E-invoicing could help businesses cut costs as they brace
themselves for recession.
The technology is moving to the mainstream as the European
Commission pushes it as part of its drive to cut costs in supply
chains.
The Corporate Action on Standards project, set up by the
European Payments Council, said that e-invoicing allows companies
to cut the average EUR30 cost of processing a paper invoice by
80%.
Businesses that want to take advantage of e-invoicing can do it
themselves, use an e-invoicing service provider or work with their
banks.
Stefan Foryszewski, senior vice-president at e-invoicing service
provider OB10, says businesses are looking at e-invoicing but only
"the more enlightened ones."
"The market is still fairly immature but awareness is beginning
to grow," he says.
Forysewski advises businesses moving to e-invoicing to ensure
that their enterprise resource planning (ERP) systems are
compatible with the system they chose. They must ensure the system
they chose can be easily integrated with all suppliers. And they
must ensure they comply with the taxation laws in the different
regions they receive invoices from.
Building an e-invoicing system is challenging for companies to
do on their own and the capital investment required may be hard to
justify as the economy slows.
DHL began rolling out an electronic invoicing and payment
system from Accountis in July last year. The project aims to
save millions of pounds across Europe by reducing billing costs by
15%.
Brian Thumwood, e-billing programme manager at DHL, says the
company chose a third-party supplier to avoid the risks of building
its own system. "We looked at doing it ourselves but the
complexities associated with the legal structure in different
countries and the technology made us work with a supplier."
Businesses only need minimal technology in place to use a
third-party service, such as dedicated servers, a connection to the
e-invoicing service, and the use of workflow systems.
Peter Ratcliffe chairman of Accountis points out that many
e-invoicing suppliers have been bought up by larger businesses
which means their software is no longer commercially available. For
example, E-invoicing software providers
Harbor Payments and
Xign were acquired by American Express and JP Morgan respectively
in 2007. As a result, companies that set up their own e-invoicing
services would have to write their own software, he says.
Banks are using e-invoicing service providers to create their
own services.
Abbey launched a corporate e-invoicing service in July last
year in partnership with e-invoicing network provider OB10, as part
of a service to offer finance to supply chains.
Tom Crowe, director of sales and delivery financial supply chain
solutions at Abbey Corporate Banking, says take up of e-invoicing
is slow because it is a new concept in the UK.
But he said that businesses will take it up because of the
savings that can be made. "Anything they can do to make businesses
more efficient they are keen to look at particularly in a period of
economic uncertainty," he says.
The Royal Bank of Scotland (RBS)
has announced that the first customers of its e-invoicing
system, provided by Accountis are going live this month.
In the current economic climate an 80% reduction in the cost of
a paper invoice will be attractive to business managers attempting
to cut unnecessary costs. IT departments must, however, decide how
they are going to implement e-invoicing to maximise the return on
investment.
What is E-invoicing?
E-invoicing is an alternative to Electronic Data Interchange
(EDI) as a method of dealing with supply payments electronically.
It also helps get the best out of ERP systems by automatically
putting more accurate information into the systems.
E-invoicing uses the internet to connect businesses with their
suppliers and automates the processing of invoices in accounting
systems. It speeds up payment times, improves the information in
ERP systems, reduces the human resources required and eradicates
inputting errors. It also cuts postage costs and reduces waste
paper.
EDI is a point-to-point computer connection between a business
and a supplier which uses a network provider to process
transactions. Large businesses use this method to connect with
their major suppliers.