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