Enabling opencommerceA Basware guidebook to thenew world of open commerce
CONTENTS:06 ........... Open Commerce: Why now?10 ........... Challenges to open commerce14 ........... An open and shut case?18 ........... A circle of benefits22 ........... State of the nation26 ........... A best practice approach30 ........... Good reviews
ENABLING GLOBAL COMMERCEIntroductionAs the Chief Research Officer of a firm that is focused ondefining, advancing, and promoting the purchase-to-paystrategies, processes, and technologies that drive businessvalue and accelerate organizational transformation withinthe finance and procurement departments of an enterprise,I believe that the timing of Basware’s Enabling GlobalCommerce Guidebook could not be better.C onsider that in recent years, most And, while globalization, innovation, and finance leaders have been firsthand the resulting increase in competition have witnesses to the dramatic impact helped to streamline and improve businesson their organizations of globalization performance, they have also helped toand open trade, which have combined increase business volatility and supplyto simultaneously expand their supply management complexity.chains and tighten the economic linkageto their trading partners. Companies in Against the backdrop of rapidly evolvingall regions and of all sizes are increasingly supply chains (and customer bases), howglobal and the need to support business organizations communicate, collaborate,relationships with global trading partners and transact with their trading partnershas become a priority of the first order. and the enabling platforms that they
utilize take on increasing importance Above all else, managing change at anto business operations and business ever-increasing pace requires agility.results. As this book highlights, Toshiba Agile finance leaders and the purchase-is a great example of a company that is to-pay organizations that they overseeleveraging technology to connect with have shown the value and importance ofmore customers and suppliers in a way getting these strategies correct. Basware’sthat improves the relationships and drives Enabling Global Commerce Guidebookefficiencies. But, Toshiba is far from the is an excellent resource for businessonly company leveraging technologies to executives seeking to understand anddrive efficiencies, increase effectiveness tackle these issues for the first time andand expand operations to drive significant for those seeking to extend the value theyand lasting value from its purchase-to- gain from their P2P operations today.pay operations. Finance leaders must notonly focus on this area, they must take aleadership role or risk losing ground to thecompetition. ANDREW BARTOLINIIn the twenty-first century, the only Chief Research Officerconstant in business will be change. Ardent Partners“In the twenty-first century, the only constant in business will be change. Above all else, managing change at an ever-increasing pace, requires agility.”
A BASWARE GUIDEBOOKOpen Commerce: Why now?06/07 Open Commerce: Why now?
Like many elements of today’s business world, internationaltrade is something that we tend to believe only became a realitywith the invention of the internet. In an age in which millionsof transactions are made every minute from nation to nation,global commerce is something that for many of us has onlybeen possible thanks to major developments in financial andcommercial technology.The reality, of course, is very different World Trade Organization in 1995, majorindeed, and the colourful, dramatic and milestones in the latter half of the 20thwell-documented 3,000-year history of Century have forever changed our approachrecognized trade routes such as the Silk Road to global commerce.and the King’s Highway attest to this. Globalcommerce, international business, world Recently, however, the pace of thistrade; call it what you will, it has been with us development has quickened. Just a fewas long as we have been able to cross borders decades ago, the prospect of doing businesswith goods for sale. Although the modern overseas was an uncommon one for thebusiness landscape is very different to the majority of finance and procurementhistorical, the principles remain the same: managers. Likely confined to their homegain competitive edge by plying your unique territory, and with a relatively small buttrade in a range of territories. well-known circle of potential suppliers and vendors, international trade would have satDevelopments throughout history have very much on the “nice to have” list for therefined the process of doing business across majority.borders, but never more dramatically than story havein the past few decades. From the signing of throughout hi Developments g businessfree trade agreements between European ocess of doin refined the pr e dramaticallypowers to the ultimate foundation of the across bord ers, never mor s. st few decade than in the pa13.5%Rate of world trade growth estimated by theWorld Trade Organisation in 2010, the fastestyear on year expansion ever recorded
A BASWARE GUIDEBOOKOpen Commerce: Why now?08/09 !Innovation is key to the renewed vigor with whichwe view world commerce. In a market in whichproduct or service differentiation and fresh ideascan be key to gaining dominance, the opportunity todraw from a vastly wider set of experiences, thoughtprocesses and market approaches can be invaluable.For even the smallest of companies, doing In any market in which product or servicebusiness with the rest of the world has never differentiation and fresh ideas can be keybeen logistically easier. New trade routes, to gaining dominance, the opportunity tomuch like their historical predecessors, draw from a vastly wider set of experiences,have been opened up by new technology thought processes and market approachesfrom simple collaborative communications can be invaluable. Without openingtools to the most sophisticated CRM and our horizons to the developments andfinance platforms. But technology is only one innovations that are taking place in otherelement of a much wider story and, in terms territories, it is difficult to grow.of cause and effect, arguably an enablerrather than a driver. In essence, doing In these uncertain times, risk too plays a part.business overseas is now possible for almost There is undoubted danger in doing business ineveryone, but the will to do so needs to exist a microcosm, particularly in terms of the supplyin the heart of the trader. chain. When suppliers in one market stumble, either economically or in production, buyers whoInnovation, too, is key to the renewed vigor rely solely on that select group will find their ownwith which we view world commerce. business impacted. Conversely, those who have
In 2009, exports and imports in the European Union alone totalled some $3.2 trillionspread the risk across multiple territories are start and remain ahead of the curve will reaplikely to find that not only can they switch focus the true rewards.more easily to a more stable market, but that they ilable to so many,can gain a competitive advantage by doing so. With a wider market ava lost in terms of the there is too much to be and relationshipsAnd, to turn that point on its head, major experience, innovation ticipate.strategic gains can be made by businesses open to those who parwilling to expand into overseas markets.With a wider and more diverse supplier base The new economic reality has forcedcomes the opportunity to strengthen those companies to re-think many of therelationships, to access new customers, new processes related to acquiring goods orpartners and new ways of working that can services. Coming out of the downturn tohave a lasting impact on the way a business a post-recessionary world means thatgrows and develops. companies are ready to invest in growth, but with a newly adopted caution. SupplierMore than anything else however, the sense relationships are inevitably affected by this,is that in a growth-ready world, the cost of especially in the case of trading globally,not participating in this new era of open everything from currency volatility to cash-commerce is too great. With a wider market to-cash cycles can have an impact on saidavailable to so many, failing to implement relationship.supporting platforms and processes canimpact on everything from topline growth Market leadership necessitates not justto bottom line profits. In a world made the vision and drive to participate, but alsoever smaller by technology that breaks the requisite process excellence to helpdown borders both physical and electronic, create a lower risk, more efficient operatingmarket dominance can be won and lost in environment. And it’s with that sentimenta comparative instant, and only those who that our story really begins.
A BASWARE GUIDEBOOKChallenges to open commerce10/11Challenges toopen commerceFor many businesses, open commerce presents vast potentialfor growth. It can facilitate finding the best suppliers forany given product or service, both in terms of price aswell as quality, and help further optimize working capitalthrough integrating procurement and finance processes andnegotiating better terms with suppliers.But it is not without its challenges. While political and tradebarriers continue to fall, helping to establish routes of entryto new markets for businesses worldwide, other fundamentalissues remain. Success isn’t just about doing businessinternationally, but efficiently too, and there are plenty ofobstacles standing in the way of any business attempting toachieve that.So what are some of the biggest issues currently facing anybusiness looking to capitalize on the opportunities of tradinginternationally? Here are our top five challenges to successfulopen commerce.
1 TAX COMPLIANCE For any company purchasing various jurisdictions who stay up-to-date on local VAT regulations. This approachgoods or services, complying with Value delivers two major benefits: it outsourcesAdded Tax (VAT) requirements is essential. all the complexity of VAT compliance toLocal government legislation defines how a reliable partner, and it saves significantVAT is collected, what information must be time and money in accounts receivable andincluded on every invoice, and what kind of accounts payable operations.audit trail every business must provide for taxinspectors. Since every country has slightlydifferent rules, complying with VAT regulations 2 CURRENCY AND COMMODITY VOLATILITYaround the world is a complex challenge. While international markets may now feelYet failing to comply has serious financial relatively stable in comparison with theconsequences. past couple of years, volatility continues to be a watchword across the globe.The European Union has issued a directive Regular fluctuations in both currency andthat will harmonize VAT rules in 2013, meaning commodities continue to play a dramaticthat electronic invoices will be considered role in any business’ bottom line, especiallyequal to paper invoices across Europe. when set against a global market in whichHowever, some differences between member political, social and even environmentalstates will still remain, not to forget that every upheaval can dramatically alter a territorynon-EU country will continue to maintain its almost overnight.own distinct rules. For those trading internationally, thisOne way for any company with operations in volatility is not so much a barrier as it ismultiple countries to deal with VAT regulations a vital consideration. Even at a domesticis to join an open e-invoicing network. Suchnetworks include service providers from
A BASWARE GUIDEBOOKChallenges to open commerce12/13level, market uncertainty can make it much with new contacts, so too are they addingharder for a business to plan and forecast more and more links into their overall supplyeffectively making it all too easy to find chain. Without careful management, that canthat stock and cash flow quickly become open the ‘home’ party up to greater risk asunbalanced. Scale this to an inter-continental their international trading picture becomesor global level however, and that imbalance increasingly complex.can quickly reduce trading opportunities andlead to diminishing capital flows. The same is true for suppliers themselves who – in many countries – are duty bound to 3 TRADE REGULATIONS Just like tax legislation, trade know both the end use and, indeed, end user of the goods that they are supplying. While bothregulations can shift and alter dramatically supplier and buyer-screening services exist, iton a near-daily basis. And, in this new world can often be easier to work with a pre-approvedof open commerce, businesses trading network, members of which have been throughoverseas are under greater scrutiny than ever a comprehensive due diligence process.to ensure that they are complying with thelaws and legislations laid down both in theirown territories and those in which they are 4 ENABLING SUPPLIERS TO TRADE ELECTRONICALLYimporting and exporting goods. Effective open commerce depends not only on being able to find the customers and suppliersTrading internationally tends not only to that will enable you to grow, but being able togrow a buyer’s supplier base, but also to access and transact with them as efficientlylengthen their overall supply chain. As they and easily as possible. In unknown, untestedmove into new territories and do business territories, this can be far from simple.While e-invoicing in isolation might not nullify someof these barriers to open global commerce, with theright approach and the right partners to deliver it, itcan be a vitally important tool for anyone wanting totrade efficiently and effectively overseas.
In this growth ready world, markets are Navigating the challengesconstantly shifting and achieving sufficient Managing these issues successfully in a fasttraction can depend on having the agility to moving and competitive landscape can requirequickly and efficiently enable suppliers to switch the support of technology, expert partners ortransacting electronically – all at the lowest both. While it may be a seemingly small piecepossible cost. Ensuring that you are gaining of a very large puzzle, e-invoicing is key inaccess to both the most innovative and impactful unlocking these challenges. For any company, nosupply base whilst ensuring that transactional matter what size, e-invoicing helps lower costsrelationships with suppliers don’t impact on your and reduce errors in invoicing and processing.own cash position can be a fine balancing act. But not just this, it also helps to break down some of the barriers to international trade. 5 CASH FLOW VISIBILITY While we’ve already touched on cash flow These assertions are supported by a piece ofmanagement in the context of stock and currency worldwide research conducted by Basware involatility, working capital on its own can also very early 2011 (discussed in more depth later in thisquickly become a barrier to open commerce if not guide). In a survey of more than 1,300 peoplemanaged in the right way. Overseas expansion working in finance, AP or procurement rolescan require significant capital investment, with globally, excellence in e-invoicing was cited by:spend on everything from product validation to • 91 per cent as a way of mitigating compliancedistribution fast mounting up. or auditing risk • 85 per cent as key to better forecastingBecause of that, cash flow must be treated • 98 per cent as a route to slicker operationalwith much greater scrutiny than ever, even in efficiencya situation where it has potentially never been • 92 per cent as a tactic for improved suppliermore difficult to do so. and buyer relationships • 93 per cent as a way of improving cash flow and working capital management
A BASWARE GUIDEBOOKAn open and shut case?14/15An open and shut case?Open commerce would not exist without the freedom to tradeand work with the organizations that you choose. While manypolitical and legal trade restrictions prevent 100 per cent freereign, businesses are – for the most part – unrestricted to choosewhich suppliers they buy goods and services from and, of course,who they in turn supply. Indeed, free trade is one of the foundingprinciples of modern global business. FINANCIAL FREEDOM
we’reIn the current environment that’s a hugepositive, as trading internationally can be a fast OPENroute to growth. As companies become bigger,they tend to experience a similar growth in From computers to networking equipment,their supplier base. With some of the world’s cleaning services and mobile phones to officebiggest corporations hooked to supplier stationery, all businesses use a range ofnetworks that number in the tens of thousands, suppliers for their needs. The chances of youcomplexity tends to scale with company size. sharing the same mobile network, bank or IT vendor as all of your suppliers is very slimFor both large corporations and small and indeed, and that possibility becomes evenmedium sized businesses however, managing slighter as you get bigger and trade with morean increasingly large supplier base can equate partners in more markets. While that might notto an equally sizable challenge. Today’s be an issue when it comes to the majority ofprocurement and purchasing personnel are business functions, it has big implications forunder greater pressure than ever to react e-invoicing, particularly when trading overseas.to a range of issues that vary from cost tosecurity, responsiveness to resilience, not to Independent research company Billentismention the growing importance of the green estimates that there will be around 530and sustainable supplier. Factor each of those e-invoicing operators in the global marketissues into rapid expansion of the supplier by the end of 2011, and your customers andbase, and the task becomes greater still. suppliers could be using any number – or indeed any combination – of those companiesE-invoicing has a big role to play in making that for sending e-invoices and purchase orders.a smoother process. Being able to transact That’s particularly true of overseas customersdocuments such as invoices and purchase and suppliers, many of whom may be using aorders electronically, manage the payment of local market e-invoicing provider rather than ayour suppliers and, of course, the receipt of global operator.payments for your own services or productsthrough one network can bring much needed Because there are so many vendors currentlysimplicity and speed to the purchase-to-pay populating the marketplace, there is alsoprocess. Like any business service solution a wide mix of e-invoicing data standardshowever, there is no guarantee that your and formats. Different vendors processsuppliers and customers will be using the same information in different ways, and that cane-invoicing system as you. complicate an already intricate situation even 230,000 companies actively trading through the Basware Open Network
A BASWARE GUIDEBOOKAn open and shut case?16/17further. As the party in the strongest position with businesses in Latin American and(usually the buyer) determines the data the Caribbean could expect to spend anformat, the other is usually bound to obey. And average of 192 hours doing so. That is a hugesince each connection between supplier and difference, and for anyone working acrosscustomer needs to be individually built and multiple territories, a major considerationmaintained on an ongoing basis, this ‘point-to- to take into account if they are choosing topoint’ model carries costs for both parties. set up individual connections with all of their suppliers and essentially managing the processThat situation becomes even more complex themselves.when you add global VAT compliance into themix. PriceWaterhouseCoopers, which in 2010 The alternative, of course, is to use a servicecarried out a comprehensive study of VAT that can remove that complexity for you.regulations across 145 countries1, found that Many global e-invoicing operators are ablethe time for an ‘average’ company to comply to alleviate that burden, offering a rangewith those requirements varied wildly across of behind the scenes services to ensureterritories. While a business trading in the EU that every invoice you send and receive iswould spend around 73 hours in establishing already tax and VAT compliant. Using a globalVAT compliance for instance, those working partner can also make it easier to manage the A CLOSED NETWORK CAN RAISE COSTS FOR ALL INVOLVED
complexities of a globally dispersed supplier As the number of businesses adopting thebase, offering a network that can help you practice grows fiercely year-on-year, more andconnect and trade with a range of suppliers more suppliers and customers expect to beacross the world without needing to develop able to transact electronically as the de factoindividual lines of communication with each. standard, free of artificial obstacles and hurdles. But, just as open commerce is dependent onUnfortunately, things still aren’t quite as being able to trade with whomever you wantsimple as they sound. While, as evidenced by to, the future success of e-invoicing hingesthe reasons above, there is a very clear need on being able to easily bill and pay a range offor a networked solution, some vendors have businesses without them needing to be lockedopted to make that network a closed one. into the same network service provider.Whilst offering a service that handles formatconversions and enables suppliers and buyers sinesses in Those working with buto work together, they do so by insisting that all Latin Ameri can and the Caribbeansuppliers lock into the same network as their an average of could expect to spendbuyer. This is bad news for suppliers. And, by doing so. 192 hoursproxy, it’s eventually bad news for buyers too.Because the chances of all a supplier’s It’s this situation that gives life to thecustomers being part of that one closed philosophy behind the Basware Open Network –network are negligible, they’ll find themselves a philosophy that is aware of the growing needneeding to sign up for multiple e-invoicing for a unifying presence in the marketplace,networks just to continue doing business. As one that cuts through divisive issues of datacould be expected, these costs in having a formats, multiple operators and suppliernetwork forced upon a supplier don’t tend to be activation costs. With interoperability at itsabsorbed. In fact, they have a nasty tendency core, the Basware Open Network is the veryto manifest themselves elsewhere in the buyer- definition of open commerce, allowing buyerssupplier relationship, often as hidden costs and suppliers to work together even if they’reattached to products and services and so – using different e-invoicing vendors in differentfurther along the road – the buyer suffers too. territories. Freeing buyers and suppliers from any concerns over whether they can easilyA suitable metaphor for this approach is to connect, it instead allows them to focus onconsider what business would be like if, to gaining greatest advantage via increasedwork or communicate with another company, e-invoicing volumes.they had to be registered with the same bankor mobile phone network as yours. Expecting Through this greater focus on maximizing ROIyour suppliers to switch to your mobile phone from e-invoicing comes the opportunity foroperator so that they could call you, or to profitable growth. With a clearer opportunitymove to your bank so that they could pay you, to capitalize on its cost saving, efficiencywould result in both confusion and bad feeling driving potential, businesses across the globebetween the buyer and supplier. can lay the ground for expansion, refining and refreshing their core processes to ensure anInteroperability has become one of the most optimum level of performance.important words in the world of e-invoicing. 1 http://www.pwc.com/gx/en/tax/pdf/impact-of-vat.pdf
A BASWARE GUIDEBOOKWe’re in this together: a circle of benefits18/19We’re in this together:a circle of benefits
The most successful businesses are based on a firmunderstanding that they’re in a two-way relationship. Whetherit’s consumers, corporate customers, partners or evengovernments, external parties place a range of pressures onbusiness, and the ability to listen, understand and adapt tothose pressures is key to thriving in any economic environment.Exactly the same is true when it comes the biggest companies being hamstrung byto suppliers. While, other than in extreme teetering supply chains can still be found in thecircumstances, suppliers are always likely finance pages and procurement press. Underto play second fiddle to the demands of pressure themselves to reduce spend andthe buyer, the quality and strength of that support cash positions, CPOs and purchasingrelationship is now vitally important. Although departments have typically transferredbuyers – primarily CPOs – retain control of that this stress to suppliers via reduced fees andrelationship, they also find themselves with aggressive terms. While that can be punishingthe responsibility of ensuring the health of enough on its own, another, more insidioustheir supply chain, both as a means of assuring form of pressure has increasingly been slippinga supply and also as a primary source of into the buyer-supplier relationship.innovation. For a long time, the prevalent industry attitudeIn Basware’s first Cost of Control research has been that suppliers will follow the lead ofreport1, professors Adrian Done of the IESE their customers when it comes to adoption ofBusiness School in Barcelona and Mark e-invoicing networks. Independent technologyFrohlich of Indiana University’s Kelley School and market research firm Forrester Researchof Business affirmed that “with regard Inc, in the July 2009 report, Enterprisesto supply chain risk, CPOs should remind Should Push Supplier Networks To Deliverthemselves and educate others of the risks Interoperability, stresses that “currently, mostinvolved in continuing to seek cost savings supplier networks base their business modelsthrough beating-up on suppliers. Such on signing up a few enterprise customers thataggressive sourcing strategies have generally then persuade – or sometimes force – theirnot weathered well, resulting in failure either suppliers to use their chosen service.”via ‘tsunami’ events or a more gradual ‘soilerosion’ effect.” “The problem for suppliers,” the report continues, “is that they have to incur fixed“We have seen that supplier failure helps no- costs to integrate with all of their customers’one,” they concluded. Indeed, stories of even chosen networks or single-buyer portals. This 1 Published November 2009
A BASWARE GUIDEBOOKWe’re in this together: a circle of benefits20/21 Suppliers Buyers Open Network E-invoice operator E-invoice operator Basware partner Basware partnerisn’t a big problem for companies with a few an essential multi-territory strategy as ithigh-volume customers, but it can create a both mitigates risk and provides options forhuge overhead for small businesses and those competitive sourcing.with many low-volume accounts.” The netresult can be that expected savings for buyers How best then, can a buyer ensure thatpushing compliance with their own network suppliers enjoy the mutual benefits of theirturn into hidden costs as suppliers seek to working relationship? The Basware Openrecoup the investment. Network has been specifically designed to help ensure that both buyers and suppliersTrading internationally can intensify the alike enjoy a range of benefits from workingimportance of the supplier relationship. For a together. Some of these benefits fall solelycompany taking tentative steps into foreign into each user’s camp, but many also crossterritory, strong supplier networks are key, and the buyer-supplier boundary and create aa standard of trust is necessary to do business true virtuous circle, rewards and returnswith peace of mind. Having such a network in flowing backwards and forwards betweenplace can also be integral to growth, with the the two parties.knowledge that you have a steadfast supplierbase serving as an excellent foundation for On the buyer side, a number of benefits cangrowth. A diverse supplier base, one that be drawn from paying suppliers more quicklygives you a range of options for trade, is also and smoothly. The Open Network doesn’t just
provide open access to a range of e-invoicingoperators. It also helps to deliver faster,more efficient and accurate payments viastraight-through-processing, eliminatingthe need for any manual intervention. Byperforming comprehensive invoice checkingagainst stringent key criteria, as well as anycustom-defined factors outlined by the buyer,invoices are processed and paid quickly no eroperabilitymatter which data formats are being used. A system that places int rkAny exceptions are flagged early and, as at its heart, the Open Netwo encourages sup pliers and buyers towith validation criteria, rules for rejection er before.can be comprehensively tailored for each work together like nevorganization’s needs.Of course, that’s just a feature set. But in For both buyers and suppliers, the Openpractice, it also translates to a much more Network also offers a true community withinefficient invoice lifecycle, driven by error which they can operate. Buyers are ablereduction, faster processing and improved to enlist the services of a growing pool ofproductivity thanks to a reduction in manual qualified suppliers, thanks to the network’sinputting. That’s good news for buyers, global address book function, while suppliersbecause a subsequent opportunity opens can reach out to a range of potential customersup for them to negotiate early payment already operating within the framework. Thatstrategies with their suppliers. It’s little possibility also serves as a huge enabler whenwonder that around 90 per cent of Open it comes to global commerce; the potentialNetwork users have adopted the facility to for buyers and suppliers to find each otherautomatically process their invoices. and transact across the purchase-to-pay value chain regardless of which territorySuppliers, beyond the core benefits of not they operate in, helping to stimulate bothhaving to implement numerous e-invoicing accessibility and growth.network connections at a cost and thepotential to get paid faster, can also benefit A system that places interoperability at itsfrom the simplicity of the network’s numerous heart, the Open Network encourages suppliersactivation services. From day one, suppliers and buyers to work together like neverare given the support they need to begin before. By strengthening that relationshipe-invoicing in whichever format they choose: through a cycle of mutual benefits, the Openthrough an e-invoice sending service, a Network helps to enable commerce on a trulydedicated portal for submitting invoices and global scale, providing a platform from whichpurchase orders, or even using PDFs and buyers and suppliers alike can operate in anprinted invoices. environment that supports them both.
A BASWARE GUIDEBOOKState of the nation22/23State of the nationHow businesses around the world are puttingsuppliers at the heart of their e-invoicing programs 72% 92% Speeding up invoicing process: Improving supplier relationships: Interoperability between e-invoicing solutions 26% 34% Benefits of an open network over traditional closed e-invoicing networks Suppliers/customers Increased flexibility 66% Increased efficiency/ cost savings 61% Common standards/ 5% consistency 54% Reduces costs to our suppliers 51% 35% Reduced complexity 46% Environmental benefits 39% Major challenges 26% Better supplier 29% Some challenges 35% relationships Don’t know 10% Not an issue 5% Don’t know 34% 0% 20% 40% 60% 80%
However you decide to approach e-invoicing as a way ofsupporting global trade, having an understanding of thebehaviors and approaches of other users can pay dividends.Useful not just as a way in which to compare and benchmarkyour own organization against others, deep insight into thee-invoicing practices of other businesses can also help you todevelop a strategy that suits your own organization based onits ambitions and objectives.In early 2011, Basware conducted a detailed Indeed, concerns over the potential costglobal investigation into how more than of e-invoicing to suppliers is the most1,300 businesses worldwide have been using frequently cited reason for not havinge-invoicing as a way of achieving global extended e-invoicing reach within angrowth. Surveying businesses from ten organization, at 46 per cent. From updatingterritories , the research asked them to share contracts to enable two way e-invoicingtheir thoughts on a range of subjects relating (49 per cent) to better communicating theto e-invoicing. It also drilled down into their benefits of e-invoicing externally (40 perviews on the Open Network approach and its cent), the overriding sentiment is that thepotential benefits, with the findings compiled ability to rapidly enable suppliers to transactin a report entitled E-Invoicing: A Global View. electronically is a key factor in the success or failure of an e-invoicing developmentOut of the findings, we can draw two major program.strands of conversation that underpin someof the very challenges we have described in When looking at the compelling reasonsthe earlier chapters of this guide. While the to extend e-invoicing adoption within anbenefits of transacting invoices and purchase organization, cost reduction is a high priorityorders electronically are widely recognized for (71 per cent). So too is the need to speedmost (two thirds stating that it had a positive up the overall invoicing process (72 perimpact on their business), adoption levels cent) and the potential to improve supplierare still low. Only 9 per cent of respondents and customer relationships (38 per cent).stated that they have high levels of e-invoice Importantly, 92 per cent said that e-invoicingprocessing. According to the research, one of presented a real opportunity to improve thethe key challenges companies are facing has buyer-supplier relationship.to do with supplier reluctance.
A BASWARE GUIDEBOOKPeer review24/25How then, does this tie into Basware’s Open surveyed, and improving relationships withNetwork approach? For many, there are customers and suppliers is important for 34significant concerns over the detrimental per cent of respondents. While these figureseffect that a non-interoperable e-invoicing are – comparatively – low, they become verynetwork can have on both their own company interesting when placed against the need toand their customers and suppliers. 63 per improve profits and top line performance,cent of businesses surveyed said that lack of which 45 per cent of respondents cited as ainteroperability between operators caused priority. Against this fundamental element ofproblems for their company, supported by business performance, the quality of externalthe 61 per cent who said that this was also relationships and cash flow optimization arean issue for their suppliers. Contrastingly, deliverables that more than hold their own.an open, connected approach is rated highlyfor improved flexibility (66 per cent), better One very important point to be takenefficiency and cost savings (61 per cent), from the survey is that, if you feel that theconsistency of e-invoicing data formats (54 invoicing procedures in your organizationper cent) and reduced costs to suppliers (51 could be improved to support widerper cent). financial objectives, you are not alone. An overwhelming 93 per cent of respondentsPartnership and performance believe their processes could be improvedAs well as considering the specific issue of either somewhat or significantly.e-invoicing, the research asked respondents Interestingly though, around one third (40to outline their key financial priorities for the per cent) of those surveyed said that theyyear. Perhaps unsurprisingly, in the context do not currently send invoices electronically.of a challenging few years, efficiency and Of those that do, some 56 per cent send lessthe refinement of working practices sit at than a fifth of their invoices electronicallythe top of the agenda. Some 73 per cent of on a monthly basis, meaning that there is arespondents said that improving operational significant scope for building on that impact.efficiency was a priority of the year, the mostpopular response by some margin. On the flip side, just 18 per cent of respondents said that they don’t receivePromisingly however, this pressing priority any invoices electronically, with more thandoes not seem to be getting in the way of half (56 per cent) receiving them by emailother strategic objectives. Optimizing cash as PDF or equivalent attachments. While 49flow and working capital management are per cent of respondents said that they usehigh on the list for 48 per cent of those an e-invoice processing system to deal with
63% of business surveyed said that lack of interoperability between operators caused problems for their companythese invoices however, somewhat ironically, afurther 28 per cent admitted to printing off theinvoices in order to deal with them. 22 per centpresently opt not to use any invoice scanning 61% said that this was also an issue for their suppliersservices. In contrast an open,That absence of an end-to-end solution for so connected approach ismany respondents appears to manifest itself rated highly for improvedin a range of problems. Once invoices fall out flexibility 66%of the automatic processing cycle, they causea range of issues, with 64 per cent citing timespent entering invoice details into their systemsas one of the biggest challenges. 40 per centsaid that time was being spent on getting theinvoices approved, and 28 per cent saw issueswith matching invoices to Purchase Orders. Most better efficiency and cost savings 61%worrying of all, 35 per cent said that invoicescould be misplaced or lost altogether.Contrasted with the earlier statistics highlightingthe potential of e-invoicing as a strategicenabler, these numbers seem to represent risk consistency 54%for some businesses. Cited repeatedly as a toolthat can play a big role in a company’s biggeststrategic ambitions as well as its – more routine,but no less important – tactical processes,e-invoicing for many is still not being deployedto full effect. In an environment in whichoptimization and efficiency are key to achieving and reduced costs to suppliers 51%growth, a gap remains in what e-invoicing cando for businesses and what it actually is. At theheart of that sits the eminently conquerablechallenge of enabling suppliers to starttransacting electronically, and it is here that thegreatest focus should lie for anyone.
A BASWARE GUIDEBOOKDeveloping an approach: best practice26/27Best practice – an achievable goalKnowing what other companies think about e-invoicing and howthey are approaching it can be a useful way of benchmarking yourown progress. But when it comes to developing a strategy for yourown business, it’s important to take the very specific circumstancesof your company into account. If you’re thinking of using e-invoicing as a way of supporting growth or helping you to move towards a more open approach to commerce, then there are some vital initial steps to take. Here, we present our top five ‘first steps’ to take for anyone looking to improve their overall purchase-to-pay program in a way that will support them through global growth.
Like many technological solutions, the more you put in, the more you get out. e-invoicing is at its most effective when dealing with the highest possible volumes. Push the envelope on benefits realization1 Cost saving is a great reason to start transacting electronically, but that’s only one part of the equation. If you’re really looking to make the most out of an e-invoicing strategy, you’ll need to take a long look at what else you can gain from it, from improved customer and supplier relationships to a more streamlined and compliant business model. Cash is king, always No matter how successful or stable your business, cash flow is always a top2 priority. As you grow, especially into new territories in which you might not be as confident with your supplier and customer network, being able to accurately forecast and manage your incomings and outgoings is absolutely essential. E-invoicing can help you to achieve that, so factor in how an improved cash flow process can help you to grow. Break down the barriers As we’ve discussed elsewhere in this guidebook, trading overseas can put3 a number of obstacles in your path, as well as opportunities. Consider what those obstacles are, which will cause your business the most pain, and then how you’re going to tackle them before they become an issue. Most are easily surmounted with the right technology or right partners, but it’s important to address them before they become an issue and not after. Scale is key Like many technological solutions, the more you put in, the more you get out.4 Transacting purchase-to-pay process related documents electronically is at its most effective when dealing with the highest possible volumes (though it can also make a big difference to even the smallest of operations). Ensuring that you have a long-term plan to move as much of your invoicing processes to electronic is essential, and that can depend on… Bringing your suppliers along with you No matter how ambitious your plans or sophisticated your e-invoicing solution,5 the ability to enable your suppliers to transact electronically is absolutely essential to the ongoing success of the program. Reaching that ‘critical mass’ of supplier enablement should be one of your number one priorities when outlining your e-invoicing program, as it’s there that you stand the most to gain on cost savings and efficiency .
A BASWARE GUIDEBOOKDeveloping an approach: best practice28/29A case in point:When it comes to e-invoicing that Q: Klaus, you’ve said already that yourbenefits both buyers and suppliers, customers were the prompt to move onto e-invoicing. What exactly happened?Toshiba’s recent experiences A: In early 2009, one of our biggeststand out as a compelling example customers notified us that they wereto follow. moving onto an e-invoicing platform and that they needed us to follow suit. The customer was using Basware, and so weAs a major supplier to businesses became part of what you would call theglobally, it was customer requests ‘Supplier Activation’ program – essentiallythat sparked Toshiba to consider Basware project managing the set up ofe-invoicing. Here, in a Q&A with IT e-invoicing capabilities on the supplier side, in this case us.Manager of Toshiba TEC GermanyImaging Systems GmbH, Klaus Dieter Q: So what happened next?Leifgen, we look at how the company A: We’d been considering switching tocut invoicing costs by 75 per cent and e-invoicing ourselves for some time, so that communication from Basware was basicallyhas developed plans to activate its the prompt that we needed. We’d alreadyentire customer base. looked at the business case internally, and it was compelling. A review by our internal postmaster, for instance, had found that by the time a paper invoice had been printed, taken to the post room, put in an envelope, stamped and sent out, the cost was € 1.61 per invoice. That compared to just € 0.40 for an e-invoice. So, in many ways, the activation message from Basware was just the final link in the chain.
We’ve reduced the costof invoicing by around75 per cent, which is ahuge saving for us.Q: Was Basware always the number one to communicate with the greatest number choice for you? of e-invoicing operators, ensuring that weA: Yes and no! The fact that one of our biggest could satisfy as many of our customers customers was already using Basware was as possible. Basware’s Open Network obviously a big tick in the box for us. But of approach did that. course, we have very stringent selection criteria for any vendor that we use, so we Q: What are the benefits that you have seen conducted an independent review of the so far? company’s capabilities. So, “no” in the A: There has been a good mix of what you sense that we investigated other options, might term ‘hard’ and ‘soft’ benefits. We’ve but “yes” in the sense that Basware came reduced the cost of invoicing by around out in first place! 75 per cent, which is a huge saving for us. On the ‘soft’ side, we’ve been able toQ: And why was that? develop better customer relationships,A: Flexibility was key. Unlike some other and we’ve also been able to get in touch businesses, we have many more customers with numerous other customers who had than we do suppliers. We knew that it’s the enquired about e-invoicing previously and buyer that tends to drive the format choice say “hi, we can do that for you now”. when it comes to e-invoicing, so we wanted That’s been a great experience. to be using a vendor that would allow us
A BASWARE GUIDEBOOKGood reviews30/31 ”We were very satisfied with the way Basware handled the program and with the quality of work. As we continue to centralize our accounts payable operations, we expect to move closer and closer to our goal of 100 percent electronic invoicing.” Erol Engin, Manager of Accounts Payable, Cargotec Corporation “Basware makes it easy to manage cashflow and track due dates. Now we can see which payments we have made, and which are coming up and plan our cash accordingly.” Marilyn Van Zant, Accounts Payable Manager, Frozen Food Industries “Very early on our senior management saw e-invoicing as the route to achieving world-class operational performance. We wanted to gain control of what had been a time-consuming and error-prone paper-based process, replacing this with a tool that would give us more consistency and control over invoice handling. Alongside cost-savings and significantly reduced processing times, we’ve been able to steer our business towards more goal-oriented purchasing.” Soile Hiekkasalmi-Linna, Development Manager, Metso
”E-invoicing is a must. There is no future for hard copy invoices.” Mervi Mäkelä, Financing Manager, Finnair“We’ve been able to do advanced reporting with Basware Invoice Processing, and use it to conduct budgeting top down and improve our spend visibility. It saves significant time and money, enables enhanced tracking and easy auditing, and provides the accuracy, efficiencies, visibility and control we need. We’re even using it to monitor suppliers and look for opportunities to consolidate invoices and early payment discounts.” Daniel Garuti, Vice President and Accounting Supervisor, Loomis Sayles“Eliminating the paperwork has significantly speeded up our processes, streamlined our operations and delivered a more rigorous accounting process. Our central accounts payable group can now enforce our corporate procedures and standards.” Chris David-Pipe, Group Vice President, Information Technology, Crown Worldwide