier usage, customer usage and change in processes. Dasgupta et al (1999) found in their study that firms facing heavy competition were more likely to adopt new information technology than others. I wanted to see if the same applied to attitudes but unfortunately only fourteen respondents stated the amount of market share the firm has thus, making the sample too small. Another competitive effect mentioned is positioning in the supply-chain. Wang et al (2004) stated that inter-firm collaboration was important regarding the likelihood of adoption. Only a few of the respondents indicated that they had any automation of the supply-chain suggesting that there is little electronic co-operation throughout the supply-chain. Economic factors proved to be very important to the respondents. Since most of the companies are quite small in terms of employees, there might not be an abundance of resources available and therefore the economic factors have such a large impact.

66 Much of this research was based on the TAM and the TRA. The perceived usefulness and perceived ease of use from the TAM both had an affect on intention to use but only perceived ease of use had an affect on attitudes. In addition, attitudes did not show to have an effect on intention to use. This could perhaps be a result of the question “I would like to use electronic invoicing” which I used as a factor for attitude. 5.3 Suggestions for further study As noted previously, there was no information obtained from financial managers and accountants working for middle-sized companies. Since these companies usually have more employees and perhaps more funds available it would be interesting to investigate whether they are closer to acquire electronic invoicing than the small companies in this study. In addition, only three of the respondents were currently using electronic invoicing and as a consequence, opinions from actual users could not be obtained. It would be beneficial for providers of electronic invoicing services to know how users are feeling about electronic invoicing in order to improve the product. 5.4 Conclusion Electronic invoicing will be important in the future. The benefits received from using it is too big to be ignored. To what extent and in what pace SMEs in Finland decide to implement electronic invoicing could not be ascertained for sure by this study but I can conclude that the majority of the respondents feel positively about electronic invoicing. Most of them also realized the benefits that can be gained. Since many where concerned with the expense of implementing electronic invoicing, there will however, probably take some time before the majority or SMEs are using electronic invoicing.

67 6 Bibliography Bertschek I., Fryges H., “The adoption of Business-to-Business E-Commerce: Empirical Evidence for German Companies“, Centre for European Economic Research, Discussion Paper, January 2002. Chau, Patrick Y.K., Lai, Vincent S.K., “An Empirical Investigation of the Determinants of User Acceptance of Internet Banking“, Journal of Organizational Computing and Electronic Commerce, 2003. Dasgupta S., Agarwal D., Ioannidis A., Gopalakrishnan S., “ Determinants of Information Technology Adoption: An Extension of Existing Models to Firms in a Developing Country”, Journal of Global Information Management, July-Sept 1999. Dasgupta S., Granger M., McGarry N., “User Acceptance of E-Collaboration Technology: An Extension of the Technology Acceptance Model”, Group decision and Negotiation, 2002. Deitel H.M., Deitel P.J., Du Waldt B., Trees L.K., (2003); Web Services A Technical Introduction, Upper Saddle River, New Jersey, Pearson Education, Inc. Fichman R.G., “Information Technology Diffusion: A Review of Empirical Research”, Proceedings of the Thirteenth International Conference on Information Systems (ICIS), December 1992, Dallas, 195-206. Grandon E.E., Mykytyn P.JR., “Theory-Based Instrumentation to Measure The Intention to Use Electronic Commerce in Small and Medium Sized Businesses”, Journal of Computer Information Systems, Spring 2004. Gullkvist, B. (2005). Det elektroniska pappret i redovisningen, Åbo: Åbo Akademi University Press. Hasselbring Wilhelm., Weigand Hans., “Languages for electronic business communication: state of the art”, Industrial Management & Data Systems, 2001.

68 Iacovou C L., Benbasat, I., Dexter A S., “Electronic Data Interchange and Small Organisations: Adoption and Impact of Technology“, MIS Quarterly, December 1995. Kelley M G., Helper S., “Firm size and capabilities, regional agglomeration, and the adoption of new technology“, Econ.Innov.New.Tech, 1999, vol 8. Luo W., Cook D., Joseph J., Ganapathy B., “An Exploratory Framework for Understanding Electronic Bill Presentment and Payment Model Selection”, Human Systems Management, 2000. Mccloskey D., “Evaluating electronic commerce acceptance with the technology acceptance model“, Journal of Computer information systems, winter 2003-2004. Nyberg, R. (1999). Skriv vetenskapliga uppsatser och avhandlingar Vasa: Edutime. Pavlou PA., “Consumer Acceptance of Electronic Commerce: Integrating Trust and Risk with the Technology Acceptance Model“, International Journal of Electronic Commerce, Spring 2003. Rautajoki, T., “A Comparison of Electronic Invoicing Solutions in the EU and the Effects of the EU Directives”, Master’s of Science Thesis in Accounting, 2003. Riemenschneider C., McKinney V.,”Assessing Belief Differences in Small Business Adopters and Non-Adopters of Web-Based E-Commerce”, Journal of Computer Information Systems, Winter 2001-2002. Riemenschneider C., McKinney V.,”Assessing the Adoption of Web-based E-Commerce for Businesses” , Electronic Markets, 1999. Venkatesh V., Morris M.G., Davis G.B., Davis F.D., “User Acceptance of Information Technology: Toward a Unified View“, MIS Quarterly, September 2003. Wang Yu Chung W, Chang C-W, Heng M., “The levels of information technology adoption, business network and a strategic position model for evaluating supply chain integration“, Journal of Electronic Commerce Research VOL. 5, NO 2, 2004.

69 Zhu K., Kraemer K L., Xu S., Dedrick J., “Information Technology Payoff in E-Business Environments: An International Perspective on Value Creation of E-Business in the Financial Services Industry“, Journal of Management Information Systems, Summer 2004. Zhu K., Kraemer K L., Xu S., “A Cross-Country Study of Electronic Business Adoption using the Technology-Organization-Environment Framework”, Twenty-third International Conference on Information Systems, 2002. Web-pages Chong Sandy; Electronic Commerce adoption by small and medium-sized enterprises in Australia and Singapore, http://www.scholar.google.com/scholar?hl=en&lr=&safe=off&q=cache:_T8BJv- QXi8J:wawisr01.uwa.edu.au/2000/Track%25201/bEcommerce.pdf+information+technolog y+adoption+organisation, 2000 accessed 16.02.2005. Ebxml forum http://www.ebxmlforum.org/articles/ebFor_20040724.html accessed 21.04.2005 E-Finland Forum http://e.finland.fi/netcomm/news/showarticle.asp?intNWSAID=8653 accessed 6.11.2004. Elma Electronic Trading www.elma.net accessed 10.01.2006. ICT Cluster Finland Review 2005 www.tieke.fi/review2005.pdf accessed 12.05.2005. The Finnish Bankers’ Association http://www.fba.fi/finvoice/ accessed 21.04.2005. Tieke, Electronic Invoice in Finland; revision of recommendation 6 http://www.norstella.no/getfile.php/161045.177/ITPrec6+Finnish_eInvoice20050404.pdf accessed 21.04.2005. Verohallinto,http://www.vero.fi/nc/viewarticle.asp?domain=VERO_MAIN&path=5,39&la nguage=SWE&article=2427&index accessed 22.04.2005.

70 e-invoice consortium http://www.einvoiceconsortium.com/en/uutinen2.html accessed 22.04.2005. CEN/ISSS e-Invoicing Focus Group, Report and Recommendations of CEN/ISSS e- Invoicing Focus Group on Standards and Developments on electronic invoicing relating to VAT directive 2001/115/EC http://www.xicrypt.com/rechnungsstellung/final_e- invoicing_report.pdf accessed on 26.04.2005. Tieke Tietoyhteiskunnan kehittämiskeskus http://www.tieke.fi/ accessed on 02.05.2005. Kirjanpitolautakunnan yleisohjeet http://ktm.elinar.fi/ktm/finhtml/kirjanpitoltk.htm accessed on 02.05. 2005. Opus Capita http://www.opuscapita.fi/FI/Tuotteet+ja+palvelut/Verkkolaskutus/Electra.htm accessed on 16.05.2005. Vahtera Pauli, Verkkolaskut käytännössä, http://opko.laurea.fi/hyvinkaa-instituutti/02_42- 51.pdf accessed 18.05.2005. Personal communication Salmi, Heli; Interview at Svenska Handelshögskolan on the 1st of July, 2005.

71 7 Appendix 7.1 Appendix 1 The questionnaire Cover letter for questionnaire What are your opinions and intentions regarding electronic invoicing? Dear Sir/Madame, I am a student at the Swedish School of Economics and Business Administration in Helsinki, doing the Master Program of Advanced Financial Information Systems (PAFIS). This survey is part of my Masters’ thesis. The purpose of the survey is to establish the opinions and intentions of managers of SMEs in Finland regarding electronic invoicing. In this survey, electronic invoicing refers to electronic transmission of an invoice. I am trying to establish what or whether there are any determinants of adoption of electronic invoicing. You may or may not be using some kind of electronic invoicing presently. To participate in this survey it is not necessary to have any previous experience of electronic invoicing. To be successful in my endeavor it is very important for me that you fill out the attached questionnaire. It should not take you more than 15 minutes. Please return the questionnaire by the 1st of November, 2005. The answers will be totally confidential and no reference to you and/or your company will be made. If you have any questions, please do not hesitate to contact me. Thank you for your participation.

72 Anna Rofhök-Björni ATTACHEMENT Questionnaire Questionnaire Please circle the alternative that suits you best and fill out the missing information. Please answer all questions. Sex and year of birth- woman, year _________ - man, year___________ Title _________________________Total work experience ____________ year(s) Company information Number of employees in the finance department __________company total _________ Industry ______________________Market share ______________________ Amount of import (% of purchases) ___________ Export (% of sales)____________ How many sales and purchase invoices do you send and receive yearly? Sales ___________________ Purchase __________________ How many employees are busy processing invoices? _____________________ What is your current status regarding electronic invoicing? 1. We are using electronic invoicing 2. Will not employ 3. Planning to employ within one year 4. Planning to employ within 3 years 5. Planning to employ within 5 years

73 Please circle the alternative that is most applicable to your company. The company is owned Domestically Foreign Both What solution is the most applicable to your company? EDI Custom-made direct invoicing Through Bank Trough software provider What ERP system are you currently using and when was it implemented?_____________________________________ Is any part of the supply chain automated presently and if so what part? ______________________________________________________________________ The following section offers a number of statements where you tick the option which most accurately corresponds to your situation. Please select only one option. Fully disagree Fully agree 1. I am very experienced in using electronic invoicing 1 2 3 4 5 electronic payments 1 2 3 4 5 electronic accounting 1 2 3 4 5 2. In our company there are IT personnel that are responsible for assisting us in technical issues 1 2 3 4 5 3. Management approves/would approve of adopting electronic invoicing 1 2 3 4 5 4. The finance department approves/would approve of

74 adopting electronic invoicing 1 2 3 4 5 5. Our customers are using electronic invoicing 1 2 3 4 5 6. Our suppliers are using electronic invoicing 1 2 3 4 5 7. Our most important customers are requesting/requested that we adopt electronic invoicing 1 2 3 4 5 8. The changes that was incurred/would be incurred in adoption of electronic invoicing would not change our existing routines 1 2 3 4 5 9. Electronic invoicing is/would be technically safe and reliable 1 2 3 4 5 10. There are no/were no financial restrictions to adopt electronic invoicing in our company 1 2 3 4 5 11. Through using electronic invoicing I can/could Increase the quality of my work 1 2 3 4 5 Increase the productivity 1 2 3 4 5 Increase efficiency 1 2 3 4 5 12. Electronic invoicing is/would be useful in my work 1 2 3 4 5

75 13. Electronic invoicing is/would be easy to use 1 2 3 4 5 14. I intend to use electronic invoicing to the extent possible 1 2 3 4 5 15. Electronic invoicing offers/would offer cost and time savings 1 2 3 4 5 16. Electronic invoicing would/could lead to personnel cuts 1 2 3 4 5 17. It is/would be difficult to check the data accuracy when using electronic invoicing 1 2 3 4 5 18. It is / would be time-consuming and tiresome to learn how to use electronic invoicing 1 2 3 4 5 19. Electronic invoicing leads/would lead to error reduction 1 2 3 4 5 20. Electronic invoicing leads/would lead to more reports 1 2 3 4 5 21. Even though electronic invoicing offers/would offer benefits I prefer to work with paper invoices. 1 2 3 4 5 22. I love/would love to work with electronic invoicing 1 2 3 4 5 23. The risk of error is/would be increased with electronic invoicing 1 2 3 4 5

76 24. Electronic invoicing is hard to understand and is/would be frustrating to work with 1 2 3 4 5 I think all invoicing will be totally electronic within ____ year(s) in Finland___ year(s) internationally. In your opinion, what are the biggest benefits of implementing electronic invoicing? ______________________________________________________________________ ______________________________________________________________________ In your opinion, what are the biggest risks of implementing electronic invoicing? _________________________________________________________________________ ___________________________________________________________________ In your opinion, what would be the most important reason NOT to implement electronic invoicing? _________________________________________________________________________ ___________________________________________________________________ Thank you for you participation!

77 7.2 Appendix 2 Questionnaire in Finnish The cover letter Mitkä ovat mielipiteenne ja aikomuksenne sähköisen laskutuksen suhteen? Hyvä %s, Minun nimeni on Anna Rofhök-Björni ja opiskelen kauppatieteen maisteriksi ruotsinkielisessä kauppakorkeakoulussa Helsingissä, eli Hankenilla, Master Program of Advanced Financial Information Systems - ohjelmassa. Osana loppututkintoani kartoitan Pk-yritysten johdon mielipiteitä ja aikomuksia sähköisen laskutuksen suhteen. Pro gradu- tutkielmassani sähköisellä laskutuksella tarkoitetaan laskun sähköistä siirtoa. Lähetän ohessa linkin tutkimukseen, joka on osa maisteri tutkielmaani. Tutkimuksellani yritän löytää sähköisen laskutuksen omaksumista määrääviä tekijöitä. Osallistuaksenne tutkimukseen Teillä ei tarvitse olla sähköistä laskutusta käytössänne tällä hetkellä. Teillä ei myöskän tarvitse olla aiempaa kokemusta sähköisestä laskutuksesta. Tutkimukseni kannalta minulle on erittäin tärkeää että Te täytätte liitteenä olevan kyselylomakkeen. Sen täyttämiseen menee noin 15 minuuttia. Ystävällisesti palauttaka lomake 1 marraskuuta mennessä. Vastauksenne käsitellään täysin luottamuksellisesti ja täten teihin tai yritykseenne ei tule viittauksia tutkimuksessani. Ottakaa minuun yhteyttä, jos teillä on jotain kysyttävää tutkimukseen liittyen. Kiitos osallistumisestanne! Anna Rofhök-Björni KYSELYLOMAKE http://www.pafis.shh.fi/~annrof03/survey/q.php?id=%d Sähköisen laskutuksen kyselylomake

78 Valitkaa vaihtoehto joka parhaiten kuvailee tilannettannne ja täyttäkää myös puuttuvat tiedot. Vastatkaa ystävällisesti kaikkiin kysymyksiin. Kiitos! Perustiedot Sukupuoli Nainen Mies • Syntymävuosi • Titteli • Työkokemus vuotta Yritystietoa • Yrityksemme talousosastolla työskentelee henkilöä • Yrityksemme palveluksessa on henkilöä • Yrityksemme toimiala • Yrityksemme markkinaosuus toimialalla Tuonnin osuus (% hankinnoista) Viennin osuus (% myynnistä)

79 Kuinka monta osto- ja myyntilaskua lähetätte ja vastaanotatte vuodessa? Osto Myynti Kuinka monta henkilöä laskutus työllistää? Mikä on tämänhetkisen laskutuksen tilanne? Valitse vaihtoehto joka parhaiten kuvailee tilannettanne Käytämme sähköistä laskutusta. Emme aio ottaa käyttöön sähköistä laskutusta. Suunnittelemme ottavamme sähköisen laskutuksen käyttöön vuoden sisällä. Suunnittelemme ottavamme sähköisen laskutuksen käyttöön 3 vuoden sisällä. Suunnittelemme ottavamme sähköisen laskutuksen käyttöön 5 vuoden sisällä. En ole koskaan kuullut sähköisestä laskutuksesta. Yritys on Suomalaisomistuksessa Ulkomaisomistuksessa Suomalais- ja ulkomaalaisomistuksessa Sähköisen laskutuksen kannalta, mikä ratkaisu sopii parhaiten / sopisi parhaiten yrityksellenne? EDI Räätälöity suoralaskutus Sähköinen laskutus pankin kautta

80 Palvelu muulta sähköisen laskutuksen palveluntarjolta Mitä toiminnanohjausjärjestelmää käytätte tällä hetkellä? ja koska se otettiin käyttöön? Onko mikään osa tilaus - toimitusketjustanne automatisoitu tällä hetkellä, ja jos vastaus on myöntävä mikä osa siitä? Valitkaa väittämä joka parhaiten kuvaa tilannettanne. Valitkaa vain yksi vaihtoehto kysymystä kohden. Olen täysin eri Olen täysin samaa mieltä mieltä 1. Olen erittäin kokenut • sähköisen laskutuksen käyttäjä • sähköisten maksujen käyttäjä • sähköisen kirjanpidon käyttäjä Yrityksessämme on IT henkilöstöä, joka on 2. vastuussa meidän teknisestä tuesta. Johto hyväksyy / tulee hyväksymään sähköisen 3. laskutuksen käyttöönoton.

81 Talousosasto hyväksyy /tulisi hyväksyä 4. sähköisen laskutuksen käyttöönoton. Asiakkaamme käyttävät 5. sähköistä laskutusta. Hankkijamme / 6. toimittajamme käyttävät sähköistä laskutusta. Tärkeimmät asiakkaamme pyytävät / ovat pyytäneet että 7. ottaisimme sähköisen laskutuksen käyttöömme. Sähköisen laskutuksen käyttöönotto ei 8. muuttanut / tulisi muuttamaan olemassa olevia käytäntöjämme. Sähköinen laskutus on / olisi teknisesti 9. turvallista ja luotettavaa. Sähköisen laskutuksen 10. käyttöönotolle ei ole / ollut mitään rajoituksia

82 yrityksessämme. Ottamalla käyttöön 11. sähköisen laskutuksen voin / voisin • Parantaa työni laatua • Nostaa tuottavuuttani • Lisätä tehokkuuttani Sähköinen laskutus on / 12. olisi hyödyllistä työni kannalta Sähköinen laskutus on / 13. olisi helppo käyttää. Aikomukseni on käyttää sähköistä 14. laskutusta siinä määrin kun se on mahdollista. Sähköinen laskutus 15. johtaa kustannus- ja ajansäästöihin. Sähköinen laskutus 16. johti / johtaisi henkilöstövähennyksiin. Sähköistä laskutusta 17. käyttäessä on / olisi

83 vaikeaa tarkistaa tiedon täsmällisyyttä. On /olisi aikaa vievää ja vaikeaa oppia 18. käyttämään sähköistä laskutusta. Sähköinen laskutus 19. johtaa / johtaisi vähempiin virheisiin. Sähköinen laskutus johtaa / johtaisi 20. usemman raportin tekemiseen. Sähköisestä laskutuksesta on / olisi hyötyä, mutta haluaisin 21. mielummin työskennellä paperimuotoisen laskutuksen parissa. Teen mielelläni / tekisin mielelläni työtä 22. sähköisen laskutuksen parissa. Virheiden riski kasvaa 23. sähköisessä laskutuksessa.

84 Sähköistä laskutusta on vaikea ymmärtää ja on / 24. olisi turhauttavaa tehdä työtä sen parissa. Uskon että kaikki laskutus vuoden sisällä vuoden sisällä tapahtuu sähköisesti Suomessa, ja kansainvälisesti. Mitkä ovat mielestänne suurimmat hyödyt sähköisen laskutuksen käyttöönotosta? Mitkä ovat mielestänne suurimmat riskit sähköisen laskutuksen käyttöönotossa? Mikä on mielestänne tärkein syy olla ottamatta sähköistä laskutusta käyttöön? Kiitos erittäin paljon osallistumisestanne! 82.181.98.213 179 Lähetä vastauksesi Bottom of Form

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Attitudes Towards Electronic Invoicing In Finland

by Friso de Jong on Dec 16, 2008

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Attitudes Towards Electronic Invoicing In Finland — Document Transcript