Tieto The Future Of E-invoicing


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Tieto The Future Of E-invoicing

  1. 1. The future of e-invoicing A Tieto publication featuring research from Gartner Contents Towards Pan-European E-invoicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 E-invoicing one stop shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Paper invoicing has NO future – The Tieto way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Swedbank, in the frontline of e-invoicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Volume 3 Issue2
  2. 2. Towards Pan-European E-invoicing For many years, the European Commission and the European Central Bank, working in conjunction with the Single European Payment area, have stressed the importance of migration to electronic invoicing. A mass-market move away from manual paper invoicing is seen as a major improvement in productivity. To help pave the way for such a development, the focus has been on making it easy for EU’s 23 million small enterprises to join digital financial value chains. Besides saving time and money, while improving the service they provide to larger counterparts, this transition enables them to automate their transactions with other SMEs. Bo Harald In 2006, the EU commission established an informal task force . This was followed by a formal Expert Group on e-invoicing . This group of thirty-one members, which started its work in February 2008, has Chairman a clear mandate . It aims to identify shortcomings in the regulatory framework concerning e-invoicing EU Expert Group for as welI as identify and validate e-invoicing business requirements . It also hopes to identify and E-invoicing validate relevant e-invoicing data elements and linkages . Another key part of its remit is to propose responsibilities assigned to standardization bodies and a time schedule for the development of common standard(s) . Finally, it wants to propose a European e-invoicing framework to establish a common conceptual structure, including business requirements, standards and solutions . This group, which I have the honor of chairing, has a strong mandate and a formidable task ahead of it . The groups mandate runs until the end of 2009 and a comprehensive mid-term report was approved in February . One of the Expert Group’s most important additional tasks is to raise awareness of the benefits of e-invoicing thus speeding up its adoption, both nationally and at a cross-border level . Thanks to the group’s active and inclusive way of working, we are already seeing clear advances in this area . In regards to its formal task, the identification of shortcomings in the existing regulatory framework, the group’s progress has been better than expected . The EU Commission responded to the group’s request to treat paper and electronic invoices equally by issuing a VAT directive proposal in January 2009 . If adopted, this will remove all technology specific demands placed on e-invoices . What’s more, it would make e-invoicing significantly easier and cost effective for all and help remove any mental barriers, which SMEs may still have . It was gratifying to note that the tax administration in the Netherlands took immediate practical actions in this direction and that the majority of EU member states already support this logical approach . In support of the EU Commission’s approach of equal treatment The Expert Group has unanimously approved a Code of Practice . This has been recommended for implementation when, and if, the amended VAT directive proposed by the European Commission comes into effect . The Code of Practice describes how businesses can provide the required reliability of their e-invoicing process through technology neutral business controls and procedures embedded in their operations . Although not mandatory, additional supplementary controls, such as managed networks and electronic signatures can also be used . The business requirements work has focused on crafting recommendations, which make e-invoicing easy, uniform and economical . Removing the mandatory technology specific requirements has been a central demand of small and large enterprises and their associations throughout the EU . The Expert Group recommends that all member states support the equal treatment principle embedded in the new VAT directive proposal and implement it in their national legislation as swiftly as the Netherlands has done . Next the Group aims to focus next on the issue of standards . We are currently evaluating how Cross Industry Invoice 2 .0, developed within UN/CEFACT, can satisfy the reasonable demands of invoice receivers yet still be easy to implement . It is particularly important to avoid ERP system investments that deliver too little data . Large invoice receivers, enterprises and the public sector will clearly not drive e-invoicing if it fails to fulfill their requirements . Service providers will have to support many existing standards during a lengthy transition period, but exchanges inside the network should move to CII2 .0 as soon as possible . Once it is accepted, it should be offered by service and ERP providers to enterprises . The Framework to be proposed also includes a Framework for Interoperability . This will help realize the vision of an EU, where invoices can be sent and received just as easily as payments . To further develop the European e-invoicing framework, we are also working on a proposal for a collaborative governance model . This is another key deliverable that will help ensure the Frameworks success . Source: Tieto 2 The future of e-invoicing
  3. 3. E-invoicing one stop shopping As a result of its strong position within the progressive Nordic market, Tieto has gained extensive experience working with some of the world’s most advanced users of e-invoicing. Through strong partnerships with banks and corporate customers, Tieto has become one of Europe’s leading e-invoicing vendors. Now, within the rest of Europe we are seeing the use of e-invoicing accelerating too . The increased numbers of exchanged documents and of invoice issuers and receivers participating in the exchange are evidence of this . In order to fulfill the complex demands created by this diversified European market Tieto offers a managed one stop shopping service . This gives customer the chance to have one vendor look after all aspects of e-invoicing, including the legal and tax related requirements . Mats Wikström Tieto e-invoicing services are organized according to the requirements of different customer Vice President groups . The backbone of the Tieto market model relies on partnerships, primarily with banks . Value Networks Tieto offers banks a white labeled service where Tieto acts as a technical partner, while the bank Tieto handles customer relations . The service package includes both Business Value Services and Business Integration Services . Tieto bank labeled e-invoicing enables banks to offer invoicing services to large corporate customers, SME’s and consumers . Having such a wide ranging scope is essential for telecoms, utilities and insurance companies, which cater to a variety of customer groups and require a unified way of handling them . Tieto also provides e-invoicing directly to large corporate customers, which require demanding solutions for long term projects that include customization and integration with core systems . As a full service ICT vendor with industrial expertise, Tieto is well placed to provide corporations with an end-to-end e-invoicing solution that integrates seamlessly with their back office systems . Small and Medium Large Enterprise Consumer Enterprise (SME) Automated eBanking / Message Exchange Self Service Portal Business Value Low Volume End High Volume End Services Self service functions Automated message exchange Integrated with eBanking Online conversions, AFI - AFO Manual capability (any format in - any format out) Document Storage File transfer capability Adapters for ERPs and Presentment Value added applications Data validation Semi-automated integration Roaming with other networks (Print file upload, PO flip) Source: Tieto The future of e-invoicing 3
  4. 4. E-invoicing one stop shopping To increase customer value, Tieto also has roaming partnerships with other leading European vendors . By co-operating like this, it is possible to dramatically increase the size of the virtual networks and the amount of potential business partners within the e-invoice exchange . The customer benefits, as only one service provider is required to reach all business partners, even if those partners are connected to other vendors’ networks . The migration from paper to e-invoicing won’t take place overnight . Connecting and automating the e-invoice exchange, within a large supplier Network, is a challenging process that takes time . To support the dematerialization of paper invoicing Tieto and its partners offer complementary scanning and printing services for the electronic exchange . Tieto also has a long history working on traditional EDI based message exchanges . Consequently, our services cover the exchange of other Financial Value Chain related documents too, thus enabling full coverage of supply chain message exchanges . Source: Tieto 4 The future of e-invoicing
  5. 5. Paper invoicing has NO future – The Tieto way The public sector and Whether the market will tip for certain technology corporations within depends on two things . Firstly economies of scale and secondly, demand for variety . Clearly a market Europe have now is more likely to tip if there are important scale begun to realize the economies, both on demand side economies of benefits of moving scale, such as network externalities and supply away from manual side economies of scale, such as lower marginal production costs . paper invoicing to e-invoicing. This is E-invoicing, it seems, provides a perfect example hardly surprising when of a technology which provides important scale economies in both the demand and supply side . you consider that Network externalities are typically divided into direct numerous studies have and indirect network externalities . E-invoicing is Markus Hautala Development Director proven E-invoicing a classic example of a direct network externality, brings significant where the utility of the network to the user Value Networks increases with the number of other users that can Tieto cost savings, frees up be reached . An indirect network externality arises increasingly scarce when the utility of a product increases with the workforce and helps reduce CO2 number of users because, for instance, there are emissions. Yet despite these more complementary products available (Katz and impressive benefits, the use of Shapiro 1986, 19941,2; Farrell and Saloner, 19873) . In regards to e-invoicing, there exist a wealth of e-invoicing still remains fairly low at complementary products including electronic around 3% in Europe. For some this archiving, e-invoice financing, and cash flow poses valid questions such as “is forecasting . e-invoicing really going to take off?” Secondly, a market is more likely to tip if there and “will the market really tip for is low demand for variety . Demand for variety in this technology?” this context describes the preference for special features . Therefore, a market can be served by Andy Grove’s 10X rule of thumb suggests that a single technology if that technology is suitable the performance of a new technology must be for all users . Moving from paper invoicing to ten times the performance of an established e-invoicing is a technology shift where one mode, technology in order to start a revolution . Various the exchange of invoice data electronically, can studies in this area suggest that from this point serve the whole market . of view e-invoicing more than meets this criterion . It delivers a tenfold increase in Low scale High scale cost savings and a clearer economies economies conscience due to lower CO2 emissions . Add to that Low demand for variety Unlikely YES the absolute necessity for increased efficiency due to High demand for variety NO Depends a diminishing labor force during the next decade and Shapiro & Varian (1999)4 you have a very compelling case for change . Some could justifiably argue that e-invoicing, as it is carried out today, is not a single technology, Will the market tip to e-invoicing? but a collection of various (often incompatible) Tipping, in this context, refers to a market making technologies referred to using one term . This the transition to a specific technology or standard . seems a valid argument, as there are many 1Katz, M . L ., and Shapiro, C . 1986 . Technology adoption in the presence of network externalities . Journal of Political Economy 94: 822-841 . 2Katz, M . L . and Shapiro, C . 1994 . Systems competition and network effects . Journal of Economic Perspectives 8: 93-115 . 3FARRELL, J ., AND SALONER, G . 1987 . Competition, compatibility, and standards: The economics for horses, penguins, and lemmings . In Product Standardization and Competitive Strategy . H . Landis Gabel, Ed . Elsevier North Holland, Amsterdam, 1-21 . 4Shapiro, C . and Varian, H . R ., Information Rules: A Strategic Guide to the Network Economy, Boston: Harvard Business School Press, 1999 . The future of e-invoicing 5
  6. 6. Paper invoicing has NO future – The Tieto way different formats to choose from, reachability that this technology will win . The transition to issues to think about as well as various industry e-invoicing will happen fast once the mass market sectors and country specificities to address . This realizes the benefits and inevitable migration to this fragmentation does not, however, extend to end vastly superior technology . users as the service providers operating in this field mask these underlying incompatibilities and actively Tieto’s general strategy in e-invoicing collaborate to solve interoperability issues across Our approach to integrating e-invoicing in Europe is different domains . based on open standards, industry best practices and collaboration . We view e-invoicing as the first As an example, we acknowledge the major benefits, step towards ubiquitous mass market infrastructure which can be gained from the emergence of a for the exchange of commercial documents of global cross-industry standard and actively support all types . To further this, our general strategy in such activities . But whether the market will shift e-invoicing is focused on open and compatible towards a single standard or not is not an issue instead of performance and proprietary . We for the end customers . B2B integration and format embrace standardization and harmonization as conversion services offered by service providers is evident from our active participation in various allow corporations to use their existing capabilities . international standard and interoperability forums, They also ensure a smooth and controlled migration such as ISO20022, UN/CFEACT, EU Expert to new standards once they are available . Group on e-invoicing and EBA e-invoicing Proof of The same principle applies to meeting differing Concept Group . national legal requirements related to e-invoicing . Tieto’s view on partnering is that no service provider The market would benefit hugely if legislation alone has the existing market position, technical related to e-invoicing was harmonized across capabilities, patents sales force or geographical different countries . There is, however, no need footprint required to dominate the market and make for anyone to wait for this to happen as service it take off . In addition to domestic connections, providers already enable the exchange and organizations need to reach their business partners archiving of e-invoices in a tax and legal compliant located outside their national borders . Suppliers manner across various jurisdictions . and buyers still face challenges with harmonized, In addition to high scale economies and low trusted and tax & legal compliant business partner demand for variety, a market will tip to one integration in cross-border connections . Tieto’s technology if multihoming costs are high . Homing interchange agreements provide extended access costs are costs and investments incurred to and reach to business partners across a number of the user due to technology affiliation, such as different geographies . maintenance costs . In the case of invoice handling, Tieto’s view is that the banking sector’s participation multihoming costs are high . The parallel handling is critical to the success of rapid mass-market of both paper and electronic invoices generates migration to e-invoicing . Banks can ensure quicker a considerable amount of additional costs for migration by building on the established practice example the scanning of paper invoices into of e-banking and by making use of the trust electronic format . established through re-use of e-banking interfaces In summary, e-invoicing is an excellent example and payment tools . What’s more, banks have the of a technology providing significant economies required mass-market sales power to convince of scale with relatively low demand for variety customers to migrate to e-invoicing and support from end users . Where those demands for variety them through the transition . have to be met, in industry specific variations, national legal requirements and standards, service Tieto delivers results as a service providers can mask incompatibilities with their offerings and active collaboration . Invoicing is From e-invoicing to Financial Value Chain also a task where multihoming costs are typically Based on Tieto’s experience, the cost savings from considerable . Consequently, it seems highly likely B2B e-invoicing within services and manufacturing that in the future the market will at some point industries typically amount to 1% of a company’s tip to e-invoicing . Precisely when the tipping to revenue . At a time when many economists predict e-invoicing will take place depends on critical challenging times ahead, such savings are very mass . Rather than a majority of users migrating, welcome . what is required to create critical mass is a Cost savings gained from electronic transactions sufficient number of potential users believing are, however, only one side of the story . Electronic 6 The future of e-invoicing
  7. 7. Compatibility Control Open • Controlled Migration • Open Migration • Compatible technology but • Friendly to users (usually no exclusive rights owned by the switching costs) producer • Several suppliers • E.g. upgrades and updates of • Compatible technology Windows • E.g. multiple generations of fax machines Performance • Performance Play • Discontinuity • A new non-compatible tech. • Several suppliers • Most risks • New technology • Attractive to outsiders with no • E.g. CD audio technology installed base • Requires “way cool” tech. Technology strategies, Shapiro & Varian (1999)5 transactions can be further utilized as a source for For large corporates, we offer automated new business services and for revenue creation . messaging services, which can be connected to Tieto’s Financial Value Chain takes the traditional their corporate integration infrastructure . In order to financial supply chain transaction management provide a complete business driven packaging of to another level by adding value through end-to-end services, Financial Value Chain services sophisticated solutions, such as supplier financing, can be complemented with local integration and working capital and trade risk management . application development services from Tieto . Electronic business transactions, including Services for banks are based on a white labeled e-invoices, can additionally be used for improved provisioning model, where the bank defines and CRM through targeted one-to-one customer delivers the commercial packaging while Tieto communications . produces the technical service: Providing the Full Range • Business Value Services includes supplier Tieto’s Financial Value Chain services improve financing, trading risk management and working working capital and financial risk management capital management . based on digitized business transactions in the • Business Integration Services includes the network between buyers, suppliers and banks . multichannel digitalization of trading and The service is designed to reach all types of corporate to bank relations, procurement to stakeholders, including self-service solutions for pay / order to cash processes (e-payments, consumers and small business organizations, e-invoices, SEPA direct debit, e-orders), trading as well as automated messaging for large partner onboarding services and tax compliant organizations . Functionality covers the digitizing of archiving of business documents . the full financial supply chain, from order to cash and procurement to payment, ensuring that all of Building bridges the transaction parties needs are met . Tieto’s interchange agreements allow for extended Results as a Service access and reach to business partners across Tieto’s Financial Value Chain solutions are available a number of different geographies . Our service as on-demand services . This service oriented enables the exchange and archiving of e-invoices delivery model enables the customer to start using in a tax and legal compliant manner in Europe, the the service with a minimal investment, minimal risk USA and Canada . and minimal use of their own resources . Source: Tieto 5Shapiro, C . and Varian, H . R ., Information Rules: A Strategic Guide to the Network Economy, Boston: Harvard Business School Press, 1999 . The future of e-invoicing 7
  8. 8. Swedbank, in the frontline of e-invoicing As one of the Nordic region’s and integration models, therefore making it easy leading banks, Swedbank’s (www. for customers to use . Like all the banks at that swedbank.com) vision is to be time, Swedbank was facing a several development the leading financial institution requirements due to regulatory demands from in every market in which it authorities . These slowed down the realization of operates. It also aims to be a business-driven development initiatives . service leader in the banking Tieto, a long-term partner of Swedbank’s in B2C industry, and make its customers’ e-invoicing, offered its services to cover B2B lives and business run smoother e-invoicing as well . Instead of selecting a traditional through a wide range of easy- IT system implementation model, Swedbank to-use and competitively priced decided to use Tieto’s white labeled on-demand financial services. Swedbank’s services . This allowed Swedbank to focus on goal is to have the most satisfied customer interface, commercial branding, service customers in the banking industry. packaging, marketing, sales and first line support . To achieve this, the company is Tieto provided the required business process Sarah Hysén at the cutting edge of product competences and delivered the technical services . Product Manager and service development, easily By embedding white labeled services into the Swedbank AB accessible to all customers and solution, Swedbank was able to scale down the Corporate Banking provides excellent service. size and resources needed for the project and launch new products faster . Swedbank Group has 9,4 million retail Swedbank’s B2B e-invoicing service is based on customers and 540,000 corporate end-user centric design and it covers both sales customers, with 419 branches in and purchase invoicing between organizations Sweden, 272 branches in the Baltic of all sizes . The service enables Swedbank to countries and 216 branches in create solutions, which support its customers’ the Ukraine. It is also present in financial value chain processes beyond payments . Copenhagen, Helsinki, Kaliningrad, The service includes a fully automated off-the- Luxembourg, Marbella, Moscow, New shelf selling process of B2B e-invoicing products, York, Oslo, Shanghai, St. Petersburg integrated into Swedbank’s existing sales support and Tokyo. As of March 2009 Swedbank and ERP systems . It is based on core functionalities had total assets of SEK 1,831 billion and of Tieto’s service and also includes customized approximately 21,000 employees. packages, which are used by Swedbank’s sales In the mid-nineties Swedbank was one of the first force to address individual customer’s needs . Nordic banks to launch a B2C electronic invoice The technical solution consists of the following presentment and payment service . As a major integrated main components: Swedish bank Swedbank used its established 1 . Self-Service Portal e-banking relation with private customers to complement the existing payment products with • Web application for small corporate e-invoicing . During that time, the B2B e-invoicing customers acting as e-invoice issuers, market was complex and fragmented and mainly mainly designed for customers with no an arena for large corporates active in specific need to integrate e-invoices with their ERP industry sectors . A few years later the B2B market system had changed, mainly due to the EU VAT directive, • Integrated with Swedbank’s external national legislation and the birth of more widely e-banking web site accepted e-invoice formats . As a consequence Swedbank became interested in offering electronic 2 . Ready-made adapters for the most common invoice exchange services for corporates of all ERP and financial systems sizes . • Plug-in adapters for common ERP systems Swedbank needed to establish B2B invoicing as in important customer segments a service, which customers would perceive as a • Plug-in adapters for widespread invoice natural part of the cash management offering . The formats service was expected to handle different formats 8 The future of e-invoicing
  9. 9. • Applicable for both sales and purchase automated message handling to connect with their invoicing business partners . To close the gap, the solution includes self service applications for e-invoicing, 3 . Message handling integrated with Swedbank’s existing IT systems . • Automated information exchange to/from The solution provides Swedbank with a new enterprises source of revenue and a more intimate relationship • Interconnections/roaming with other with the customer . It also improves customer e-invoicing networks retention and enables the further development of other financial services integrated with the • Handling of both bulk and individual trading processes . These include cash forecasting, e-invoices working capital financing and trade risk mitigation . • Traffic monitoring and an extensive set From Swedbank customers’ perspective the of value added services for transmitted service has made their life a lot easier . Prior to information packages, including the solution’s introduction they had to send paper addressing, splitting, routing, validation and invoices, which involved a significant amount conversion functions of manual work . Now, invoices can be sent electronically, either by using a web application The service introduced a seamless integration of or directly from their ERP systems . For Invoice services for both large corporates and SMEs, often receivers the benefits are just as impressive . Today, sharing the same financial value chains, but having they can integrate invoices directly to their workflow very different business needs . In order to replace and ERP systems and improve the automation labor intensive manual handling, large organizations levels of invoice handling . Alternatively, they can aim to fully automate and digitize business use self-service applications to approve and pay documents with all their suppliers and buyers . received invoices . However, some SMEs may not have the technical skills or investment capability to implement an Source: Tieto The future of e-invoicing 9
  10. 10. Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed E-invoicing is finally growing, make 50% of your invoicing traffic electronic in especially in Europe. The two years, then you’re doing great . savings have been proved, but STRATEGIC PLANNING ASSUMPTION(S) the complexity of multinational By 2012, at least 20% of all invoices exchanged e-invoicing projects is deceptively in Europe will be electronic, up from about 3% in 2009 . challenging. Application managers, CIOs and business managers should use this research to plan e-invoicing ANALYSIS projects and to achieve the best 1.0 E-Invoicing: A Definition cost-savings and benefits. E-invoicing cuts through many disciplines, requires a lot of knowledge (spanning business, regulations Key Findings and IT), and involves a lot of complexity . A good • E-invoicing is a complex solution that must definition of e-invoicing is: bridge heterogeneous internal business processes of business partners . A substantial • E-invoicing is the interchange and storage of amount of IT infrastructure is needed to legally valid invoices in electronic format only support these processes, and to address tax between trading partners . and business regulations compliance . The interchange does not use or require paper- • Because of all the moving targets involved, based invoices . E-invoices have legal validity, the vast majority of e-invoicing projects will be and can be used to prove compliance or as tax implemented by B2B or e-commerce service originals . This research is about e-invoicing in providers . On-premises software will be an general, and most considerations apply whether option only for very large corporations, which you are sending e-invoices or receiving them, are in the best position to provide a high level unless otherwise stated . Operationally: of control of the solution, and can afford the • The seller must ensure that the invoice contains strong commitment of a handful of technology the correct data and that it is authentic . and business specialists . • The buyer must verify the authenticity of the • The first case studies of e-invoicing indicate invoice, match it to goods or services received, that these projects typically break even (that is, and execute payment . they pay back their own costs) within a year or less . • The seller and the buyer (or a third party on their behalf) must both store the readable • Several governments in Europe (and others and authentic (this comes with a lot of added around the world) mandate the use of strong security) invoice for a period of time e-invoicing for government agencies; more are (see Section 4 .0 European Union Directive likely to follow in the next year or two . 2001/115, and Its Revision 2006/112’ below), • It’s only a matter of time before e-invoicing and make it available to a tax authority on becomes mandatory, wherever you are, request . whether you are a supplier or a seller . 2.0 Basic Facts on E-Invoicing Payments for goods and services account for Recommendations about 30% of the gross domestic product of most • Start evaluating e-invoicing project countries; several countries implement value-added opportunities now, regardless of your tax (VAT) over those payments (for goods and company’s vertical industry or financial shape . services): so we are talking about a lot of money, • Never underestimate the consequences of made up of a lot of invoices . With good reason, regulation diversity across countries; potential tax authorities in government have a strong interest problems are in the details . in ensuring that companies exchange and store invoices in a secure and reliable way to prevent • Don’t sell the benefits of e-invoicing internally taxation errors, and to minimize fraud . Thus, tax in your company too quickly; multicountry authorities typically rely heavily on the invoice to e-invoicing projects last years . Proceed with a establish the commercial and tax implications of a succession of projects and demonstrate their specific transaction . value one by one . In a large project, if you 10 The future of e-invoicing
  11. 11. E-invoicing takes for granted that a company has to be around €30 . It also determined that by a clear, structured process, which, on receipt of using e-invoicing, an 80% cost saving is possible . an invoice, reconciles it with goods and services Confirming this data, initial case studies also delivered, accepts it automatically if an agreed- indicate that e-invoicing has proved to reduce the on set of criteria is met, and starts payment . cost of processing one invoice to less than €7 . Implementing buyer e-invoicing is more challenging E-invoicing also offers a range of other potential in organizations with fragmented accounts payable benefits, including improvements in AP processes (AP) systems and processes . Organizations that by reducing invoice processing time and minimizing have already implemented shared services for AP manual intervention, thus leading to a reduction will realize the greatest benefits, because they in operating expenses . This fact alone makes already have only a small number of locations some companies start e-invoicing projects; it where invoices are received . makes many more look deeper into the e-invoicing conundrum . Where multiple AP systems are in place, implementing an AP invoice automation system Several studies and surveys are available on the can link multiple AP systems to provide one point current e-invoicing uptake and on the projected of interface for e-invoices . However, this will growth in the next years . The results are somewhat add complexity to the project . Some companies different, because several vested interests are in piggyback on the necessity of an e-invoicing play, but a conservative estimate indicates that in project (for example, to comply with a government 2008, tens of thousands of European corporations regulation) to force an internal rationalization and several million consumers exchanged tens of effort, and to put some order into their existing millions of e-invoices . So, e-invoicing is possible, processes, in preparation for an electronic solution, viable and beneficial – today . The e-invoicing because the processes are not that difficult to market (made up of several markets; see Section change (they are just clerical AP processes) . But 3 .0 Current Vendor Landscape) started from very e-invoicing is not only about this; it is also about little, and is processing tens of millions of e-invoices compliance with local tax laws and integration with just four years later . Still, many voices in this area the security infrastructure that is used to exchange express disappointment at the slow progress and invoicing information and to keep the records . uptake of e-invoicing; we can only observe that they must have had unrealistic expectations from E-invoicing affects internal business processes, the beginning . Yes, the adoption of e-invoicing mutual agreements among business partners, remains very modest for now (approximately only financial transactions, taxes, and legal compliance, 3% of European invoices are electronic), but it is and a lot of the IT infrastructure that supports easy to explain why, considering the difficulties and all this . The business processes to get invoices complexities associated with this approach (see paid change slightly company by company (and Section 7 .0 E-invoicing Challenges) . sometimes within a specific company, depending on trading partner agreements, or on different One immediate observation is that how you do business practices in different geographies, or e-invoicing does not depend only on where your on the type of invoice); (tax) laws and security company has its headquarters, or on the country norms (for example, e-signatures and how where it is listed on the stock exchange . There are advanced/qualified they are, or the rules for also strong dependencies on the countries from issuing them or building certificates) . On the other which you receive e-invoices and to which you hand, for many buyer-supplier communities, the send e-invoices, because you will have to conform continued prevalence of paper-based or fax- to the norms and business practices of those based invoices and the inertia it has produced countries for the e-invoices to be valid there . This have severely limited the ability to leverage research is mainly about e-invoicing in Europe, but e-invoices to automate the purchase-order-to- it also affects every company that does business invoice reconciliation processes and the rest of the with European partners . So, if you are outside payment process . the European Union (EU; for example, in the U .S .) but your company does business internationally All the above is enough for some companies or plans to do so, this research is highly relevant . to decide, “E-invoicing is not for me, at least Don’t forget that your business partner might for today.” But one fact introduces doubt into even be your own company; because of the this perspective: The European Associations VAT implications of e-invoicing, and because of Corporate Treasurers identified the average intercompany transactions are subject to VAT in processing cost of a paper invoice across Europe The future of e-invoicing 11
  12. 12. Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed countries with VAT statutes, you may find that strong industry focus, whereas supplier e-invoicing the simplest place to start an e-invoicing rollout is solutions are generic, because AP processes are between you and (one of) your foreign subsidiaries . the same across industries) . No company that is conducting transactions Recently, some larger integration service providers electronically today will stop doing so . Current in B2B have been combining supplier/customer projects will only expand, because the more e-invoicing with archiving for tax purposes, offering invoices you process electronically, the more services for the whole e-invoicing space across money you save . An accounting department several countries . By looking at the bullet list of that processes twice as many invoices in the vendors at the beginning of this section, these new same unit of time delivers immediate benefits offerings by larger integration service providers in savings on resources and in customer today address a much wider set of requirements . satisfaction (users of e-invoicing are starting to It must be noted though that the vast majority of see more than 10 invoices processed per hour these offerings is incomplete: however, leveraging per full-time equivalent [FTE]; see Section 9 .0 ongoing harmonization efforts, they already deliver Reasons for Doing E-Invoicing) . Proof-of-concept significant benefits, so they are starting to sell well . implementations that began during the past year E-invoicing solutions have a wide range of users: on a small percentage of invoices will be extended . Gartner expects hundreds of new projects to start • IT staff to install and operate the solution in Europe just in the next year . Larger integration (possibly outsourced) service providers offering e-invoicing services • Administrative payments/accounting staff expect to at least double their e-invoice traffic in (could be outsourced, too, but it’s less 2009 . Again, even from a conservative perspective, frequent) it’s clear that the number of e-invoices exchanged in Europe will grow steadily in double digits for • Tax auditors from tax and revenue agencies the next few years (see Section 10 .0 The Main outside the company who want to see Reasons Why E-Invoicing Use Will Grow) . evidence of real, paid, unchanged invoices (and all of them) kept for a number of years 3.0 Current Vendor Landscape The complexity of catering to such diverse Many competing and varied vendors are trying to constituencies of users adds to all the other solve various aspects of e-invoicing, including: difficulties of putting an e-invoicing solution • Banks together (see Section 7 .0 E-invoicing Challenges) . Also, e-invoicing solutions need to closely follow • Credit card companies several moving targets, and must immediately • ERP-related purchasing applications vendors demonstrate tangible benefits; for these reasons, e-invoicing solutions delivered as a service in • Pure-play e-invoicing providers Europe tend to be much more popular and easy to • Marketplaces consume than software-based solutions . • Integration service providers 4.0 EU Directive 2001/115, and Its • Electronic data interchange (EDI) technology Revision 2006/112 providers As this directive’s ID number indicates, the original • B2B software companies directive was issued in 2001, and was revised in 2006 (see http://ec .europa .eu/taxation_customs/ • Supply chain finance specialists taxation/vat/traders/invoicing_rules/index_en .htm), Historically, each vendor has addressed only with a view to “simplifying, modernizing and one specific side of the e-invoicing puzzle: harmonizing the conditions laid down for invoicing Today, supplier (or buyer) e-invoicing frequently in respect of VAT in the EU,” for all member states. is addressed by a different set of vendors from A core theme of the directive was to promote customer (seller) e-invoicing, which frequently is the efficient cross-border creation, transmission, addressed by a different set of vendors set general acceptance, storage and retrieval of invoices . e-archiving – and the list can go on . Today, Since it went into effect on 1 January 2004, all EU these are different markets, just as the issues member states must accept e-invoices for VAT the vendors address are somewhat different (for purposes – if two conditions are fulfilled: example, customer e-invoicing solutions have a 12 The future of e-invoicing
  13. 13. • The other party agrees to exchange invoices in operate or be trusted in the sender’s or receiver’s electronic format. Article 232 states, “Invoices home country . Some countries require time stamps issued pursuant to Section 2 may be sent at specific points in the e-invoice life cycle . All this on paper or, subject to acceptance by the information must be linked together for proper recipient, they may be sent or made available accounting and tax processing . In addition, these by electronic means.” stipulations overlap with the regulatory framework governing e-record every EU member state already • The integrity (nonchangeability) and authenticity has in place . (the declared source being the actual source) of the e-invoices are guaranteed in transport The e-invoicing directive explicitly states that third and storage . parties may issue the invoice in the name and on behalf of the supplier . It is generally assumed To allow for technological differences between – although usually not explicitly regulated – that each member EU state, and to remain technology- the buyer can also outsource some or all tax- neutral, the directive allowed for several ways of relevant processes to a third party . This opens meeting the two conditions . For example, the up a variety of new lines of business for B2B requirements to ensure authenticity and integrity infrastructure vendors to extend existing B2B can be met either through advanced or qualified projects to e-invoicing, and to maximize the value e-signatures or through EDI with contractual of investments that IT end users have made in B2B security measures (see Section 8 .0 E-Signatures, projects . EDI or the “Third Option”? for a brief discussion on the alternatives) . In an announcement issued at the end of January 2009, the commissioner for taxation and Unfortunately, this technological flexibility has customs of the European Commission unveiled led member states to adopt state-specific proposals to make e-invoicing subject to the versions of the directive, which have disparate same rules as paper-based invoicing – without requirements for meeting the functional objectives . mandatory controls such as EDI or e-signatures These requirements, in turn, have led to more- as a precondition . This deregulation, if approved, stringent or less-stringent controls in different would give businesses freedom as to how to prove states (for example, in the U .K ., no e-signature is that their invoices are real and unchanged, but required; in Germany, the enterprise must create the deregulation would not change the fact that the signatures using a certificate issued by an every company ultimately must be able to produce approved certification authority and issued to an such proof for their EU invoices . Any change to approved individual representing the enterprise) . the current regulations would require unanimous The directive includes policies about: approval by all (27, at the time of this publication) EU member states . This new regulation, if • Integrity and authenticity guarantees through approved, is not likely to formally enter into force e-signatures or “EDI” or “other means” (the before 2013, at the earliest, and e-invoicing directive states that invoices are not required projects typically break even within one year, so to be signed) holding investments only because a change in • Storage of invoices in any European country regulations may be coming is not a good idea . • Content of invoices 5.0 Countries That Mandate the • Outsourcing of invoice issuance to third parties Use of E-Invoicing for Government • Self-billing (the buyer issues the e-invoice on The first European country acting on the European behalf of the seller based on received goods or directive was Denmark, which made e-invoicing services – as opposed to waiting for the seller mandatory for the public sector in February 2005 . to issue and send an e-invoice) The scanning of documents at the post office was possible initially, but has since been replaced Invoice storage location and retention period with direct sending . Approximately 15 million (ranging from three to 11 years) requirements also transactions that the state previously handled vary widely among countries . Some countries have on paper are now managed electronically, with specific requirements about whether invoices can huge benefits . According to Claus Juhl, of the or must be retained in the sender’s country versus government’s digital task force, public-sector the receiver’s country or a third country altogether . savings amount to around €100 million in three There are also state-specific requirements for the years; this result gains importance when you use of outsourcing providers that may or may not The future of e-invoicing 13
  14. 14. Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed consider that Denmark’s population is only 5 for the use of e-signatures for e-invoicing, but million . Sweden set a deadline for public-sector mandates guaranteed integrity of e-invoices during e-invoicing readiness (not completely mandatory) the whole e-invoice life cycle, including storage . in July 2008; it’s too early to discern the real In the U .S ., there is no real VAT concept in difference e-invoicing is making . taxation, but the final transaction between buyer Finland is an active e-invoicing country in which a and seller carries a tax that depends on state number of consolidators cooperate with a growing and federal administrations . This tax is generally bank scheme supported by the government . enforced by examining the records of a company, Finland has set a public-sector “e-invoice or which the Internal Revenue Service regulates no invoice” (paper invoices will be returned very heavily for taxpayers who keep records only to the sender) deadline for the end of 2009 . in electronic format . Despite a 1996 law that Several major corporations in Finland (including, requires the U .S . government to make payments interestingly enough, some of the biggest paper electronically, only 27% of federal contractors companies in the world) are enforcing the deadline use e-invoice presentment and payment (EIPP) to already . Most government ministries in Spain present invoices, and only 26% receive payments will honor only e-invoices from September 2009 . from the government via EIPP . Many companies Italy mandated use of the European directive (by (several U .S . government agencies have e-invoicing prohibition to accept and pay paper invoices) in mandates as well) send and receive payments 2008, but even more than the level of readiness electronically, but the purchase-to-pay and order- of public-sector suppliers, it’s the red tape and to-cash processes are not fully automated, nor internal cultural resistance that are making the are they particularly well-integrated to process transition difficult . Implementation seems to be or produce e-invoices . There are no explicit postponed to later in 2009, inevitably causing requirements for e-signatures . confusion . The Canada Revenue Agency (CRA) has issued a Approximately 10 other European countries are in series of circulars on electronic transactions and the process of setting up deadlines for mandatory records for income tax purposes . These rules also e-invoicing in government . The size of a country apply to e-invoices . seems to matter most; the smaller the country, the According to TrustWeaver, a pure-play e-invoicing faster it can adopt e-invoicing . Some remaining technology provider that bases its business on the countries might already have a lot of e-invoicing research it conducts on international e-invoicing experience, due to the activity of local businesses norms, the situation in other areas of the world is (such as Poland with its retailers, or France and still at initial stages of development: the U .K . with their utilities over EDI) . • Japan is a notable exception among Outside the EU, the Singaporean government economically strong Asian countries in that has allowed e-invoicing since 2003, and has paperless invoicing is not permitted without made it mandatory since May 2008 . Mexico has explicit approval from the tax authorities . been pushing e-invoicing (mandating the use of e-signatures), albeit with some local twists in • E-invoicing, as known in other parts of the regulations, similarly to Brazil, where e-invoicing world, is prohibited in China . The Chinese tax is already common in some public-sector areas . authorities are rolling out a central-government- Chile, Uruguay and Costa Rica are in the process controlled e-hub under the Golden Tax Project, of passing similar legislation . Australia, New which will increasingly be the only permitted Zealand, Taiwan, Indonesia and Malaysia as well channel for invoicing, reporting and paying have started legislation on e-invoicing . applicable taxes . The project is designed for the communication of tax-relevant transaction 6.0 Situations in Other Countries information among businesses, which makes it Outside the EU, important European countries an automated law enforcement engine requiring such as Switzerland and Norway also allow little manual intervention by the tax authorities . e-invoicing . Switzerland has closely coordinated • E-invoicing remains illegal in the vast majority its legal framework for e-invoicing with that of the of African countries . Some Northern African EU, but only e-signatures are allowed – there is no countries, such as Tunisia and Morocco, have EDI option or other alternative . Norway (not an EU mature regulatory and institutional frameworks member, but closely aligned with the EU), contrary for the recognition of electronic transactions to Switzerland, does not have explicit requirements 14 The future of e-invoicing
  15. 15. (including e-signatures) in general, but they do agreed standard to structure an EDI message.” So not have specific regulation for e-invoicing . the Commission really means “B2B infrastructure,” under the current Gartner definition . Some EU • South Africa has allowed e-invoicing since member states (for example, Lithuania) still define September 2002, but e-invoicing traffic EDI strictly as systems using a specific EDI for remains low among businesses and tax Administration, Commerce and Transportation authorities . (EDIFACT) standard only . Is Web EDI (where one transacting partner manually keys in, supplements 7.0 E-Invoicing Challenges and/or approves invoice data) EDI under the As anticipated by the considerations in the directive meaning, and will tax authorities recognize previous sections of this research, there are a it as such? What trading partners consider EDI will number of intricacies in doing cross-country not necessarily be viewed as EDI by tax authorities, e-invoicing projects . Supplier e-invoicing and and vice versa . generic e-invoicing projects with all business partners in one country are considerably easier, Another complication with the current EU and this tends to be the initial point of many e-invoicing system is that most requirements e-invoicing pilot and emerging projects . However, that are in practice are not published by member the vast majority of midsize to large organizations states and are extremely difficult or expensive for in Europe and the rest of the world has suppliers businesses to obtain, interpret and monitor . In or sales channels or customers outside their home the absence of information, how do e-invoicing countries, and because the value of an e-invoicing systems handle errors? Even this becomes solution typically is related to the number of country-specific, because of the tax implications invoices processed electronically, restricting the of a wrong invoice and the possible actions you projects to one country is not generally wise, viable might want in place to deal with or correct the or both . error . At the moment, there is a knowledge gap between businesses and tax departments around This section highlights the main difficulties requirements, liability and legal questions . Wide international e-invoicing projects suffer from so that knowledge differences frequently exist between stakeholders will be aware of and actively work to different revenue department workers . Sometimes avoid them . businesses end up educating the revenue services We have introduced the several axes of on their own legislative texts, with the inevitable variance of e-invoicing requirements (internal delays for discussion and interpretation . Big and multienterprise business processes, IT accounting firms, such as PricewaterhouseCoopers infrastructures, law and security, to name a few), or Ernst & Young, are only slowly getting into the and how they cause differences, from the seller’s business of certifying e-invoicing solutions . Thus and the buyer’s perspectives; it is common, for far, this is happening in Scandinavian countries and example, that different laws will apply to buyers in the U .K ., and is likely to be extended to other and sellers . This, by far, is the most common geographies, but it is difficult to predict how quickly source of difficulties in e-invoicing projects, this will occur . and is compounded by regulations and general Additionally, if you are procuring or running an requirements that are not fixed in time; these often e-invoice solution, then how do you know that change because interpretations and practices it is compliant with the EU directive, or with the evolve . various tax laws abroad? There is no such thing For example, the European directive explicitly as compliance with the EU directive itself; what talks about EDI as a way of transporting invoice matters is whether there is interoperability with information having the attributes of integrity your business partners and fulfillment of local and authenticity. But what is EDI? The concept requirements as applied by local tax authorities, of “EDI” (and of “e-signatures”) differs among VAT laws and general industry practices . Mexico countries, and largely consists of rules that is the only country that is putting in place a existed long before the e-invoicing directive . certification program for e-invoicing; in Europe, the Frequently, the legal and business definitions European Committee for Standardization is working of these concepts are not the same . The on “good practice guidelines for e-invoicing,” but directive refers to a definition of EDI from a 1994 it will take at least two years for this work to be European Commission recommendation: “The finished and for all tax authorities to endorse it . In electronic transfer, from computer to computer, addition, major cultural differences persist among of commercial and administrative data using an country views of a “typical e-invoicing process,” The future of e-invoicing 15
  16. 16. Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed and these differences will continue to slow the did not receive the e-invoice). Most “managed adoption of e-invoicing for years to come . networks” run by integration service providers’ use of certificates for authentication and/or signing of 8.0 E-Signatures, EDI or the certain types of content . “Third Option”? Using e-signatures will mean dealing with poor The e-invoicing directive requires invoicing parties interoperability internationally, and you certainly to guarantee the authenticity and integrity of don’t need even more problems in your e-invoicing e-invoices in transport and in storage, through projects . However, consider that: e-signatures, EDI or “other means.” To respect • If your e-invoicing project includes business the various ways of guaranteeing authenticity and partners in Switzerland, Mexico or Brazil (or if integrity of the processes in use in Europe, and to you are running your e-invoicing project from allow each member state to build on the policies one of those countries), then you have no they have already, the directive is not intentionally choice; these countries mandate e-signatures . prescriptive . To comply with the e-invoicing directive (for However, some member states are more which the e-signature is only one of the three prescriptive than others, so it is up to each allowed options), no EU member state strictly government tax office to rule on whether a specific mandates e-signatures; however, e-signatures method of guaranteeing authenticity and integrity seem to be the preferred option for Spain and is acceptable . A lot of government tax offices Germany . worldwide simply do not have the necessary • Top e-invoicing pure-play vendors, and knowledge to do this . the integration service providers using Historically, different methods have been employed their software, are slowly getting around in different countries to guarantee the authenticity interoperability problems, and working solutions and integrity of e-invoices; for example, there is a are in place for some countries . lot of EDI use in France and Germany, and a lot of • E-signatures are better-regulated than “other means” in use in Sweden and Finland, and e-invoices; requirements are fairly clearly most of these systems can guarantee integrity . In defined in most countries . a few cases, authenticity is guaranteed, too, or can be guaranteed by extending the functionality • E-signature software is now available at of the system (typically through e-signatures) . But reasonable pricing (if you choose a service- whether the tax authorities in all the countries based offering, then you will use your service where you implement e-invoicing recognize those provider’s software, and the cost of this methods as valid for tax purposes is another approach is generally subsidized between question . different users – in other words, if you do e-invoicing through a service provider, then Security never was a necessary component you don’t need to worry about the cost of of EDI . A lot of EDI systems are far from being e-signature software) . secure, because the threat of breach is not high enough, and the potential damage of a breach • No matter how you do e-invoicing, the need can be reasonably contained . In other words, for e-signatures will arise in some way in the the fact that a system can legally qualify as EDI requirements when you start analyzing how says nothing about the guarantees it provides for to implement integrity, authentication, secure e-invoice integrity and authenticity . Nearly all EU storage or time stamps (required in several member states have additional requirements that countries – for example, Italy) . systems must comply with under the EDI option . In summary, for your e-invoicing project: Furthermore, EDI (remember the directive basically means generalized B2B with that – see Section • If your current ways of doing B2B can 7 .0 E-invoicing Challenges) and e-signatures guarantee the authenticity and integrity of are not two mutually exclusive options . Modern e-invoices in transport and in storage, and if B2B standards make room for the use of the tax authorities in all the countries you are e-signatures; for example, point-to-point security doing e-invoicing in accept this, then it’s likely standards (like Applicability Statement [AS2]) that your current B2B system can deliver all are based on e-signatures as the most effective e-invoicing benefits (and you might be doing way to guarantee integrity and authenticity (and e-invoicing already) . nonrepudiation – the receiver cannot say that it 16 The future of e-invoicing
  17. 17. • If your current ways of doing B2B cannot to reconcile the invoice with the goods or guarantee the authenticity and integrity of services received (typically, by integration with an e-invoices in transport and in storage, then ERP package) . The vast majority of e-invoicing estimate how difficult and expensive it would implementers that have done invoice printing and be to add this function . You are likely to be scanning have found that it is not enough and have forced to introduce e-signatures at some point, moved on to something else . If you need to send but the extension costs often are repaid quickly e-invoices to the governments in Europe or the by the savings (ensure that you carefully supply chain masters who mandated (or will shortly estimate savings and costs before starting the mandate) e-invoices, then printing and scanning project) . will be of little use . • If your B2B projects do not deal with invoices, By implementing supplier e-invoicing, you or if extending their functionality proves to be immediately remove one of the biggest issues in AP too costly, or if you are starting e-invoicing – the processing of paper invoices . These frequently from the ground up, then you are better must be manually entered into the AP system, which off planning for an e-invoicing project using is time-consuming and error-prone . Also, when e-signatures, despite all the complexities paper invoices are routed around the organization associated with this approach . for approval, they sometimes get lost and frequently get delayed . E-invoicing addresses these issues 9.0 Reasons for Doing E-Invoicing and improves AP efficiency, without having to make So far, this research has surveyed several major changes to internal processes . arguments against e-invoicing, and we have Current case studies indicate that you can quantify covered in some detail the complexities associated e-invoicing savings in many ways, including the with it . However, there are excellent reasons that cost per invoice, as above, or the total savings due prompt companies to face these complexities, deal to reduced number of resources and computing with them and start an e-invoicing project . power (60% to 80%, as compared to paper invoice To reduce invoice-processing costs, the first processing), or even a percentage of a midsize thing companies try is centralized invoice printing to large company’s turnover (approximately 1%) . and scanning (with or without optical character Whichever way you decide to demonstrate savings, recognition) . More large organizations are the clear indication from case studies is that the increasingly trying this option, because they can savings for companies that have to deal with a negotiate costs down with printing and scanning large volume of invoices (more than 100 per day, providers and, thereby, cut paper invoicing costs inbound and outbound) are significant , because sometimes drastically, somewhat reducing the of the economies of scale obtained by aligning pressure to move to full-fledged e-invoicing . technical, business and compliance strategies . Printing and scanning do not require process Other benefits include: adaptation, but are mainly add-ons to well-tested • Better spending analysis, leading to some paper-based processes . This alternative does spending reduction provide savings, but this is only a fraction of what an e-invoice project can deliver (see Section 11 .0 • Faster processing times and payment cycles Can Paper and “E” Go Together?). • Enhanced contract performance analysis The next step is to formalize the existing, • Better tracking and enforcing of trading partner unchanged invoice processing process(es) into compliance with commercial terms a business process management suite or a workflow . This puts more order into the work, • Improved dispute handling and avoidance and gives more visibility over the processing of • Opportunity to realize more supplier rebates an invoice . However, in this case, the savings and discounts are marginal, and they need to be offset from the costs of the software being used to support the • Better auditability of invoices through integrity workflow, and of training the invoice processing and authenticity guarantees staff for using the software . • Easier availability of data for regulatory Most of the e-invoice savings are due to more- compliance, for example, supply chain streamlined payment processes, taking humans traceability out of the picture as much as possible, and • Greener approach, big reductions in providing the whole set of data that is needed consumption of paper The future of e-invoicing 17
  18. 18. Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed The potential for benefits is much greater for the 11.0 Can Paper and “E” Go buyer than the supplier/customer, because the Together? buyer is improving internal processes for handling The road to full e-invoicing is gradual . First, you invoices and typically has to process a lot of them, will make electronic-only a subset of all invoices, compounding the benefits (which is why we are according to several criteria (selected business seeing a bigger uptake in buyer e-invoicing and partners or types of invoices, for example), then customer e-invoicing) . However, e-invoicing does you will gradually increase the number of invoices provide benefits to senders, too, such as improved that can be dealt with automatically, or with minimal customer satisfaction, reduced administrative human intervention . So, for practical purposes, costs in credit collection, more-effective capital paper and “e” will need to go together anyway management and cash flow control (suppliers can for a few years . During this transition, companies see when invoices will be settled, so they can should ensure that a tax inspector can easily forecast receipts more effectively), and, above and clearly distinguish in the accounting systems all, lower customer churn . This would apply also between what is done electronically and what is to smaller senders, which would not have the not . Companies tend to deal with this years-long e-invoicing volumes of the suppliers . “transition” in different ways, as described in this As always in B2B, the key in e-invoicing projects section . Because of internal process intricacies lies with the recognition of the shared benefits (or because it is hard to get small suppliers to go that suppliers and buying organizations can electronic), certain types of invoices will tend to stay realize . This typically implies improved business on paper, at least in the initial years of e-invoicing processes (with the associated organizational and initiatives . change management challenges) and technology To ease the transition, some companies continue additions . to accept and issue paper invoices, and to accept and issue e-invoices at the same time for the 10.0 The Main Reasons Why same goods or services, as a sort of transition E-Invoicing Use Will Grow to full e-invoicing . Receiving paper and electronic After a few dormant years, e-invoicing adoption is records for the same invoice will not remove the finally increasing . Although none of these reasons problem (which, primarily, is processing the paper in isolation is likely to be enough to warrant invoice), and will duplicate work . Except for brief continued growth, all of them together are driving periods of time during pilot programs, this is not an and will continue to drive increased widespread ideal situation, and dramatically raises the costs of adoption: dealing with invoices, instead of driving them down . • Strong user demand, because of the benefits, More frequently, some companies are receiving especially savings invoices electronically, but they also keep paper copies for tax and legal purposes . Doing this • Increased supply, and an associated increase (electronic data transfer) is quicker, less-expensive in the maturity and effectiveness of e-invoicing and less-complicated than full-fledged paperless solutions; in particular, several banks are e-invoicing and still delivers some benefit . However, promoting e-invoicing in their strategies in a solution like this, you still incur high invoice (especially in Spain, Finland and Switzerland) storage costs (driven down only partially by • More governments mandating e-invoicing, scanning) and higher fixed costs of reconciliation especially in the EU between what is on paper and the electronic transactions . This means that you won’t harvest • Increasing availability of viable (and compelling) the full scale of benefits that e-invoicing can deliver, e-invoicing references and case studies as having done most of the work for it . more companies adopt e-invoicing Yet, there is plenty of room for development . Some Other factors may come into play (for example, studies estimate that pure e-invoices (with no paper some e-invoicing pioneers are asking suppliers for summary attachment) currently represent only 2% extra money to process paper invoices), but the to 3% of the total amount of invoices in Europe, four factors above will constitute the main push . so the market potential is immense . Bo Harald, Thus, e-invoicing will grow steadily during the next chair of the EU e-invoicing expert group, says that few years, despite all the difficulties overviewed paper invoices have no future . In the long term, it in this research, simply because the momentum is difficult to disagree with him . In the short term of these factors is stronger than the decelerating and midterm, there is still a lot of complexity to force of the difficulties . 18 The future of e-invoicing