Federal Government Mandate Could Drive E-Invoicing Adoption

By Arnold Leap

Electronic invoicing is set to get a shot in the arm from a federal government mandate requiring that commercial companies submit their invoices to the U.S. Department of the Treasury electronically.

Starting in fiscal year 2013, all commercial companies will be required to submit invoices to Treasury via the government’s Internet Payment Platform.  Part of President Obama’s “Campaign to Cut Waste” across the federal government, the mandate could reduce the Treasury’s cost of entering invoices and responding to inquiries by as much as 50 percent — saving taxpayers $7 million a year.  If e-invoicing were required across the federal government, the savings would hit $450 million a year.

Conversely, Treasury says that e-invoicing will enable companies that do business with the federal government to collect payments faster, and gain instant, online access to invoice status.

While countries such as Finland and Mexico have already passed legislation designed to drive the adoption of e-invoicing, Treasury’s mandate is the U.S. government’s first step in this area.

The mandate comes at a time when more businesses are recognizing the tremendous benefits that e-invoicing delivers to both buyers and sellers (namely, faster cash flow, lower costs, better visibility into invoice status, more discount opportunities).  Billentis estimates that the use of e-invoicing increased by 20 percent in 2011 alone.  Mandating that companies that do business with the government submit their invoices electronically will be another catalyst in the growth of e-invoicing.

But the mandate raises another issue: If the federal government can deploy e-invoicing, why can’t private businesses?

Untangling Accounts Receivable Processing

By Arnold Leap

Try mapping an organization’s manual accounts receivable (AR) processes and the result will likely look like tangled strings of Christmas lights that were hastily stuffed into a Rubbermaid tote.  And the combination of multiple billing, collections and AR systems, numerous handoffs between departments, and piecemeal reporting and interfaces can be just as maddening to deal with.

Companies that rely on manual AR processing suffer from unruly volumes of paper invoices and supplemental documents, high Days Sales Outstanding (DSO), weak capital management, time-consuming disputes, inconsistent customer service, and costly manual posting and cash application.

And the costs associated with these paper-driven AR processes add up fast.  Gartner pegs the average cost to apply a paper check (including labor, equipment and overhead) between $5 and $10.  Worse, the average cost to resolve an exception payment or invoice dispute weighs in at an eye-popping $25 to $100.  Simply producing a paper invoice costs an average of more than $5, Gartner reports.

With reduced DSO, improved cash management, faster receivables turnaround, and increased efficiency topping the list of objectives that companies have for their AR departments (according to Aberdeen Group), it’s no wonder that more businesses are automating their AR with e-invoicing.

E-invoicing allows suppliers to electronically deliver invoices in the format that their customers desire (EDI, XML, print file, etc.), virtually eliminating the manual intervention that costs so much time and money (it also will help ensure payment predictability as the United States Postal Service cuts back on deliveries).  What’s more, an e-invoicing portal provides tools for automating deduction management and tracking individual payments.  Additionally, e-invoicing allows companies to offer customers self-service electronic payment options, as well as the ability to manage their own profile.

By using a SaaS-based e-invoicing solution, suppliers also avoid the hardware and software license fees associated with traditional AR systems, and they won’t burden their strapped IT resources.

Together, these benefits not only make an AR department more efficient, they make a business more competitive.  It’s for these reasons that untangling AR with e-invoicing is gaining traction.

Now, about those Christmas lights…

6 Steps to Increasing Supplier E-invoicing Adoption

By Arnold Leap

E-invoicing continues to distinguish itself as an effective way of addressing the most common accounts payable challenges: lost and misplaced invoices, cumbersome invoice-to-order matching, long approval cycles, missed discounts, and high volumes of supplier inquiries – just to name a few.

And with Aberdeen Group pegging the cost of manually processing an invoice as high as $35.56 at some companies, it’s little wonder that analysts expect demand for e-invoicing to continue to soar.

But to optimize e-invoicing, companies must drive adoption of the technology among their partners.  To help your e-invoicing adoption efforts, here are six best practices for partner on-boarding:

1. Aggressively target your highest-volume suppliers: At one company, 6 percent of its suppliers produce 79 percent of its invoices.  That’s why many companies set a goal for themselves of reducing paper invoices from key suppliers by 70 percent within the first year.
2. Establish a supplier adoption committee: The committee should include representatives from all of the business units associated with your project.  Plan to hold weekly committee meetings to discuss strategies for improving adoption, and share feedback from the field.
3. Let your invoices help do the talking: Change the “Remit-To” address on your invoices to reflect your electronic self-service payment options.  And include special messages on your invoices promoting your electronic payment options, and how partners benefit from them.
4. Establish and promote e-invoicing and electronic payment as the way your company does business:  For instance, require by contract that all new suppliers submit their invoices electronically and accept electronic payment methods (e.g. such as Automated Clearing House or procurement card transactions).  And consider offering better payment terms for partners that submit invoices electronically or accept electronic payment methods.
5. Don’t leave your coworkers speechless: Provide your procurement and customer service departments with quick training guides, as well as supplier “talking points” on e-invoicing.
6. Launch a marketing program targeted to suppliers: Include outbound telemarketing, Webinars promoting the service (and how it works), and online registration assistance tools.  And don’t forget to leverage tools available from your e-invoicing solutions provider.

Using these strategies, companies not only will drive e-invoicing adoption, but also impact their bottom line.  In the case of one global company, more than doubling the percentage of invoices its partners submitted electronically resulted in a 24 percent reduction in its average cost to process an invoice, and a 50 percent reduction in supplier inquiries.  The company also reduced the average cycle time for invoices from a minimum of four days to just 12 hours for electronic invoices.

What strategies has your organization successfully used to drive e-invoicing adoption?