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E invoicing, models integration level and benefits
 

E invoicing, models integration level and benefits

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    E invoicing, models integration level and benefits E invoicing, models integration level and benefits Presentation Transcript

    • www.osservatori.net Conference – Electronic Invoicing in Europe Electronic invoicing: models, integration level and benefits Alessandro Perego Politecnico di Milano School of Management Madrid - 27th April 2010
    • ICT & Management Observatories Observatory on eInvoicing and Dematerialization ICT & Management Observatories q31 Observatories qMore than 60 individuals involved (researchers + staff) qOver 3,000 companies analyzed (by both case studies and surveys) q87,000 unique contacts on CRM database q2 newsletters: Knowledge (approx. 20,000 members); “PMI” (approx. 30,000 members) Observatory on eInvoicing and Dematerialization Origin “Spin-off” of the B2b Observatory, analyzing the impact of ICT on customer-supplier relationships since 2001 Mission Deeply analyze themes related to electronic invoicing and more in general the integration and dematerialization of company processes Main objective Identify and assess real potential of solutions in terms of Value creation for user companies A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The new perspective: electronic invoicing as “a competitiveness lever” Electronic invoicing is not first and foremost a question of compliance with fiscal rules and regulations… Fornitore Viewed mainly as a set of Sistema Allineamento dati Bancario Ordine Consegna Fatturazione Pagamento rules & regulations, Cliente Value standards, Benefits constraints, Technology and costs Change management Contracts Standards Costs Legal constraints Rules & regulations A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The new perspective: electronic invoicing as a “competitiveness lever” …but rather a tremendous opportunity to optimize both company and inter-company business processes Fornitore Sistema Allineamento dati Bancario Ordine Consegna Fatturazione Pagamento Viewed mainly as a set Cliente Viewed as of rules & regulations, Value Constraints true value standards, Benefits Technology constraints, Technology Rules & regulations and costs Change management Costs Contracts Standards Standards Contracts Costs Change management Legal constraints Benefits Rules & regulations Understanding value A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The mathematical model - The structure We developed a mathematical model to assess costs, benefits and profitability ...and validated it with dozens of companies in many sectors Context Elementary Elementary Output data times costs Perfect cycle Benefits Non-conformity Profitability Profitability indexes assessment model Investments Effectiveness indexes Current costs Adoption Service paradigm + fruition mode View by player A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The scope of the analysis The B2b trade process Invoicing is the pivotal phase of a more extended process starting with business data alignment and ending with payment reconciliation Supplier Banking System Data alignment Order Delivery Invoice Payment Customer A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The main adoption paradigms considered Substitute archiving Supplier Storage of receivables – Electronic storage of invoices issued to clients, substituting paper storage in accordance with fiscal norms Banking Digitalisation and storage of payables - Electronic storage of Data alignment system Order Delivery Invoice Payment invoices issued by suppliers, substituting paper storage in accordance with fiscal norms Customer Electronic invoicing Electronic invoicing – Agreement between trade partners for the Supplier exchange of invoices generated, send and stored exclusively in Banking electronic format Data alignment systems q Unstructured format: invoices are image files (TIFF, JPEG) and Order Delivery Invoice Payment cannot be directly altered q Structured format: the invoices contain data able to be altered through computer applications Customer Full trade process integration Exchange of documents between clients and suppliers taking place Supplier in structured electronic format q Integration of the order-to-invoice cycle – exchange of logistics- Banking trade cycle documents Data alignment System Order Delivery Invoice Payment q Integration of the invoice-to-payment cycle – exchange of administrative-financial document cycle q Complete integration and dematerialization – integration of all Customer phases of the cycle + electronic invoicing A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The benefits The models of substitute archiving From net benefits of 2-3 € per invoice – with less than one year as the average payback time – in the case of adoption of the substitute archiving solutions… Accounts receivable archiving • Gross benefits between 2.3 and 3.2 €/cycle • Net benefits: between 1 and 2 €/ cycle Supplier • Payback time: generally < 1 year • Source of benefit: space, transmission Banking Data alignment system Order Delivery Invoice Payment Accounts payable digitalization and archiving Customer • Gross benefits between 1,6 and 2.4 €/ cycle • Net benefits : between 0.5 and 1.2 €/ cycle • Payback time : generally< 2 years • Source of benefit : space A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The benefits The models of electronic invoicing VAT-compliant …to net benefits between 4 and 12 € per invoice in the case of VAT-compliant electronic invoicing… Supplier Structured electronic invoicing • Gross benefits between 9 e 12 €/cycle Banking • Net benefits : between 5.5 and 8.5 €/cycle Data alignment systems • Payback time : generally< 1 year • Source of benefit : productivity of personnel Order Delivery Invoice Payment Un-structured electronic invoicing • Gross benefits : between 3.6 and 5 €/cycle Customer • Net benefits : between 0.6 and 4 €/cycle • Payback time : generally< 2 years • Source of benefit : space, transmission A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The benefits The model of full integration and dematerialization …to net benefits of up to 65 € per cycle in the case of the full integration of the trade process Supplier Banking Data alignment System Full integration of the trade process Order Delivery Invoice Payment • Gross benefits between 30 and 80 €/cycle • Net benefits : between 25 and 65 €/cycle • Payback time : generally< 1 year • Source of benefit : productivity of personnel Customer A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The super-additional rule The benefits related to the improvement in accuracy Full integration of the trade process Integration of the order-to-payment cycle Integration of the order-to-invoice cycle Integration of Consumer goods the invoice-to-payment cycle The choice of the most advantageous service VAT-compliant fruition mode for each scenario is considered electronic invoicing Costs reduction of: Perfect cycle Non conformities Accounts receivable archiving In collaboration with: Indicod-ECR Accounts payable digitalisation and archiving [€/cycle] 0 10 20 30 40 50 60 The super-additional rule is due mainly to the reduction in non- conformities coupled with the reduction in cost of the interface activities between the phases (e.g. settlements) A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The benefits Specific industry differences The “maximum” benefits in the different sectors can vary from 30 to 80 €/cycle and can represent from 1 al 3% of turnover High High Pharmaceutical 0.6% Electrical equipment -67% Document chain efficiency Document chain efficiency 2.8% -82% Building materials 1.7% -82% -84% 3% -80% Consumer goods 2.1% Low Low Home appliances Low Low High High Initial accuracy of the project Initial accuracy of the project A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • The barriers A classification of the perceived barriers The barriers (actual or perceived) which hinder the spread of electronic invoicing and integration of the order cycle projects, can be traced back to 5 main types Lack of clarity of the regulatory Regulatory confusion framework leads to a high perception of reacting in a “non-confirmative” manner External The difficulty in developing B2b Lack of standards integration projects, due to lack of interoperability tools Barriers to The obstacle preventing immediate adoption Poor awareness of value consideration of the topic with the proper attention and perspective Fragmentation of the The presence of parcelization both in the Internal organisation as well as in the supporting order-to-payment cycle information systems Difficulty collaborating The difficulty in collaborating with other with “the Outside” companies – the competition or just suppliers, client and service providers A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net
    • www.osservatori.net Conference – Electronic Invoicing in Europe Electronic invoicing: models, integration level and benefits Alessandro Perego Politecnico di Milano School of Management Madrid - 27th April 2010